“Poverty, by America”: Author Matthew Desmond on How U.S. Punishes the Poor & Subsidizes the Wealthy
Written by GRB on 18/04/2023
This is a rush transcript. Copy may not be in its final form.
AMY GOODMAN: This is Democracy Now!, democracynow.org, The War and Peace Report. I’m Amy Goodman in New York, with Juan González in Chicago.
Republican House Speaker Kevin McCarthy has proposed increasing the debt ceiling for a year in exchange for sweeping budget cuts that would likely result in less federal money for housing, education, healthcare and the environment. McCarthy also pushed for tougher work requirements for recipients of SNAP — that’s the Supplemental Nutrition Assistance Program — and to expand domestic mining and fossil fuel production. McCarthy outlined his plan in a speech at the New York Stock Exchange on Wall Street.
SPEAKER KEVIN McCARTHY: Before we borrow another dime, we owe it to our children to save money everywhere. Our proposal will examine wasteful Washington spending and executive overreach in all forms.
AMY GOODMAN: The White House slammed Speaker McCarthy’s proposal, warning it would impose devastating cuts on families and take healthcare and food assistance away from millions of people.
This comes as a new study in the Journal of the American Medical Association, JAMA, published on Monday, found that poverty is the fourth leading cause of death in the United States, just behind heart disease, cancer and smoking. The study linked 183,000 deaths in the United States in 2019 directly to poverty. That’s an average 500 deaths from poverty every day.
Well, today, we the spend the rest of the hour looking at how there can be so much poverty in the richest country in the world. We’re joined by Matthew Desmond. He’s author of the new book, Poverty, by America. It’s Matthew Desmond’s first book since he won the Pulitzer Prize for his groundbreaking 2013 book, Evicted: Poverty and Profit in the American City. Evicted, something he knew well, as his family was evicted. Matthew Desmond is a sociologist now at Princeton University, where he’s director of the Eviction Lab.
Professor Desmond, Matthew, thank you so much for joining us. This book is a bombshell. It is epic. The title of your book, Poverty, by America, doesn’t talk about how is it possible that the richest country in the world can have so much poverty, but you say that it’s because of its wealth there are so many poor. Lay out the scope of the problem and why you took this on.
MATTHEW DESMOND: Because there is so much poverty in this land of dollars. You know, if you just look at the official poverty line, there’s 38 million of us living below it. That means that if the American poor founded a country, that country would be bigger than Australia. But the poverty line is incredibly low. You know, one in three folks in America live in homes bringing in $55,000 or less. Many aren’t officially counted as poor, but what else do you call living on $55K and trying to raise two young kids in Miami or Portland? There is an incredible amount of unnecessary scarcity in this land of abundance. So this book is about why, and this is a book about how we can finally abolish it.
JUAN GONZÁLEZ: And if you could summarize some of the main reasons why, especially given how other wealthy countries don’t have nearly the level of poverty that the United States does?
MATTHEW DESMOND: It’s an important point. You know, our child poverty rate, for example, is double — double — that of South Korea, Germany, many other of our peer nations. So, why? And in a nutshell, there’s so much poverty in America, not in spite of our wealth, but because of it. Some lives are made small so that others may grow.
And many of us, those of us who have found some privilege and prosperity in America, we contribute to this. You know, we consume the cheap goods and services the working poor produce. We benefit when the stock market goes up because labor costs are pushed down. Many of us get tax breaks from the government, which is an enormous part of government spending. And we protect those tax breaks, which starves anti-poverty programs. And then we continue to be segregationists in America, building walls around affluent communities and concentrating not only wealth and privilege, but also concentrating poverty. Many of us are connected to the problem, and the solution.
JUAN GONZÁLEZ: And we often hear conservatives in the United States talk about the welfare state. But you make the point that our country actually is subsidizing the affluent. Can you give some specifics about how that happens?
MATTHEW DESMOND: So, every year, we spend about $1.8 trillion on tax breaks. That’s about double what we spend on the military. It’s a colossal sum. And look, many of us who receive those tax breaks, we have a hard time seeing those as the same thing as food stamps or housing assistance. But both housing assistance and, say, the mortgage interest deduction, they both cost the government money, they both put money in a family’s pocket, and they both increase the deficit.
And so, if you add up all the tax breaks that are going to families and all the means-tested programs for the poorest families and all the social insurance programs — basically, everything that government does for its people — you learn that every year families in the bottom 20% of the income distribution receive about $25,000 a year from the government, but every year families in the top 20% of the income distribution, our richest families, receive about $36,000 from the government. That’s almost a 40% difference. That’s crazy to me. And our country does a much better job helping folks that have plenty already than it does eliminating and fighting poverty.
