Reagan and the Poor
To the Editor:
Michael Novak’s article, “The Rich, the Poor & the Reagan Administration” [August], is perhaps the finest piece on politics and the budget that I have had the pleasure of reading since coming to Congress.
Of the numerous reports and analyses that cross my desk every day, Mr. Novak’s article impressed me because of its careful and objective attention to the facts. As one involved in the newspaper publishing business throughout my life, I appreciate Mr. Novak’s efforts in writing such an insightful piece.
I have wrestled for quite some time over this whole issue of “fairness” and come to the conclusion that there is no one word in the English language that is subject to more interpretation than the word “fair.”
[Congressman] Denny Smith
House of Representatives
Washington, D. C.
To the Editor:
Michael Novak’s rebuttal of the Left’s mean-spirited depiction of the Reagan administration as a heartless enemy of the poor was long in coming, though worth the wait. But Mr. Novak touches upon two areas of the federal budget too lightly: entitlement programs and defense. Each of these deserves far greater scrutiny.
Mr. Novak himself falls prey to the liberal-Left’s characterization of Social Security and Medicare as “fundamental welfare programs.” Although the original purpose of Social Security was to provide assurance that the elderly would avoid destitution, today the system is expected to do much more. It has become a pension fund from which virtually all “senior” citizens draw, regardless of financial need. And, for the most part, today’s beneficiaries are members of the same middle class that enjoys Medicare benefits.
Social Security and Medicare are just the more salient of the many federal entitlement programs which have continued to gallop out of control. Over 50 percent of all federal spending consists of benefits to individuals. For two-thirds of those benefits, the financial need of the recipient is not a factor. In addition, one out of every three Americans receives some form of non-cash federal benefit. These various entitlement programs amount to what Peter G. Peterson has called middle-class welfare. Examples abound.
Item: Pensions for retired federal employees are irresponsibly generous. Replacement income for government employees averages 50 percent higher than in the private sector. Over 40 percent of male civil-service workers retire between the ages of fifty-five and fifty-nine, compared with only 6 percent in private industry. With civilian and military pensions costing over $35 billion in fiscal year 1983, this profligacy is reaching scandalous proportions.
Item: The Veterans Administration’s $10-billion-dollar health-care delivery system is another entitlement program out of financial control, now that it provides free medical care to veterans sixty-five years of age and older, whether or not their illness is service-related. This select-beneficiary population is about to double in size, as World War II veterans swell the ranks of the “entitled.” At this point, it is an even bet as to which will be financially overwhelmed first, Medicare or the VA medical system.
Item: Between 1970 and 1980, the disability caseload increased by 75 percent and its payload by 500 percent, although rates of sickness and injury did not change significantly. The cost of living merely doubled while the dollar value of disability benefits tripled. The proportion of men who are not working doubled since 1953. In the fifty-five to sixty-four age group, more than one in four men no longer work. They withdrew from the labor force in increased proportion as it became more lucrative not to work.
Federal subsidies for the middle class can also be found in the most unlikely guise. One example with which I am personally acquainted is federal aid to poor . . . urban areas. It seems that the eligibility criteria are such that Great Neck, New York, an affluent (and politically liberal) community on Long Island’s north shore, has received, in fiscal years 1982 and 1983, federal urban aid to permit the red-bricking of sidewalks outside the village’s more fashionable stores and boutiques, Local liberals rationalized that the village was entitled to the subsidy and, besides, if Great Neck did not take the money, someone else would.
The principal problem is that our political leaders are afraid to level with their middle-class constituents. Conventional wisdom says that a politician who is thought to oppose middle-class entitlements will suffer defeat at the polls.
Unfortunately, President Reagan accepted this political thinking when he declared early in his term that the nation’s largest entitlement programs (i.e., those serving the middle class) would be exempt from serious cost-containment measures. One result has been that the burden of budget restraint fell mainly on welfare programs that focus on the poor or near poor, a fact that has made the administration vulnerable to the charge of callousness. Of greater import, the failure to attack all entitlement programs is assuring astronomical budget deficits.
The Left, however, seized the opportunity to appeal to the middle class through scare tactics (e.g., Reagan was going to “slash” Social Security benefits) and by establishing reduced defense spending as the alternative to limiting entitlement benefits.
