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Robert Reich: Why Has America Rescued Our Elderly From Poverty But Not Our Children? – OpEd

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Welcome to another week of the “What will Manchin demand now?” and “Who knows what Sinema wants?” Senate melodrama. Don’t worry about the outcome. Sometime soon, certainly before the Christmas recess, a version of Biden’s Build Back Better bill (or social policy and climate bill, or whatever you’d like to call it) will be passed by the Senate and signed into law. But its price tag is likely to be less than the House has passed, and far less than Biden originally sought.

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With this in mind, I want to present you with something of a mystery that haunts whatever version of the bill is finally passed. The puzzle underlies much of the last fifty-five years of poverty policy in America. I’ll also take a stab at solving it, and I’d be interested in your thoughts as well. Here it is: Why has America chosen to dramatically reduce poverty among the nation’s elderly but not among our children?

First, a bit of nostalgia. I’m old enough to have a vivid memory of Medicare being signed into law, on July 30, 1965. I had just finished my first year of college and was visiting my two grandmothers, Minnie Reich and Frances Freshman, who lived in neighboring houses in upstate New York. Despite their proximity to one another, Frances and Minnie didn’t get on. Minnie was a great cook. Frances burned everything she put on or into a stove. Frances was a great conversationalist and extrovert. Minnie didn’t talk much. Whenever their grandchildren visited, Frances and Minnie competed over who would get the most time with them. As much as I tried for balance, I always seemed to fail.

At the time I’m referring to, both Frances and Minnie were younger than I am now. Yet both had a number of ailments everyone assumed were inevitable in people who reached their seventies — arthritic hips, aching backs, high blood pressure, and illnesses associated with incipient diabetes. Neither had health insurance, probably because insurance was hugely expensive for the elderly (more than three times what it cost younger people). Medicare remedied that. Watching television in Minnie’s small living room, the three of us saw Lyndon Johnson sign Medicare into law.

At that time, and partly due to the costs of health care, over a third of America’s elderly were impoverished. Neither Minnie nor Frances was poor but both lived on modest budgets, mostly from monthly Social Security checks.

Minnie and Frances are now long gone, but since 1965 America’s elderly have fared much better. Medicare has markedly improved our health and well-being — financing hip replacements, blood pressure medications, and much else. Social Security has been expanded. As a result, poverty rates among the elderly have shrunk to a quarter of what they were then.

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The current poverty rate among the elderly is 9 percentThat’s still too high, especially considering that our official measure of poverty understates the true level of hardship by failing to fully account for the high costs of housing.

But the current the poverty rate for children under 5 years old is 18 percentThat, if I may say so, is an utter scandal.

The rate of child poverty in America hovered around 15 percent through most of the 1980s and early 1990s but worsened after 1996 when the Clinton administration (of which I was a member) joined Republicans in Congress to end a program called “Aid to Families with Dependent Children,” by then known as “welfare.” It had been part of the Social Security Act of 1935. I thought Clinton’s decision shameful then, and still do.

The Build Back Better bill that has passed the House (now awaiting Manchin’s and Sinema’s nods) extends the year-long child tax credit in last year’s Covid bill, thereby reversing Clinton’s decision — but not by much. The extension is for only one additional year. Had the tax credit been made permanent, as was Biden’s original intent, it would have cut child poverty by half.

America’s current rate of child poverty is among the highest of all advanced nations. We do have a Children’s Health Insurance Program, but it’s not close to what other advanced nations give their children. Hell, we don’t even provide what other advanced nations offer by way of childcare. Norway spends about $30,000 per child each year on early childhood care. Finland spends $23,000. Germany, $18,000. The United States? We spend $500 per child — or 1/60th of what Norways spends on its toddlers. As it stands now, Biden’s Build Back Better bill will provide additional funding. But it’s astonishing how little the richest nation in the world has done for its kids.  

Let’s be clear: Poverty is a political choice.

So why have we chosen to reduce poverty among America’s elderly but not among America’s children? There are three dominant theories:

Because the elderly vote and children don’t. Many have suggested this, but it can’t be the reason because children have parents and grandparents who do vote.

Because of racism, in that a disproportionate percent of poor kids are children of color. This is a common explanation as well, but it also falls short because a disproportionate percent of the elderly poor are also people of color.

Because of demographics, in that the giant boomer generation is intent on keeping or expanding Social Security and Medicare. The timing doesn’t quite work, in that America was most generous to the elderly way before boomers got old. Besides, boomers have grandkids.

So what’s the answer? My guess is that we as a society were simply more generous to those in need during the 1960s and 1970s, because those were years when the middle class was expanding, and most Americans were doing better. These were the years when we created Medicare and expanded Social Security, and provided a lot of assistance to poor children through Aid to Families with Dependent Children.

But we’re not as generous now. Even though the American economy is far larger than it was then, the middle class is a smaller share of it. For the last four decades America has been dividing into well-off professionals who don’t feel any connection to the poor, and a beleaguered working class that’s easily convinced any help to the poor will cause their taxes to increase.

Hence, in 1996 even a Democratic president decided to end aid to poor kids, largely because polls showed that most Americans — including the vast majority of the working class — no longer supported welfare. Twenty-five years later — and even after the awful consequences of that decision have become apparent — a Democratic Congress has chosen not to provide permanent help to the nation’s poor kids.

In other words, I don’t think we’ve prioritized the elderly poor over poor children. The big difference is we have become far less equal as a society, which has made us less willing to remedy poverty at all.

That’s my theory. What do you think?

Robert Reich

Robert B. Reich is Chancellor's Professor of Public Policy at the University of California at Berkeley and Senior Fellow at the Blum Center for Developing Economies, and writes at robertreich.substack.com. Reich served as Secretary of Labor in the Clinton administration, for which Time Magazine named him one of the ten most effective cabinet secretaries of the twentieth century. He has written fifteen books, including the best sellers "Aftershock", "The Work of Nations," and"Beyond Outrage," and, his most recent, "The Common Good," which is available in bookstores now. He is also a founding editor of the American Prospect magazine, chairman of Common Cause, a member of the American Academy of Arts and Sciences, and co-creator of the award-winning documentary, "Inequality For All." He's co-creator of the Netflix original documentary "Saving Capitalism," which is streaming now.

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