Fifty-seven years ago, a Democratic president who had a reputation as a moderate — and who had been a senator and vice president before reaching the highest office in the land — announced his administration would be waging “unconditional war on poverty in America.”
The legislation that grew out of President Lyndon B. Johnson’s declaration had no marquee program. Instead, the war on poverty was a collection of new initiatives that have stood the test of time: Medicare; Medicaid; food stamps (now known as the Supplemental Nutrition Assistance Program); aid for women, infants, and children (WIC); school breakfasts; Pell Grants; Head Start; and Section 8 housing vouchers, to name a few. It was a landmark passel of legislation that reshaped American life in the decades that followed.
With Congress’s passage of the $1.9 trillion American Rescue Plan, another Democratic president with a reputation as a moderate (and who came through the Senate and the vice presidency) is putting his stamp on American policy. The Covid-19 relief bill, which passed the US House on Wednesday afternoon and was signed into law by President Biden on Thursday, is the most far-reaching anti-poverty legislation in more than 50 years.
The American Rescue Plan sends $1,400 checks to adults and child dependents and extends bonus federal unemployment benefits through September (continuing the work done in 2020’s stimulus bills). It also increases the child tax credit for 2021, offers subsidies to help low-income people in states that didn’t expand Medicaid purchase health insurance on the ACA marketplaces, provides housing vouchers for people at risk of homelessness, and boosts the earned income tax credit (EITC) for adults without kids.
Johnson’s war on poverty has gotten a raw deal in historical memory. Ronald Reagan’s quip that “poverty won the war” remains the dominant assessment of Johnson’s efforts. (It certainly didn’t help matters that Johnson escalated US involvement in a real, catastrophic war around the same time.)
But poverty didn’t win the war. When two economists tried to construct a more accurate measure of American poverty between 1960 and 2010, they found that Johnson presided over a massive decline in poverty. In 1960, the rate of consumption poverty in the US was 30.8 percent. By 1972, it had declined to 16.4 percent. Johnson’s efforts appeared to be the main lever cutting the poverty rate nearly in half.
The effects of the American Rescue Plan won’t be quite as massive, but they’ll be in a similar ballpark. By one estimate, overall poverty will fall by a third, and child poverty by over half. Whether Biden ends up matching LBJ’s achievement depends on what he and the Democratic-controlled Congress do in the months ahead.
Biden does not have the characteristic nastiness of LBJ, but they share a lot of the same political DNA. Similar to Johnson, Biden is an arch pragmatist and institutionalist with a deep love for the Senate, who is distrusted by the leftmost flank of his coalition. And sure enough, Biden’s American Rescue Plan would be the federal government’s most significant attack on poverty since Johnson’s presidency.
Amid the celebrations, there is a caveat: If that attack begins and ends with the stimulus bill, whose biggest anti-poverty measures are temporary, the legislation will offer only momentary improvements. If, however, Biden and his allies in Congress can build on this week’s remarkable accomplishment, they have a chance to make as enduring a dent on poverty as LBJ did decades ago.
The American Rescue Plan: The first campaign in Biden’s war on poverty
After years of advocacy by progressive groups and think tanks, the American Rescue Plan brings into being a robust child allowance in the US — something many wealthy countries already have.
The Biden child allowance converts the existing child tax credit into a near-universal benefit of up to $3,600 annually for kids 5 and younger and $3,000 annually for those ages 6 to 17, a portion of which will be paid out monthly from July through December. The expanded credit is not only more generous — it currently maxes out at $2,000 per kid under 17 — but also includes in its scope poor families that don’t qualify for the full $2,000 per year under the current rules. For the first time ever, families with no taxable earnings will be able to claim the full credit.
“Though framed in technocratic terms as an expansion of an existing tax credit, it is essentially a guaranteed income for families with children, akin to children’s allowances that are common in other rich countries,” New York Times reporter Jason DeParle, the de facto dean of poverty journalism in America, wrote about the plan.
According to an analysis by the Center on Budget and Policy Priorities, a center-left think tank, the child allowance on its own will cut child poverty by about 40 percent in 2021.
There’s a catch: The expanded credit lasts only one year under Biden’s stimulus bill. A competing proposal from Sen. Mitt Romney (R-UT) would make it permanent, though it would also cut other social programs. That said, Biden has signaled his own support for making the changes permanent going forward.
But the child tax credit is hardly the only anti-poverty policy in the stimulus package.
The $1,400 stimulus checks — perhaps the most visible of the provisions in the relief bill — will slash poverty rates further. Then there’s the one-year expansion of the EITC that triples the benefit for low-income workers without kids, plus $300-per-week bonus unemployment payments until September 6.
Lesser-known provisions also largely benefit the poor: huge expansions of Obamacare subsidies (so uninsured people in non-Medicaid-expansion states can better afford insurance on the marketplace), expanded food stamp benefits, emergency rental assistance and expanded Section 8 housing vouchers, an expanded child and dependent care credit, and aid to help shore up states’ welfare programs.
It’s a lot. An Urban Institute analysis of the final stimulus package found that the poverty rate among children in 2021 will fall by more than 52 percent due to the stimulus, with the $1,400 checks and child tax credit doing most of the work. Overall poverty, among adults and children alike, would fall by more than one-third, lifting 16 million people out of poverty. That’s as large as, or larger than, the poverty reduction in the March 2020 CARES Act (a reduction that was short-lived, as President Trump and the Republican-controlled Senate allowed its key provisions to expire).
