While everyone has heard stories of someone who made it big, the U.S. economy today generates far more cases of constrained mobility and deepening inequality as a result of deregulation, erosion of the welfare state, and an ideological shift toward reducing federal and state aid to the poor while spending on middle- and high-income families has increased.
By WILLIAM ELLIOTT III
Special to The Star
For example, in Kansas we have seen income tax changes that the nonpartisan Institute on Taxation and Economic Policy estimates will cost more than $1 billion, necessitating reductions in state expenditures on priorities like public education and social services, while resulting in a tax increase on the poorest households. After state legislators cut university appropriations $66 million over the next two years, the Regents raised tuition by as much as 8 percent at some schools, further pricing low- and moderate-income students out of a college education.
These harsh economic realities, which are not confined only to our local context, threaten the viability of the American dream — psychically, as a generation questions whether they will ever enjoy their parents’ economic security; socially, as chasms between classes erode cohesion; and financially, as estimates put the cost of American poverty at more than $500 billion annually.
Effort and ability are still the heart of the American dream, but our institutions have always been its arteries, infusing each person’s effort and ability with essential sustenance. Evidence reveals that patterns of inequity are maintained in large part because public policy does not encourage the poor to build financial assets, the foundation of a capitalist society, focusing instead on mere subsistence, while considerable investments subsidize the wealth of those already advantaged. To reverse these patterns, we must undo institutional failures.
First, we address the inconsistencies and nonlogic of our bifurcated welfare system, where those depending on means-tested programs like SNAP and TANF are punished if they manage to save, while tax expenditures give incentives for saving in 529s, 401(k)s, and other vehicles for those higher earners with tax liabilities.
Second, we restore the role of higher education as a driver of equality. Recognizing it as an investment in our common future rather than a commodity to be purchased shifts costs from students and reduces heavy reliance on debt.
Our research suggests that having even very small amounts of savings for college can help students engage academically, increase enrollment and improve graduation rates. Across a generation, this shift could deliver the educational attainment needed to catalyze the rebirth of the middle class.
Third, we acknowledge that we cannot end poverty without confronting persistent racial gaps in wealth. Today, the average white household has nearly 10 times the wealth of the average black household. This divide has dramatic effects on intergenerational economic mobility, access to education and societal prosperity.
Examining the experiences of the ‘winners’ in today’s economy affirms the central importance of pursuing policies that build the economic security and stake in the future that come with asset holding. As long as those struggling financially encounter punitive welfare policies that discourage saving, expensive student loans that may make their graduation less likely and their postcollege financial health less sure we cannot say in good conscience that the American dream lives for all Americans.
There is reason to hope, though, that Americans will once again embark on a war against poverty — not accepting a defeatist attitude or what some may call a realistic attitude about our ability to end poverty and reach our destination together.
We can make poverty vanish from the wealthiest country in the world. If not here, where shall the battle against poverty be won?
William Elliott is the director of the Assets and Education Initiative at the University of Kansas School of Social Welfare, which is hosting a speaker series in 2013-2014 called “Is there an American dream for you? How Institutional Failure Perpetuates Poverty.” To submit an As I See It, send 700 words to Grace Hobson, firstname.lastname@example.org.