A War Economy Perpetuates Poverty

From the March 2014 PNL #832

by Ursula Rozum

Fifty years ago, Lyndon Johnson declared a “War on Poverty,” ambitiously proclaiming that “the richest nation on Earth can afford to win it." Johnson's Great Society programs likely stemmed from his genuine concern for our country's poor, even though he ended up diverting precious resources away from programs of social uplift into the war in Vietnam. Still, the Great Society's programs transformed the United States for the better, bringing billions of dollars to low-income schools, building infrastructure in forgotten places, training doctors and social workers, expanding access to healthcare and empowering low-income students to attend college. These programs were so popular that LBJ's Republican successors actually expanded them. In the first 10 years of the Great Society, America’s official poverty rate dropped from 19 to 11.2 percent. While many of these safety net programs were defunded during the Reagan era, their positive impacts are with us to this day. The expansion of food stamps and of other nutritional programs such as free and reduced school breakfasts and lunches, led to enormous drops in hunger and malnutrition. Social Security, which was expanded as part of the War on Poverty, reduced the population of elderly Americans living below the poverty line from 44 percent to 9 percent.


Today, we are faced again with a troubling reality. In Syracuse, statistics from 2012 indicate that about a third of our city lives in poverty and for children, the level is more than 50%. This is worse than the national average (16% and 20% respectively) based on Census data. This is the result of three decades of a failed conservative approach to fighting poverty – tax breaks and incentives to the rich to encourage investment, aka trickle down economics, from the Reagan "enterprise zones" to Clinton's "empowerment zones" and now Obama's "promise zones," and Cuomo's tax-free zones. We could win the War on Poverty; what's standing in our way are these neoliberal of policies that encourage concentration of wealth at the expense of the working class – a recipe for poverty.

Low Wages

Low wages keep corporate profits high and workers living below the poverty line. Had the federal minimum wage just kept pace with inflation since 1968, it would stand today at $10.67 per hour, not $7.25. Regressive taxes and corporate tax giveaways squeeze public budgets, creating doubt in our ability to fund basic public needs, like infrastructure, healthcare, and education.

Corporate Tax Breaks

The corporate tax rate peaked in 1969 at 52%, generating a third of federal tax revenues. Today, the rate on the highest bracket is 35% and generates only about 10% of government revenue. The effective rate paid by U.S. corporations is actually 12.6%, after corporate welfare loopholes, credits, and subsidies are exploited

“Free” Trade

Another ingredient in the neoliberal poverty recipe is the outsourcing of U.S. jobs through free trade agreements like the 20-year old NAFTA and the pending Trans-Pacific Partnership agreement. These agreements encourage a race to the bottom as companies relocate to seek lower wages and laxer regulations. In Syracuse, NAFTA caused the loss of at least 2630 jobs in its first six years alone. From Clinton, through Bush and Obama, there has been a bipartisan consensus in favor of unfettered free-market policies that exploit workers.

As the wage gap between the wealthy elites and the working poor widens, billions of taxpayer dollars pour into the coffers of the Department of Defense every year. Estimated to be around $716 billion in 2013, the U.S. defense budget is greater than the defense budgets of the next ten highest spending nations combined. The defense budget is literally out of control - the Government Accountability Office of Congress has deemed it "un-auditable." Endless war ensures that profits continue to flow to the armaments industry, especially its CEOs. The current CEO of Lockheed Martin, Marillyn Hewson, made $5,983,961 last year – according to Forbes, she spends significant time on Capital Hill, advocating against defense cuts.

Republican superstars Paul Ryan and Marco Rubio proclaim the failure of the “War on Poverty,” holding it up to demonstrate that the government has no constructive role to play in helping our fellow citizens maintain a basic standard of living. On the Democratic side, politicians are using this historical moment to positions themselves as champions of the working poor, just in time for the 2014 midterm election. Both sides in this argument between the radical-right and political center ignore the bloated Pentagon budget. The tension between guns and butter, military vs. social spending, tormented LBJ who will likely be remembered more for the war in the jungles of Vietnam than for expanding food stamp funding.

Our country's political class has a difficult time learning from history. Instead of committing to winning the War on Poverty, the US government is pursuing a counterproductive War on Terror. Spending on the wars in Iraq and Afghanistan will end up costing the US at least $4 trillion, according to a recent Harvard study. And in January, the United States sent “advisors” (with guns) to Somalia, a country where the US has already been waging a secret war through the CIA's use of drone strikes. This expansion of the War on Terror bears eerie similarities to the Vietnam War where the US government was also intervening in a civil war, violating our professed support for self-determination in a conflict where neither side was democratic.

Most US citizens support cutting military spending. In May 2012, a survey of U.S. public opinion by the Stimson Center, the Program for Public Consultation and the Center for Public Integrity found that 76 percent of respondents favored slashing U.S. military expenditures. This included 80 percent of respondents in districts represented by Democrats and 74 percent in districts represented by Republicans. The US could implement significant “ defense” cuts (25-50%) by shifting military spending to actual defense, rather than world policing. These cuts could come in the form of reducing our nuclear arsenal, bringing troops home from Europe and Japan, stopping spending on weapons that don't work or that mothball upon completion, cutting our foreign military operations at hundreds of foreign military bases and cutting overt military interventions and covert special forces operations in some 120 countries. Here are 10 detailed ways to cut the military budget.

The Freedom Budget 

The same year that Johnson declared the War on Poverty, his historical counterparts A. Phillip Randolph, Bayard Rustin and Martin Luther King Jr. published the “Freedom Budget for All Americans,” a political and economic proposal whose basic objective was to address what they recognized as the root causes of poverty. Its aims included full employment, the fulfillment of basic economic needs (healthcare, education, housing, adequate wages) and a healthy environment. As we continue to confront poverty and inequality today, it would be useful for political leaders and community activists to recommit to the Freedom Budget as a baseline of demands for what winning the War on Poverty would mean. King was a vocal opponent of the Vietnam war, identifying militarism as one of the greatest evils in the world, alongside poverty and racism. Cutting the military budget would free up billions of dollars for the anti-poverty Freedom Budget King envisioned that we still desperately need today.

Ursula Rozum is on staff at the Peace Council.