ow that the Republicans have solidified
their control over the presidency and both houses of Congress,
progressives might assume that the idea of helping the poor is off
the table. But it doesn't have to be this way. If Democrats are
crafty enough, they can sneak some progressive policy into the
Republican agenda by focusing on specific tax relief, military
benefits and President Bush's "ownership society" initiative.
The poor have been off the public agenda for the last two
election cycles. This is in part because the left essentially ceded
the debate on poverty in 1996, when welfare reform was enacted.
Workfare presented Democrats with the chance to say that these
"working families" deserved more. But aside from a call to raise the
minimum wage, there has been little effort to renew the discussion
about helping the bottom one-third of American households.
This is understandable in some ways. After all, how exactly does
one prevent the outsourcing of good jobs for low-skilled workers?
And how does one put more money into the hands of the poor when
welfare is dead?
To add to the challenge, any progressive agenda today would have
to be revenue-neutral, in our age of budget deficits. And more
important, it would have to be sneaked through a government
controlled by a party whose base is the top 20 percent of American
households, not the bottom one-fifth.
Harold Wilensky, the political scientist, once lamented that the
American left had not learned the lesson of Europe: allow taxation
to be more regressive to collect enough money to finance the
programs that liberals hold dear. European governments collect an
enormous amount of revenue through the value-added tax (sales tax);
their effective tax rates on lower-income workers are much higher
than America's; and they do not rely very much on property taxes
(which are the most progressive of all). In return for a more
regressive tax structure, Europeans receive a litany of social
services that are politically unthinkable in this country.
Another lesson, however, is that there is nothing particularly
American about the paradox of progressive taxation - that folks
resist progressive tax structures. The Republicans seem to have
learned this. In fact, some pundits have even argued that the
Republicans manage to stoke the populist anti-tax fire to reduce top
marginal tax rates by raising them on lower income Americans.
(Ronald Reagan's payroll tax increase provides the classic
example.)
In facing this reality, Democrats can essentially choose from two
responses. The first is the European option, for lack of a better
name: agree to a flat tax in return for more spending on health
care, child care and other services.
The other option would be to hijack the Republicans' fervor for
tax cuts, the military and the ownership of private property. Let's
start with tax cuts. From an accounting standpoint, there is no
difference between a direct transfer to the poor and a refundable
tax credit. In political terms, one is called welfare (a sure loser)
and the other tax relief (an almost certain winner).
For example, the Democrats should advocate making the child tax
credit refundable. While it has been expanded under Mr. Bush to
$1,000 a child from $600, the credit does not fully benefit poor
families who owe fewer taxes than the full credit amount. Making it
refundable changes it into a program that is no different than a
negative income tax - what McGovernites were proposing back in 1972,
while calling it tax relief. Or, if we do end up with a flat tax,
why not play a game of political chicken with Republicans by pushing
the "no-tax" income exemption as high as possible?
The same goes with the payroll tax. Why not cut the payroll tax?
The Social Security payroll tax is the biggest tax burden faced by
poor Americans; cutting it would put more money in their pockets.
Such a move would also stimulate hiring, since employers shoulder
half the burden of the tax. This plan could be kept revenue-neutral
by merely raising the amount of wages subject to the tax - now
capped at $87,900.
The worship of all things military can also be co-opted for
progressive ends. The military is now the de facto welfare state.
The armed forces and the Department of Veterans Affairs are the two
largest health care providers in the United States. The military is
also a major bankroller of higher education through the G.I. Bill.
And because of America's all-volunteer force, it is the nation's
poor that disproportionately serve. By proposing major increases in
benefits for the families of active personnel, reservists and
veterans, Democrats can use that holiest of holy grails on the right
- "our troops" - to help increase opportunities in American
society.
Finally, Democrats can turn the right's worship of wealth to
better ends by promoting asset ownership. While Mr. Bush is poised
to campaign for an "ownership society," several proposals have been
stymied in Congress to provide universal savings accounts. These
bills would provide every American, as a matter of birthright, with
a trust fund of a few thousand dollars. Meanwhile, individual
development accounts - a little-known experiment that is part of
welfare reform - have been providing matching funds for poor
people's savings in selected areas of the country. Both these
programs put wealth into the hands of the poor.
The United States is a country where - depending on how the
question is worded - 90 percent of the population defines itself as
middle class (and the top 20 percent of earners think they are among
the top 2 percent). So if the left wants to achieve economically
progressive ends, it must pursue a strategy William Julius Wilson
has called "targeting through universalism" - namely, generating
political support for programs by making them widespread (think
Social Security). Put another way, don't begrudge the middle class
family (or even the upper class one) a tax break; grin and bear it
so that the poor can have their cake too.
Dalton Conley, director of the Center for Advanced Social
Science Research at New York University, is the author, most
recently, of "The Pecking Order: Which Siblings Succeed and
Why?"