AMY GOODMAN: This is an absolutely critical figure that you’re saying, Matthew Desmond, because so often the argument about — against helping the poor is: Why should they get free money, when no one else does? And you’re pointing out, actually, it’s the opposite, that wealthier people get more money from the government than poorer people do. But I’d like you to continue on that point and talk about why, in fact, already in this country, there are millions of dollars available to people who are in the lowest economic bracket that they can’t or don’t take advantage of. Explain what are the obstacles in the way.
MATTHEW DESMOND: One obstacle is we do a very bad job connecting families to programs that they need and deserve. Sometimes we literally just don’t spend the money on fighting poverty. So, if you look at a program like the Temporary Assistance to Needy Families program, or TANF — this is cash welfare — for every dollar budgeted for TANF, only 22 cents ends up in the family’s pocket. What’s going on here? Well, states have a lot of discretion about how to spend that money, and they spend it in really creative ways. Some states use those dollars to fund Christian summer camps or abstinence-only education, marriage initiatives, things that have nothing to do with alleviating poverty. Many states don’t even spend the money. Last time I checked, Tennessee was sitting on over $700 million on unspent welfare dollars. And so, this is one way that that money doesn’t reach the families that need it the most.
And another way is that many families are just leaving a lot of money on the table. You know, one in five folks that are poorly paid workers that could receive something called the earned income tax credit, this wage bump, they don’t take it. Most elderly Americans that could receive food stamps, they don’t take it. And so, if you add all that up, you learn that every year over $140 billion — “billion” with a B — of unspent aid is left on the table. This is not a picture of welfare dependency. This is a picture of welfare avoidance, the fact that we as a nation need to do a much better job connecting families to those programs.
JUAN GONZÁLEZ: And what did the crisis of the pandemic teach us about the ability of government to make a significant dent in poverty? And then, of course, once the worst of the pandemic was over, we’ve seen now a takeback of those policies.
MATTHEW DESMOND: Exactly. So, there’s two resounding lessons from the pandemic when it comes to poverty alleviation. One, organizing works. Social movements pushed for bold relief from the government, and they won, and that relief came. And the second big lesson is that relief makes a world of difference.
During the pandemic, we rolled out something called the extended child tax credit, which was basically a subsidy to low- and moderate-income families with kids. And that simple program cut child poverty by 46% in six months. In six months. It was the most historic thing we’ve done to fight poverty since the war on poverty and Great Society in 1964.
Another thing that we did was we rolled out emergency rental relief. We helped renters that had fallen behind because they had lost their jobs during the pandemic. And that initiative made evictions fall to record lows. We’ve never seen evictions this low on record. And those evictions stayed low for months and months and months, even after the federal moratorium on evictions was lifted. These programs were transformative.
But you’re right, Juan, they are lifting. They’re expiring. You know, and, frankly, I want to live in a country where a Congress should have been terrified of taking those benefits away. I want to live in a country where more of us said, “No, I want this to be the new normal.”
AMY GOODMAN: So, Professor Matthew Desmond, you just talked about evictions. You won the Pulitzer Prize for your book Evicted. Talk about your own life experience and what eviction means.
MATTHEW DESMOND: So, I grew up in a little town in northern Arizona, a railroad town. And my family, money was tight. And when my dad lost his job as a minister, we lost our home, and I helped my parents move into a small rental unit. And I think that experience worked its way inside of me, probably provoked me to study evictions later on in life. And I moved to Milwaukee, and I moved into a mobile home park and a rooming house in the inner-city of Milwaukee, and followed families getting evicted.
And what I saw was eviction causes tremendous loss. Families lose their homes, of course, but they often lose their stuff, which is piled on the street or taken by movers. Kids lose their school. Eviction comes with this mark, a blemish, which can prevent you from moving into good neighborhood and good housing, because many landlords see that mark, that court record, and they say, “No, thanks.” And so we push those families into worse housing, and we push those families into high-crime neighborhoods. Eviction causes job loss. And if any of you listening or watching today have been evicted, you know exactly why that is. It’s such a consuming, stressful event. It can cause you to make mistakes at work and lose your footing in the labor market. And then there’s the eviction mark on your soul, your mental health.
And when you add all that up, I think we have to conclude that evictions, which used to be rare this country, which used to draw crowds — evictions are not just a condition of poverty, they’re a cause of it. They’re making things worse. And they’re leaving a deep and jagged scar on the next generation.
