The Poverty Nation Washington Built

The Poverty Nation Washington Built

The massive job losses between 2008 and 2009 were surely the biggest factor in the record poverty numbers the Census just reported. But those harrowing months were neither the beginning nor the end of the problem.


The maddening thing about Beltway political culture is not its oft-maligned partisan divide but rather its ever-present consensus that tomorrow will be better, when all evidence points to the contrary. American families have been spiraling in a steady and quickening economic decline for years, a devolution that did not begin with this recession and will not soon end without massive and sustained intervention. That hard truth is as plain as the troubling reality that few in Washington are prepared to face it.

Thursday, the U.S. Census Bureau released data showing record-breaking poverty in 2009: Nearly 44 million Americans lived below the poverty line; that’s more than the Census Bureau has logged in the fifty-one years it has kept track. This may have been the year’s least surprising headline—such numbers grow from our political choices just as surely as night follows day.

Nor is it surprising who fared most poorly in 2009. While the overall poverty rate climbed to 14.3 percent—one in seven—more than a quarter of both African Americans and Latinos lived in poverty last year. The data for poor children is the most arresting. Nearly 36 percent of black kids and 33 percent of Latino kids were poor in 2009, as were 38.5 percent of all families headed by single moms. Stop and try to digest this data: More than a third of all black and Latino kids are growing up destitute. With numbers like that, how can we talk meaningfully about a future of any kind, let alone a better one?

It’s a question the whole nation would do well to consider. Because the troubles of black and brown families are better understood as leading indicators than outliers.  

The massive job loss between 2008 and 2009—a 3.5 percent increase in unemployment–is surely the largest factor in the immediate poverty increase. But those harrowing months were neither the beginning nor the end of the problem. African Americans have been hit so hard in this recession for many reasons, but chief among them may be that black neighborhoods never emerged from the 2001 recession. Which meant they were the most vulnerable to the housing market predation that pushed the country’s economy off the cliff. 

We now know banks wrote bad loans deliberately, and that regulators ignored ample real-time signs that too many of those loans were both fraudulent and likely to fail. This went on with impunity because it was just business as usual. Wall Street’s demand for large, short-term profits informed banks’ irresponsible lending choices long before they gorged themselves on subprime securities. Every family I’ve interviewed in the course of covering the housing crisis was propelled into these dangerous loans by an effort to climb out of huge credit card debt, overwhelming student loans and the many other economic trap doors banks had already built into the economy. 

As Congress has worked to close some of these traps, banks and corporations will merely open new ones. They’re searching for new, inventive ways to trick customers into agreeing to huge overdraft fees and they’re exploring ways to broaden the payday lending market. Insurance companies are jacking up rates in advance of reforms and credit card companies are devising ways around new consumer protections. And that’s just the stuff we know about. So with the ranks of those who’ve been out of work for more than six months steadily lengthening, more and more families will be as vulnerable to banks’ predation as black and brown families have long been.  

All of which is why the most important job in Washington may be the new consumer financial-protection watchdog created by this year’s Wall Street reform bill. 

Wall Street’s congressional representatives have worked hard to undermine the bureau. They successfully blocked an independent agency, so instead it will be housed inside the Federal Reserve, operating with its own budget. Importantly, the very regulators who signed off on the banks’ previous bad behavior will have veto power over the new watchdog’s policing efforts. So the only way it will succeed is through a strong, savvy director who has the president’s ear—someone like Elizabeth Warren, who conceived and championed the new bureau, and who the banks’ protectors have worked tirelessly to block. Early in the debate over the agency, Republicans went so far as to write an amendment designed expressly to prevent Warren from running it. 

President Obama is poised to nonetheless appoint Warren as the interim chief, avoiding an ugly confirmation battle. He’d be wise to go further still, but the move is nonetheless an overdue show of fight commensurate with the battle we’re in. 

The White House has also responded to this week’s bleak poverty report by pointing out how much bleaker it would have been without last year’s stimulus act. That’s true. As the Center on Budget Policy and Priorities pointed out, unemployment benefits kept another 3.3 million people from falling into poverty last year. When the bureau’s statisticians figure in tax credits and food stamps later this year, they’ll likely cut this week’s poverty number by a few million more. 

Of course, the White House and congressional Democrats are failing to convince voters they deserve credit for this feat because it’s like weathering a hurricane with an umbrella. There were already nearly 44 million people living in poverty when Congress parceled out the relative pennies of the 2009 stimulus. That number has certainly grown in 2010, as longterm employment has increased.  

Notably, the only people who have staved off poverty are seniors. While just about every other demographic group’s poverty rate went up last year, seniors continued a decades-long decline, dropping to the lowest level on record. Why? Social Security. Or, put more bluntly, government spending to make sure the most vulnerable among us don’t hit the bottom. 

Conversely, it’s no coincidence that poverty among single moms and children is cresting. Why? Because over the past two decades we have torn down every program we created to lift these groups up out of poverty. "As anti-poverty policies have come to depend more on paid work as the main pathway out of poverty," writes the Economic Policy Institute, in the latest analysis to point out the "lost decade" of the 2000s, "the safety net has become less effective in reducing economic hardship when the economy and job market are underperforming."  

Today’s poverty is the accumulated toll of two forces that have advanced in tandem for decades: The corporate fleecing of family wealth and the bipartisan destruction of a refuge to which those shorn families can turn. We fought a long, hard war on poverty to avoid landing in precisely this place. But the Reagan revolution ushered in a long hard war on government to undue that progress. Bill Clinton’s protestations notwithstanding, so-called moderate Democrats long ago conceded defeat in Reagan’s war. And as a consequence, government is crippled at a time when we need it most. The simple fact remains that unless someone in Washington is willing and able to gather the strength to rebuild government and ensure there’s a floor through which we will not let people fall, America will continue its downward spiral.

Cross-posted at  

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