The total cost of the above programs would not be prohibitive. As outlined above, the cost of universal health care would not be any more than our current system. (Although it would necessitate an increase in taxes, this increase would be offset by the elimination of insurance premiums paid by employers that currently provide coverage and by individuals who must pay their own premiums.)
The exact cost of the other three programs is not known, although it would not require more than a minimal (less than 1%) increase in Federal expenditures. In 1991, the Census Bureau estimated that it would have taken an additional $37 billion to raise the incomes of
all poor families with children to the poverty line. By contrast, yearly Social Security income alone is approximately $500 billion. The tax deduction that homeowners are allowed to take for the interest they pay on their mortgages (really an income transfer program to the middle class) costs the US treasury $49 billion.
The implementation all of the above programs—which would raise the incomes of almost everyone in the country above the poverty level—could be financed by less than a 1% increase in taxes (excluding the cost-neutral transfer of health insurance payments to taxes)!
Although the
political likelihood of enacting the above programs is small, we should not confuse the issue by saying that we have "tried everything" to eliminate poverty or that "the government can't solve the problem of poverty." The government (that is, the American people acting together)
can solve the problem of poverty, and it would not be expensive.
Would not the above programs simply allow—or even encourage—people to sit back and let the government take care of them? The evidence suggests not. The backbone of the above programs is the expansion of the EITC. According to a recent report by the Center on Budget and Policy Priorities,
A series of studies … [has] consistently found that the EITC has substantial positive effects in inducing single parents to go to work. One of the most important of these studies finds that the proportion of single mothers who are in the labor force rose sharply between 1984 and 1996 and that the EITC expansions instituted during this period are responsible for more than half of this increase.36
Footnotes
34 In all probability, the urban children would have done just as well (or perhaps better) in an affluent black neighborhood, but this has not been tested.
35 Physicians for a National Health Program (PNHP) has proposed a plan very similar to McDermott's bill. The details of such a plan can be obtained from them at 332 South Michigan Suite 500, Chicago, IL 60604 or from their website at www.pnhp.org.
36 New Research Findings on the Effects of the Earned Income Tax Credit by Robert Greenstein and Isaac Shapiro, a report from the Center on Budget and Policy Priorities, 820 First St NE Suite 510, Washington, DC 20002. Their website is
www.cbpp.org, from which the entire report (along with much other useful information) can be downloaded.
