Spotlight on Poverty

Inequality is hardly a new American phenomenon, but last week it finally went viral. Over the last three decades, the distribution of income in the U.S. has become increasingly skewed. Median incomes remained largely flat, while the most dramatic growth occurred among the top one percent.

Last year, two Michigan residents won the state lottery. Ordinarily, this would not be a newsworthy occurrence, but they were also Supplemental Nutrition Assistance Program (SNAP) recipients. Despite their windfall, they continued to receive SNAP benefits.

Michigan was one of around 40 states that don’t require SNAP recipients to document their savings to determine eligibility. Technically, neither winner was in violation of the rules. Still, it didn’t take long for charges of waste, fraud, and abuse to draw attention to this “loophole,” and Michigan reinstated its asset limit.

For over 26 million American households, tax day is a relief. Thanks to the Earned Income Tax Credit (EITC), filing taxes triggers a refund that may be the largest lump sum of cash these families receive all year. Unfortunately, for many other families, it’s just another day. One in four who qualify for the EITC don’t file, and they don’t benefit from what’s really the country’s largest anti-poverty policy effort—currently at over $55 billion. For those with low-incomes and few resources, their tax refund is a welcomed infusion of cash that can be used to manage their poor finances.

... The second step is to study whether a low- or no-cost intervention could be designed that would allow HUD to incorporate FSS-type features into the very fabric of rental assistance and offer them to everyone in subsidized housing. Reid Cramer and I have developed one approach for doing so and would urge that it be tested rigorously against other alternatives to evaluate costs and benefits. ...

Original article

There is no question that major changes will have to be made to the U.S. budget in coming years. Surpluses are never expected to return, the debt is projected to climb to unprecedented levels, and major programs are significantly underfunded, leaving participants uncertain about what benefits they will receive in the future.

For most policymakers, it is never a good time to talk about poverty. When times are flush, their constituents are doing well. When recession hits, everyone is hurting. But as economic hardship continues to impact a greater number of families and communities, this may be the time to redouble our search for innovative and potentially effective ways to break the cycle of poverty.