JUAN GONZÁLEZ: I wanted to ask you the political impacts of this debate. Donald Trump is often talked about as having enormous appeal in rural white America, and some of the poorest states in the union have delivered the biggest votes for Trump, places like West Virginia, Kentucky, Mississippi. I’m wondering your sense of this account of why Trump appeals to poor white Americans.
MATTHEW DESMOND: I think it’s hard to answer that question without recognizing the racial element of the appeal. When Trump started his presidential run, famously, he was disparaging Mexicans and immigrants. There’s very little evidence that immigrants dragged down wages for native workers or are contributing to poverty in America at all, but it really has a deep cultural resonance with a lot of Americans who are white and who are in struggling economic areas.
There is a connection here on the ground, though, that I think is often overlooked in the politics, which is, on basic issues of economic fairness and justice, there is a lot less polarization than we often see in Washington. Most Americans want a higher minimum wage. Most Americans think that the rich aren’t paying their fair share of taxes. Most Americans, Democrat and Republican, believe now that poverty isn’t caused by a moral failing, that it’s caused by unfair circumstances. The electeds are very polarized, but on the ground, I think there’s a lot of Americans that want a — they want more opportunity, they want less poverty, and they want less inequality, on both sides of the aisle.
AMY GOODMAN: Professor Desmond, I wanted to ask you about your comment that many well-off Americans, quote, “are unwitting enemies of the poor.” And this goes to the issue of solutions. Explain how.
MATTHEW DESMOND: So, if we just look at tax breaks, for example, so, many of us who are homeowners, who receive something called the mortgage interest deduction, we can just deduct the interest of our mortgage every year at tax time. And if you look at that deduction and you look at everything that homeowner subsidies amount to, you know, in 2021, we as a nation spent $193 billion on those benefits and only $53 billion on direct housing assistance to the needy, public housing, Section 8. So it’s a big imbalance.
Most of those property owner deductions, they went to families with six-figure incomes. And we also have to face the fact that most white Americans today are homeowners, and they benefit from one of the sweetest cutouts in the tax code, but most Black and Latinx families are not, because of our systematic dispossession of people of color from the land. And so, it’s really hard to think of a social policy that does a better job of amplifying racial and economic inequalities than that system does. And many of us are protective of those tax breaks.
And so, this book is a call to reevaluate our values. It’s not a call for redistribution, I don’t think. It is a call for rebalancing our safety net. I want a country that does a lot more to fight poverty than it does to guard fortunes.
JUAN GONZÁLEZ: Could you talk about the changing nature of work and the job market over the years and how that’s affected definitions or how people see themselves as poor or not? You’ve said that your grandparents had careers, but this generation has gigs. How does that relate to poverty?
MATTHEW DESMOND: It’s huge. It’s a huge part of the story. So, after World War II, the job market really delivered for many Americans for decades. You know, in the 1970s, one in three of us belonged to a union. Worker pay was climbing. Real wages, inflation-adjusted wages, increased by 2% every year. If you had a job for Ford, you worked for Ford, and you could advance in that company. You got some benefits. You got some pride.
But as workers started to lose power as unions started to be destroyed and dismantled, our jobs got a lot worse. And if you look at the real pay, the worker — the inflation-adjusted wages for men without college degrees today, it’s actually lower than it was 50 years ago. Benefits have gone away. And many of us who are working for Ford now or Apple or Google, that’s not the company — those companies don’t sign our checks, right? We’re independent contractors without a lot of benefits and without a lot of room for advancement.
The deterioration of the American job means that, you know, the government has to do more to fight poverty. When the war on poverty and Great Society were launched, the job market was strong, and it was kind of a one-two punch: deep government investments along with a job market that was delivering. That massively cut poverty in America. Today, the job market just isn’t pulling its weight. And this is one of the reasons that we don’t just need deeper investments. We need different ones. And one of those investments is finding ways to empower more American workers.
AMY GOODMAN: You’ve called for poverty abolition. And this goes right to your previous point. Lay out the ways poverty can be abolished. And again, that point you made earlier, that the pandemic taught us so much, for example, halving, cutting in half child poverty within six months, and then the U.S. Congress votes to do away with that program, throwing millions more children into poverty?
MATTHEW DESMOND: Right, exactly. You know, a study came out a few years ago that showed that if the top 1% just paid the taxes they owed — not paid more taxes, just stopped evading taxes — that we as a nation could raise an additional $175 billion. That’s more than enough money to reestablish that child tax credit. You know, that’s enough money to double our investment in affordable housing and still have money left over. That’s basically enough money to lift everyone under the official poverty line above the line. We have the resources. We know how to do it.