Mr. Novak correctly points out that President Reagan’s rearmament program will consume less of the nation’s GNP than defense costs did in the early 60’s. More importantly, the current increase in military spending is essential to reverse the gross deterioration of U.S. defenses which occurred in the 70’s as a result of a steady decline in real-dollar funding. Underfunding adversely affected all areas of the military at a time when the Soviet Union was engaging in a breathtaking military build-up.
In today’s debate, the Left successfully misrepresents the issues, claiming that increased defense spending is made possible by cuts in social-welfare programs. In fact, if the military budget were not increased by a single dime next year, the projected federal deficit would still exceed $150 billion.
Perhaps it is too much to expect that Congress will temper runaway entitlement programs by controlling expenditures. Only Ronald Reagan stands in the way of increased taxes—which he correctly understands would be a sure-fire way to replace economic recovery with economic stagnation. Nevertheless, it is one thing to veto congressional tax increases, it is quite another to make Congress appropriate the funds necessary for rearmament.
Unless President Reagan dispels the false link between defense and social-welfare spending, it may not be possible to sustain the political support essential to a long-term U.S. military build-up. That is why it is crucial that the President tackle entitlement programs head-on. There simply is no other realistic choice.
Great Neck, New York
To the Editor:
I would like to reply to the article by Michael Novak defending the “fairness” of the economic policies of the Reagan administration.
The believers in the Ronald Reagan brand of government are decrying the findings of a recent Gallup poll, whereby 82 percent of the American people hold that President Reagan’s domestic programs “help the rich”; 75 percent hold they “hurt the poor.” To this Mr. Novak and others answer that reality is different from perception; that the perception, or misperception in their view, of the Reagan administration’s domestic programs is the product of an overzealous, liberal-biased media. Thus the Reagan partisans do not so much dispute the accuracy of the poll as the correctness of the public’s thinking. If the public were presented with a full dose of Reagan’s truths, it would think better of his policies.
Whatever the percentages of those Americans who regard Reagan’s policies and programs as hurting the poor, there can be no doubt that the poor have, in fact, been targeted for cutbacks while the wealthy have been the beneficiaries of largesse from the preferential tax and economic policies of our government. Indeed, “restructuring the national debt,” reducing “costly” subsidy and social programs for the poor while “reinvigorating” the economy through changes in the tax code and “incentives” for businesses was a stated, open agenda of Reaganomics. And the Reagan budgets realized a major reduction in the welfare state, including cuts in food stamps, job training, legal services, aid to public education, financial aid for students in college, health care for the poor, and funding to families with dependent children. This assault on social programs was executed at a time when the neoconservative movement was in full swing, urging less government regulation of business and less activism on the part of the federal government in terms of civil-rights enforcement.
The picture painted by Reagan supporters in the privileged classes was that the federal government’s promoting racial justice and the general welfare of the nation had created a rising tide of dependency and mediocrity and had stunted the individualistic enterprises of the “best and brightest” capitalists. “Free enterprise” and government support of business, they suggested, would remedy inflationary cycles and curb low productivity on the part of workers. . . .
Today, President Reagan, the former labor leader, the partisan of the working man, former Democrat and modern-day Horatio Alger, personifies and is the chief representative of a clique which engages in double-talk about poverty, race, and class; which speaks patriotically about the “sacrifice” every hard-working American owes to his nation as its members reap the benefits of mammoth profits and personal wealth left virtually intact by means of tax shelters and tax-avoidance schemes made possible by Congress and the President.
While Jimmy Carter made a symbolic effort to appear like the common man, donning, on occasion, sweaters and trimming some of the “perks” which accompany the Presidency, Reagan has wined, dined, and lived grandiosely, mostly not at the expense of his own pocket-book but at the expense of the taxpayers. Both the poor and the taxpayers are substituting chicken for hamburger at their dinner tables while at the White House the prime ribs are being replaced by salmon with mousse of sole. This is a celebration of wealth and splendor within the same federal bureaucracy which candidate Reagan promised to control. The bureaucracy in turn successfully hides an outrageous squandering of taxpayers’ monies. According to the knowledgeable columnist Jack Anderson, “no complete tabulation exists of presidential spending. Any extravagances are kept out of sight in dark bureaucratic corners. . . .”
Curious how simple and feasible it is, though, for these same federal bureaucrats to propose rules and regulations for counting the pieces of furniture and TV sets in a poor family’s household against a welfare payment or other allowance provided for subsistence.
