January 9, 2014

We were warned that this was coming earlier in the week, and as expected, the GOP's "new" anti-poverty agenda -- where they have decided to put on their best face and pretend that they actually give a damn about the income disparity and poverty in America -- looks a whole lot like their old anti-poverty agenda, otherwise known as trickle-down economics.

Marco Rubio's Cure For Poverty? Subsidize Crummy Jobs, Make Massive Block Grants:

Florida Sen. Marco Rubio joined the Republican chorus declaring Lyndon Johnson's "War on Poverty" a failure Wednesday and proposed his own cures, which include subsidizing work that doesn't pay a living wage and shifting all poverty programs to the states.

Rubio, one of the lead GOP prospects for the 2016 presidential contest, unveiled his plans in a speech sponsored by the American Enterprise Institute. The talk seemed aimed at convincing people that he and his fellow Republicans do hold the concerns of the poor close to their hearts, despite what Democrats may say, and perhaps getting a jump on the kind of arguments about the "47 percent" that helped sink Mitt Romney's 2012 campaign.

The senator argued that poverty remains a major problem in America and cited numerous statistics, including the country's soaring income inequality since 1980. He said those numbers show that LBJ's "big government" philosophy simply doesn't work and that America needs to be more concerned about "opportunity inequality."

"These economic, social, cultural and educational causes of opportunity inequality are complex. And they will not be solved by continuing with the same stale Washington ideas," Rubio said. "Five decades and trillions of dollars after President Johnson waged his War on Poverty, the results of this big-government approach are in."

But Rubio insisted that pursuing Democratic goals such as raising the minimum wage was not part of the solution.

"Our current president and his liberal allies propose that we address this by spending more on these failed programs and increasing the minimum wage to $10.10," Rubio said, mocking the idea. "Really? That is their solution to what President Obama has identified as the defining issue of our time? Raising the minimum wage may poll well, but having a job that pays $10 an hour is not the American Dream."

Instead of requiring employers to pay something closer to a living wage, Rubio proposed having the government supplement the stingy pay at many companies.

"We should pursue reforms that encourage and reward work. That’s why I am developing legislation to replace the earned income tax credit with a federal wage enhancement for qualifying low-wage jobs," Rubio said. "This would allow an unemployed individual to take a job that pays, say, $18,000 a year -– which on its own is not enough to make ends meet –- but then receive a federal enhancement to make the job a more enticing alternative to collecting unemployment insurance." [...]

Some progressive economists were not impressed with Rubio's speech, suggesting that he hadn't actually thought that carefully about the problem.

"This sounds like he has no idea of the structure of programs and how they took the shape they did," said Dean Baker, co-founder of the Center for Economic and Policy Research.

"His 'wage enhancement' would run into real problems for people working multiple jobs. Does he want to subsidize wages for people earning $36,000 a year by the same amount as someone earning $18,000 a year?" Baker said in an email. "And, since it won't depend on family size, does he intend to cut his EITC [earned income tax credit] equivalent for workers with 2-3 kids? If not, then we will have to spend more, not less on this program."

"This is not close to being a serious plan to address poverty," Baker added. Read on...

Marco Rubio’s “Anti-Poverty” Agenda Would Create Two Americas:

On Tuesday, the 50th anniversary of the launch of President Lyndon Johnson’s “War on Poverty,” Sen. Marco Rubio (R-FL) gave a widely anticipated speech laying out his vision for breaking poverty’s grip on nearly 50 million Americans. [...]

Yet it also featured a generous helping of conservative boilerplate about the wonders of the free enterprise system, the failures of big government and the supposed futility of raising the minimum wage. Confusing causation with correlation, Rubio made the common claim that the decline of traditional marriage has led to a significant increase in economic insecurity.

His prescriptions also offered some shopworn rhetoric, calling for less regulation, lower taxes and lamenting “the uncertainty created by a dangerous and growing national debt.”

But he offered two proposals that will likely define the Rubio anti-poverty agenda in the years leading up to 2016, when he is expected to seek the Republican presidential nomination.

First, Rubio would replace the Earned Income Tax Credit (EITC) – which supplements the incomes of the working poor, especially those who have kids — with a “federal wage enhancement.” Rubio said his enhancement would differ from the EITC in that single people would be eligible for the same kind of subsidies families with children enjoy today, and it would be added to workers’ paychecks instead of being paid out in a lump sum at tax time.

It’s difficult to evaluate how this idea might work in the real world absent significantly more detail. But it’s worth noting that the EITC is one of the most successful – and largest — social welfare programs we have: Census Bureau data show that in 2010 it lifted more than five million Americans out of poverty. And the EITC is structured in such a way that it disproportionately helps the very poor. If Rubio’s alternative isn’t, it could take dollars from the very poor and give it to those who earn a bit more.

Rubio’s other “big idea” would turn the entire social safety net over to the states, replacing a wide array of federal social welfare programs with “flexible” block grants. “Innovations are difficult to pursue because Washington controls the money,” he said. “But I know from my time in the Florida legislature that if states were given the flexibility, they would design and pursue innovative and effective ways to help those trapped in poverty.”

There are two serious problems with this idea. First, block grants increase with inflation, regardless of what’s happening in the larger economy. In the current system, social welfare spending increases during recessions, as more people become eligible for unemployment benefits, food stamps and the like. The “counter-cyclical” nature of these programs not only provides a vital lifeline to the neediest when they need it most, it’s also an important source of stimulus. When the economy takes a dive, these programs ramp up automatically, without the need for political battles.

Second, it block grants would deepen the already significant divide between the red and blue states. When it comes to spending on health care, education and anti-poverty programs states have widely divergent priorities. These differences are ameliorated to a degree by the federal government’s involvement in our social welfare programs, assuring that every American has access to some minimal level of social services even if their states are run by the most conservative politicians.

Turning over the entire welfare state to local governments would risk making the cliché about “two Americas” a stark reality – people living in blue and red states would experience entirely different forms of government. Read on...

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