So, when we’re met with this kind of question about how could we afford this, how could we afford to cut child poverty in half or make sure every family in America has a decent, affordable home, I feel like those questions are sinful and dishonest. The answer is staring us straight in the face. We could afford it, if the richest among us took less from the government. We could afford it, if we designed a welfare state to do less to subsidize affluence and more to eradicate poverty.
So, how do we get there? We deeper investments in the issue, which is funded by tax fairness and enforcement. We can go deeper. We also need different programs, programs that attack the unrelenting exploitation of the poor in the labor market and in housing market especially. And then, finally, our walls, they have to go. We have to end segregation in America and strive for broad, open prosperity.
Now, this sounds like a policy discussion, right? But it’s also a personal commitment. So, a call for poverty abolitionism is not just about voting the right way or signing up to join a social movement. It’s also about ways that we need to interrogate our everyday lives and commit ourselves to divesting from poverty in our consumer choices, our neighborhood choices, in all the little ways that we go about our life that unwittingly contributes to this issue.
JUAN GONZÁLEZ: You mentioned the housing market and affordable housing, but the reality is that for most Americans, their main source of wealth is whatever equity they have in a home they’ve purchased and pay a mortgage on over the years. But increasingly, we’ve seen these private equity firms come in, especially after the housing crash of 2008, and buy up all of this housing. And so, now we have this unusual situation of private equity having an enormous say over affordability in housing in the United States. What can be done about that?
MATTHEW DESMOND: I think one thing that can be done is for us to get serious about expanding homeownership opportunity for first-time homeowners and for working families. You know, last year, 27% of homes sold in America were for under $100,000, affordable homes. But only 23% of those were financed with a mortgage. You know, the rest were kind of bought up in cash by landlords or real estate speculators. So, what’s going on? And the thing that’s happening is that many banks just aren’t interested in these small-dollar mortgages. And it’s not because those small-dollar mortgages are riskier. They’re just less profitable. So, if I’m a bank, I have an incentive to give you a mortgage on a $5 million home, but I’m not really interested in funding that $75,000 home.
So this is where the government could step in. It could help down payment assistance and ensure those kind of mortgages in a different way to incentivize that low-income families have that opportunity to step into homeownership. You know, I remember meeting a woman named Lakia Higbee in Cleveland a few years ago, and she was renting a four-bedroom home for $950 a month. But if she bought that home under conventional mortgage standards, her mortgage payment and insurance would be about $570 a month. That’d be $4,500 more in her pocket every year. That’s real money, and without rent hikes. And so, I think that’s one way we can kind of step in and make sure those homes go to more people, and not just to go to private equity.
AMY GOODMAN: Matthew Desmond, you talk about labor unions promoting worker empowerment, which ultimately works to fight poverty. And you say also that poverty is so expensive. You have this beautiful quote of James Baldwin: “Anyone who’s ever struggled with poverty knows how extremely expensive it is to be poor.” Put those two together.
MATTHEW DESMOND: So, if you look at just the financial exploitation of the poor, you know, you learn that every year overdraft fees pull about $11 billion a year in fees. Only 9% of bank customers pay most of those fees. Who are those 9%? They’re the poor, made to pay for their poverty. And if you add that up to the $1.6 billion in check-cashing fees and almost $11 billion in payday loan fees, you learn that every day, every single day, $61 million in fees are pulled from the pockets of the poor. So, when Baldwin wrote that, he couldn’t even have imagined these receipts. So, this is one way that we need to address poverty, because poverty isn’t just a lack of income, it’s a lack of choice. And we need to expand the choices folks have in terms of where to work, where to live, and how to access money and credit.
AMY GOODMAN: And the issue of unions fighting poverty?
MATTHEW DESMOND: So, unions have an incredibly impressive track record in striving for worker empowerment. The problem in America today is organizing a workplace is incredibly difficult. And so let’s make it easier.
So, one idea in the book is something called sectorial bargaining, which is a pretty wonky name, but the idea is pretty simple. Instead of organizing one Starbucks, then this Starbucks, then another Starbucks, what if everyone in food and beverage in America, every single worker, took a vote, and if that vote cleared 50%, 60%, whatever we’d like, it would activate the secretary of labor, who would form a bargaining panel made up of worker and business representatives who could come to an agreement for unions or protective rights that would protect all folks in that industry, every single barista, every single Starbucks?
AMY GOODMAN: We have five seconds.
MATTHEW DESMOND: So, I think unions and worker power is essential to ending poverty in America.
AMY GOODMAN: Matthew Desmond, we thank you so much for being with us and for your book, Poverty, by America. I’m Amy Goodman, with Juan González.