The Reagan administration’s record on domestic programs is a dismal one precisely because it is flawed by cynicism and lined with hypocrisy. Assuming, as we must, that the aforementioned Gallup poll was a sampling of a cross-section of the American people concerning their opinions about the “fairness” of Reagan’s policies, the results understate rather than skew the problem. This is because the direct targets and victims of the Reagan cuts, and the people who are traditionally underrepresented, if included at all, have not yet been heard from. These invisible persons include the unemployed, the discouraged workers, the youth, the students, the elderly, the infirm, the language minorities, the blacks, the Hispanics, and women, all of whom are now seething, and registering to vote, and acting as a coalition of concerned humanity. Also, increasingly among their ranks are to be found persons from the intelligentsia and those who, though privileged, are imbued with the egalitarian spirit.
People are again marching by the hundreds of thousands, organizing and engaging in the politics of self-preservation. They are reclaiming their social consciousness from mutually-shared pain.
This is a growing movement which the media cannot ignore. It is news. While there is still plenty of hype in the press about how Reaganomics is “working” (the President says it’s working because “they don’t call it ‘Reaganomics’ any more”), TV cameras are spanning the American landscape and rediscovering poverty, blight, and hunger. Last Thanksgiving and Christmas the soup kitchens were open and serving meals to once-secure families as well as to the homeless. People were falling smack through President Reagan’s “safety net.” Reaganomics was not, and is not, working to meet the urgent crisis of teenage parents, battered wives and husbands, abused children, hungry senior citizens, discouraged workers, illiterate adults, and drop-out youth. What federal commission will propose the “political” solution to this malformation of discontent?
If anything is true about this savage “discovery” by television cameras, it is that the media were a little late catching up with the analyses, warnings, and findings of reports from civil-rights and public-interest groups. The media were too identified with a national mood of giving the President’s policies a chance, and this ignored the budget alternatives offered by the NAACP and the Congressional Black Caucus and others, perhaps because these budgets represented, in some news-manager’s mind, strident, passé liberalism. Both houses of Congress accommodated the President’s national economic recovery plan. Some in Congress chastised it as a clone of supply-side economics, but, except for the shouting from the few liberals and minorities, the Reagan legislative railroad ran free. Not even Tip O’Neill dared uncork the Humphrey-Hawkins full-employment measure from its bottle as a gesture of a gasping plea for sanity from the loyal opposition. “Realism” was the order of the day.
The “fairness” issue is now surfacing because, once again, disruptive protest and unprecedented turnouts of minority voters are taking aim at Reaganism. The election returns of 1982 are causing some politicians to reconsider their endorsement of the Reagan formula. Their constituents were sending them a message. The tide, as poll-takers see it, is turning. The ideological debate about the role of the federal government is not one-sided as before.
The supply-side partisans, however, have not given up. They point to sliding interest rates and declining unemployment statistics to rehabilitate Ronald Reagan and prop him up to run for another four-year term. But as Vice President George Bush discovered when he spoke at the NAACP convention last July to a chorus of boos, the message that economic recovery is around the corner is not being bought by blacks. As bad as unemployment has been for whites under Reagan, it was never as bad or as chronic and structural as the unemployment crisis of black Americans. And while unemployment for whites has diminished somewhat, unemployment for blacks is dangerously high, and for black youth it is skyrocketing. The racial gap persists. The rising economic tide did not lift all boats.
There is, moreover, reason to be skeptical of the slight decrease in national unemployment statistics when one considers the relationship of poverty data to the economic health of the nation. The national poverty rate rose in 1982 to 15 percent, the highest in seventeen years. That translates into some 34.4 million people officially counted as poor. Responding to the increased poverty rates, the White House notes that food stamps, public-housing subsidies, Medicaid health benefits, and Medicare are not counted as income and, therefore, the poverty rate is overstated. One might say in answer that, had these programs been funded below the current levels of cutbacks, then under an unfettered Reagan program of austerity and “New Federalism,” the numbers of officially-defined poor would be ever so much larger.