An evaluation of Biden’s proposal by the Center on Poverty and Social Policy at Columbia in January (which was largely similar to the one Congress ultimately passed) came to similar estimates: Overall poverty falls by a third, child poverty is cut in half.
What the next phase of the second war on poverty should look like
The second war on poverty will, we can be reasonably sure, make life a lot easier for millions of families living in or near poverty in the year 2021.
But a durable fight against poverty requires durable programs. And if Biden decides to get ambitious, he could wind up slashing poverty in half — for good.
Biden has already suggested that the increased child tax credit is here to stay. That’s no surprise: The American Family Act, where the idea originated, is explicitly supported by 160 House Democrats and, as of last Congress, had the backing of 38 Senate Democrats, too (one of whom is now Vice President Kamala Harris). The expanded EITC and child and dependent care credit are likely candidates to be made permanent as well. The latter is based on a (permanent) proposal from Biden’s presidential campaign, and an expanded EITC for childless adults is a longstanding Democratic priority going back to the Obama years.
But Biden could do more.
He could go beyond the rental assistance provisions in the stimulus bill and revive his campaign proposal to make housing an entitlement.
The Housing Choice Voucher program, colloquially known as “Section 8” because it’s authorized by Section 8 of the US Housing Act, is the main way the federal government subsidizes rent for low-income people. But a lot fewer people receive benefits from the program than are eligible. To qualify, households must be considered “low income,” defined as earning less than 80 percent of the local median income, and only about a quarter of eligible people actually receive benefits.
That’s because housing vouchers are not an entitlement program, but a discretionary one; while food stamps and Medicaid go to everyone who’s eligible, housing vouchers are administered by local housing authorities that receive money from the federal government. When they run out of money, those housing authorities stop adding new beneficiaries and set up waiting lists that recipients typically stay on for years.
Demand is so high that most authorities have closed their waitlists and aren’t adding newly needy households. That’s not the only limitation of the program — many landlords also discriminate against housing voucher beneficiaries — but it’s by far the biggest one, and it keeps the voucher program from being reliable for most low-income people.
Biden, building on ideas from low-income housing groups and academics such as Princeton’s Matthew Desmond, has proposed making housing vouchers an entitlement, meaning the federal government would fund the program adequately so that all eligible people get assistance. As Matt Yglesias previously explained for Vox, we should expect this to lead to declines in housing instability, food insecurity, and domestic violence. Multiple randomized studies have found that housing vouchers are an effective way to reduce homelessness. In one experiment, voucher receipt reduced homelessness among low-income participants by about 75 percent.
Biden could also go one step further with his EITC expansion plan.
During her presidential bid, Harris touted a plan called the LIFT the Middle Class Act. The LIFT Act would expand the EITC by adding a new benefit for low-income people who work, which phases in dollar for dollar.
If you’re a single person and make $1,000 a year, you get an additional $1,000 from the LIFT Act. If you make $2,000, you get another $2,000. The payments max out at $3,000 a year for individuals and $6,000 a year for couples. The phaseout is much milder, with middle- and upper-middle-income families and individuals losing only 15 cents for every $1 their income grows after the phaseout starts (at $30,000 for individuals without kids, $60,000 for married couples, and $80,000 for single people with kids).
There are a few improvements one might want to make to the LIFT Act. Rep. Rashida Tlaib (D-MI) has proposed a variant called the Building Our Opportunities to Survive and Thrive (BOOST) Act, which is mostly identical but does not phase in with income. A single person with $0 in earnings would get the annual $3,000, and it would still phase out for high earners. Though Tlaib’s proposal would cost more and eliminate any work-incentive effects of the EITC (insofar as they exist), it would also do more to reduce poverty.
The LIFT Act could also be restructured to reform, rather than exist on top of, the EITC. Under Harris’s plan, workers would have to file for both, which could increase complexity, especially since the EITC depends on the number of kids one has, while the LIFT Act doesn’t.
But assuming Biden does not want to go as far as, say, Tlaib in embracing a basic income for all American adults, the LIFT Act is the natural working-age complement to a child allowance, supporting families with and without children with a massive work supplement.
Put the LIFT Act, child allowance, and Section 8 together, and you have an incredibly ambitious permanent poverty alleviation agenda. When I asked Columbia’s Center on Poverty and Social Policy to model this mix of proposals last year, it estimated that such a suite of proposals would lower the adult poverty rate from 12.7 percent to 6.5 percent, nearly a 50 percent reduction. That’s 20.2 million fewer people in poverty. Child poverty would fall by three-quarters. It would be a dramatic, overnight transformation of the state of hardship in America: There would suddenly be a whole lot fewer people enduring a whole lot less material suffering.
The Biden administration has not, to be clear, endorsed all of these policies as permanent measures. The campaign’s Section 8 idea has seemingly been forgotten, and Biden has never endorsed the LIFT Act, even after Harris joined the ticket.
But here’s the thing: It’s so close to endorsing this agenda, or one very much like it. The expanded EITC in Biden’s stimulus bill is basically a shrunken-down version of the LIFT Act. Same for the expanded Section 8 benefits for people at risk of homelessness: You can interpret that as a trial run for a much more ambitious expansion of Section 8. All of these are tax and spending programs that should be easily passable under budget reconciliation with 50 Democratic votes.
Biden has begun a second war on poverty — and he has a short window in which to keep waging it. The coming year will show just how far his administration can go in building on the landmark American Rescue Plan.