It is not surprising that Reagan is annoyed by these most recent revelations of hunger in America; just as his administration’s record on civil-rights enforcement is an embarrassment, so are these poverty figures. The initiatives undertaken by the administration in the name of national recovery and breaking the cycle of “welfare dependency” have not created jobs for the hard-core poor, or otherwise put “idle” hands to productive work. Reagan has no jobs program to reach the millions and millions who want to work. These people think it unfair for Reagan to point to employment ads in the newspapers advertising positions which are available only to the highly-skilled while their President ignores the lines of thousands which form whenever real, but scarce, openings occur in construction, hotel services, carpentry, sanitation, police, and municipal-service jobs. . . .
The situation of disproportionate poverty among blacks cannot be ignored. . . . The fact is the ghettos and the gilded suburbs exist side by side as a function and symbol of institutionalized economic racism. As psychologist Kenneth Clark has indicated:
The child born in the ghetto is more likely to come into a world of broken homes and illegitimacy; and this family and social instability is conducive to delinquency, drug addiction, and criminal violence. Neither instability nor crime can be controlled by police vigilance or by reliance on the alleged deterring forces of legal punishment, for the individual crimes are to be understood more as symptoms of the contagious sickness of the community itself than as a result of inherent criminal or deliberate viciousness [emphasis added].
Plainly, ghettos take on psychological as well as physical properties, and the social-caste-like inequities between poor and rich enclaves serve to frustrate equal enjoyment of opportunity. This racial and class dimension of American society makes a mockery of the civil-rights laws which were enacted to free individuals of the burdens of racism. Present realities are that whites’ fears concerning property values, and their untoward anxieties respecting competition in the workplace (which is rationalized by a myopic, self-perpetuating definition of “merit”), make it extremely difficult for individual efforts alone to restructure opportunities to decrease tensions and conflicts between the races. . . .
Conservatives like Mr. Novak are quick to note that despite huge expenditures by government, poverty seems to be growing. Actually, with the advent of the Great Society programs, rates of poverty had started to come down and poor people’s sense of hope in utilizing newly available resources increased their expectations of better horizons and brighter futures. Class-action lawsuits filed by legal-service attorneys further expanded both the vision and boundaries of the fight against poverty in America. But the Reagan era dashed those hopes, and his Justice Department has actively attempted to restrict the pleadings and scope of remedies to scandalous constitutional violations. This trend on the part of the administration to pull back on civil-rights enforcement and “rethink” traditional approaches in equity law raises serious questions about the ability to secure justice in a democratic society. Every person deserves the equal protection of this nation’s laws, and certainly the burgeoning ranks of the poor are owed remedies in law commensurate with the impact of the illegal conduct perpetrated against them by private actors and public agencies.
Unfortunately, the American people have been only fleetingly concerned with the causes and effects of poverty. Their spirit of generosity has not yet extended to understanding and resolving the fundamental dimensions of poverty in America. To do so they would have to think more honestly about privilege and class in America. They would have to transcend the self-and other limiting prejudices concerning, for example, class, race, and merit, and at the least alleviate the greed and inequities which have rent trust in our destiny as a nation by eroding and blocking the nation’s commitment to human rights.
Pronouncements of support for equal opportunity are mere statements. The Equal Protection clause of the Fourteenth Amendment to the U.S. Constitution was meant to accomplish much more than the establishment of a broad public policy. It empowered the Congress to take necessary action to attack the dual society. If Congress and the American people undertook that responsibility, they could turn promises into guarantees, and help foster the integration of the economic side of opportunity with the civil-rights perspective of fairness.
Director, Office of Research, Policy, and Plans
National Association for the Advancement of Colored People
Brooklyn Heights, New York
To the Editor:
Michael Novak’s article contains serious errors of fact. For example, contrary to what the article says:
- Medicaid does not cover all of the poor. Rather, it covers only persons who are aged, disabled, blind, or members of families with dependent children. Able-bodied single individuals, such as middle-aged divorced women, are ineligible for Medicaid.
- The elderly poor are not all receiving Social Security and are not all covered by Medicare. Benefits under both of these programs must be earned with sufficient quarters of covered work, with the result that approximately 6 percent of the current elderly population is ineligible. Some of these individuals are poor.
- Social Security, Medicare, and Medicaid have not “virtually ended” poverty among the elderly. Recent Bureau of Census statistics on poverty in 1982 show that approximately 3,750,000 individuals aged sixty-five and over had cash incomes below the poverty line—which was $4,626 for those living alone, and $5,836 for those living with another person. While there was a marginal improvement from 1981—about 100,000 elderly persons moved above the poverty line during the year—the number of persons below is still very significant. Moreover, it is not surprising that the three listed programs did not solve the problem. The two medical programs help only the sick (the sicker you are, the more benefits you get, but this does not make you richer) and the average Social Security old-age insurance benefit for an unmarried person approximates the poverty line. This means about half the retirees receive Social Security benefits below the poverty line.
The material in the article is slanted to a point beyond that which is acceptable, even in polemical writing. Some examples:
- The list of social programs given on page 30 is not complete, and no explanation is given for the omissions. Not mentioned, for example, is the public-employment program which at its peak (1979) provided over $5.5 billion for employing the poor; it has been terminated by the current administration. What else has been omitted from the list, and have these other programs been cut? Head Start? Family planning? Perhaps other very major programs. Because of these omissions, the table is not a fair guide to the changes made by the Reagan administration.
- Mr. Novak disregards the significance of the fact that some programs are means-tested, such as food stamps or Medicaid, and others are payable regardless of income, such as Social Security, Medicare, and unemployment insurance. The significance is that many beneficiaries of the three social-insurance programs, especially Social Security and Medicare, are not poor.
- Although the author notes that the increase in total outlay for social programs, such as unemployment insurance and food stamps, is at least partially attributable to increased unemployment, he does not make any effort to correct for that fact. This he could easily have done by discussing either the number of individual beneficiaries or the amount of money expended for each beneficiary. (As it is, his use of data reminds one of the old saw: “God must love the poor, He created so many of them.”)
- The article does not say what housing programs have been greatly expanded or when the funds for these programs were obligated. By omitting these important facts, the article encourages the reader to assume that all the money involved has been newly obligated for the benefit of the poor. In fact, it may include such items as mortgage credit for the middle class or community-development funds, some of which are used to rehabilitate blighted downtown areas of big cities. Moreover, a portion of the projects may have been undertaken in prior administrations but still appear in the current budget because erecting or renovating a building takes a long time.
- The text that follows the table regarding taxes on page 28 does not fit the table. In trying to read the two together, I thought of grocery stores that list prices in exotic off-weights, so that the shopper needs a calculator to compare the price of one product to another.
The policy analysis that accompanies this flawed presentation (and the above does not purport to be an exhaustive critique) is similarly deficient.
- Mr. Novak does not acknowledge the relationship between unemployment and inflation, although most economists think that the sharp increase in the former was the principal reason for the decrease in the latter. One may think this trade-off worthwhile, but a serious discussion should at least note or attempt to disprove its existence.
- Mr. Novak seems persuaded that the changes in the tax law have persuaded the rich to invest more productively. At this stage in the process, he should be able to cite some evidence that this is factually true, or at least explain why he disagrees with the substantial doubts of many other observers who say the evidence is to the contrary.
Because of these many deficiencies (and I suspect there are others), I cannot accept this article as a guide to an analysis of the Reagan program. . . .
Edith U. Fierst
Washington, D. C.
To the Editor:
In his article Michael Novak ridicules the idea of redistribution as a means of reducing inequality and poverty in America. He claims that the notion of “taking from the rich and giving to the poor” is a “dreamy ideal [that] can never be fulfilled literally, for the simple mathematical reason that there are too few rich and that, even in the aggregate, they have too little income.”
Mr. Novak then proceeds to do some deep statistical dreaming of his own. Citing Internal Revenue Service tables, he points out that in 1980 there were only 117,000 Americans with gross adjusted incomes of $200,000 a year or more. He then misleadingly states that this group’s “total income came to $46 billion on which they paid $20 billion (or 43 percent) in income taxes.”
Now, as a man of Mr. Novak’s substantial means undoubtedly knows, a person’s total income bears little relation in reality to his gross adjusted income, the divergence between the two growing as income increases.
Using real-world concepts of total income (including all capital gains, rents, interest, and dividends), those 117,000 had a total income of at least $66 billion (about $560,000 per family). After taking advantage of the generous loopholes provided for them by the Congress, they had a gross adjusted income of $46 billion (about $400,000 per family) on which they paid $20 billion in income taxes (about 30 percent of real total income).
Leaving aside for the moment Mr. Novak’s dubious practice of defining the rich as those with incomes greater than $200,000 a year at a time when the average family of four was living on less than $25,000 per year and not even 5 percent of all American households had incomes greater than $60,000 per year, let us proceed to do some of the “simple arithmetic” for which Mr. Novak expresses such fondness.
In 1980 there were 29 million poor people in the United States. An income-transfer program designed to eliminate poverty only among those not expected to work—i.e., over sixty-five (3.7 million), children (6 million), and the mothers of those children (4.1 million)—would have cost about $13 billion. This sum could have been generated by increasing the real effective tax rate on the super-rich from 30 to 50 percent, leaving the average millionaire with a post-tax income of $280,000 a year.
But why accept Mr. Novak’s definition of the rich as those households with average incomes in excess of $400,000 or $500,000 a year?
If the rich are defined as the top 5 percent of all households, then in 1980 their average personal incomes would have been over $81,000 a year, at a time when the median money income of all households was only about $18,000 a year, and the average income of poor families was less $5,000 per year.
In order to generate the extra $13 billion needed to eliminate poverty among the elderly and female-headed households in that year, it would have been necessary to increase the effective federal income-tax rate on the richest 5 percent of households from about 22 percent to about 26 percent; hardly a confiscatory level.
Let’s cut the statistical double-talk and admit to ourselves that poverty in America is the result of a maldistribution of jobs, wealth, and income, a stark reality that “dreamy idealists” like Mr. Novak deliberately refuse to face.
Timothy R. Cappelli
West Chester, Pennsylvania
Michael Novak writes:
I am grateful for the responses of Congressman Smith and David Schimel. The latter’s emphasis on the amount of social-welfare spending now going to those who are by no means poor—for brick sidewalks outside Great Neck’s boutiques, to cite his vivid example—illustrates a major conceptual problem. Imagine one giant welfare state in Europe offering benefits to every European jurisdiction, village, and individual from Sweden to Italy, Turkey to Ireland. How could it ever draw up criteria clear enough to meet each separate case fairly and in line with the central government’s stated intention? This is the continental-sized task U.S. federal welfare must fulfill. No wonder that the Office of Management and Budget estimates that even in the programs “targeted” for the poor, forty-two cents of every dollar reaches recipients above the poverty level. Thus the problem of social welfare lies in its design rather than in the amounts actually being spent.
The letter of Michael Meyers answers itself. The poor and the unemployed are not, as he suggests in one place, “invisible,” but as he insists in many other places tremendously “visible”—and have been the subject of magazine covers and unremittingly frequent television treatments not only during Reagan’s first year (before “Reaganomics” went into effect) but for two decades now. In his budget message for 1962, President Kennedy urged larger temporary welfare expenditures to help strengthen families and to move persons from dependency to independence, thus effectuating lower social-welfare budgets in the future: “a hand, not a handout,” was the slogan. Now Mr. Meyers, failing to consider where all the money spent to help the poor since 1962 has gone, wants not a hand but a “guarantee.” Families have not been strengthened; dependency has not been diminished; clearly stated intentions have resulted in diametrically opposite effects.
Just after my article appeared, the Census Bureau reported that in 1982 the poor had grown to 34.4 million. The official monetary measure of poverty had climbed to $9,862 for a non-farm family of four, not counting any in-kind benefits. In addition, two separate testimonies before the Congress set the “poverty shortfall”—the difference between the income the poor already receive and the amount necessary to bring them over the poverty line—at $43-$45 billion. This “poverty shortfall” amounts to far less than is currently being spent on “targeted” poverty programs. To repeat, the design seems faulty.
One reason for this, of course, is the universal but tacit recognition that poverty is not a merely monetary problem, despite the Census Bureau definition. There is something about poverty which exceeds monetary calculations.
Will Mr. Meyers’s hostile feelings be assuaged, then, if a Democratic administration comes to power in 1984? He does not argue that the situation of the poor was better in 1967-80. One senses his frustration. Part of it arises from not examining his own premises. Is not the NAACP as responsible as the rest of us for not holding welfare programs to their original purpose: stronger families, less dependency?
Edith U. Fierst demonstrates vividly how arcane the argument must become to support the charge that the Reagan programs are unfair. She ignores the forest, about which she tacitly concedes that I was correct, to examine individual trees. On most of the detail she raises, she confirms my argument. Using 1982 figures, for example, she says that 3.75 million individuals aged sixty-five and over have cash incomes below the poverty line, while (using the latest figures available when I wrote, for 1981), I wrote “about 3 million.” She has the decency to note that between 1981 and 1982, the number of the elderly in poverty was reduced by 100,000.
That this number is “significant,” as she insists, is surely true; these people should not be overlooked. It is for them that non-cash benefits like food stamps, housing and energy assistance, and many other programs have been established; for them, too, that Medicare is held in reserve when they are ill. There is no need to suggest that the American public is hardhearted. In 1962, a near-majority of the poor were elderly; today, just over 10 percent. This is important progress. As Mrs. Fierst says, only 6 percent of the elderly are not covered by Social Security and Medicare, a percentage I did not know of when I wrote in a footnote that “all” were covered, and a correction for which I am grateful.
I also erred in saying, in the same footnote, that Medicaid covers “all of the poor without exception.” In covering the aged, disabled, blind, and members of families with dependent children, it covers only “most” of the poor, not the relatively few able-bodied of working age and without dependents. But even many of those are covered as, for example, a young male victim of a knife assault. Different states cover Medicaid differently.
Mrs. Fierst asks, too, for a complete list of social programs, not simply the short list of major programs I selected, and asks for detailed differentiation, for example, between the obligated and the actually expended funds in housing programs. Mrs. Fierst seems to concede that it would be very hard to show a pattern different from the one I drew and, therefore, throws the burden back on me. It is hers. The welfare expenditures I listed total $325 billion; there is not much else. The charges of unfairness are broad and should not require fine detective work to sustain.
The difference between obligating funds for housing programs and actually expending them in a given year is important. But for a Congress trying to cut spending obligated in a less responsible era, cuts in future obligations—a large part of which go to middle-class (if not upper-class) building projects—must seem a socially useful target. I am willing to concede that “housing programs” might be omitted from my list, and that the subject is complex enough for an article impenetrable except to experts. But please note how outlays have gone up, not down, from 1980 to 1983. The pattern, while representative, is shocking to one who believes the broad-brush charge of “cuts.”
The difference between the table on taxes and the text following it hinges on one point. The median tax return occurred at an income of approximately $12,000 per year, rather than at the levels ($10,000 and $15,000) shown in the IRS group display. I used the median in the text, but did not insert it in the IRS table, since the IRS did not. Mrs. Fierst seems to have figured it out without difficulty.
Finally, Mrs. Fierst surely does not want a disquisition from a theologian on the relation between unemployment and inflation. Still, even in 1980 common sense did suggest that the Carter administration interest rates of 22 percent were bound to bring heavy unemployment for a year or more. Further, there was little promise that Carter policies, even with high unemployment, would bring down inflation. Indeed, not even the Reagan administration believed in 1981 that inflation would come down as it has in 1982 and 1983. As for productive investment by the rich, somebody has been investing in the stock market since August 1982.
My argument that “the Reagan administration has neither helped the rich nor hurt the poor in the blatant way that has been charged by its critics” is not budged by Timothy R. Cappelli’s letter, either. If he wishes to define as “rich” everyone above $60,000, let him. There are many government families making at least that much who do not think that they are rich. And there are many on the Left, perhaps including Mr. Cappelli, who when they excoriate the “rich” do not include themselves. It bears repeating that the “poverty shortfall”—the amount necessary to raise all the poor above the poverty level—was in 1982 about $45 billion. But much more than that is being spent on targeted poverty programs alone. So why hasn’t our goal already been accomplished?
There are further problems with Mr. Cappelli’s “real-world concepts of total income,” since he seems to think that capital gains, rents, interest, and dividends are not already taxed. There are also some problems with his “simple arithmetic.” But his fundamental problem is philosophical. A just society cannot possibly pay everyone the same income, since the aptitudes and efforts of individuals diverge dramatically, and since the common good is far better served, accordingly, by systematic inequalities of reward. Furthermore, no socialist society, pledged to the impossible standards of income equality, seems to have done even as good a job as ours in approximating it. It is bad theory, and doesn’t work in practice even when attempted.
The U.S. properly practices a great deal of “redistribution”—indeed, far more than would seem to be required to end the “poverty shortfall.” I am entirely in favor of uplifting the poor; clearly, though, something dreadfully inefficient and destructive inheres in the way we are currently going about it.