October 11, 2005
Liberal Hopes Ebb in Post-Storm Poverty Debate

WASHINGTON, Oct. 10 - As Hurricane Katrina put the issue of poverty onto the national agenda, many liberal advocates wondered whether the floods offered a glimmer of opportunity. The issues they most cared about - health care, housing, jobs, race - were suddenly staples of the news, with President Bush pledged to "bold action."

But what looked like a chance to talk up new programs is fast becoming a scramble to save the old ones.

Conservatives have already used the storm for causes of their own, like suspending requirements that federal contractors have affirmative action plans and pay locally prevailing wages. And with federal costs for rebuilding the Gulf Coast estimated at up to $200 billion, Congressional Republican leaders are pushing for spending cuts, with programs like Medicaid and food stamps especially vulnerable.

"We've had a stunning reversal in just a few weeks," said Robert Greenstein, director of the Center on Budget and Policy Priorities, a liberal advocacy group in Washington. "We've gone from a situation in which we might have a long-overdue debate on deep poverty to the possibility, perhaps even the likelihood, that low-income people will be asked to bear the costs. I would find it unimaginable if it wasn't actually happening."

Mr. Greenstein's comments were echoed by Representative Rosa DeLauro, Democrat of Connecticut: "Poor people are going to get the short end of the stick, despite all the public sympathy. That's a great irony."

But many conservatives see logic, not irony, at work. If the storm exposed great poverty, they say, it also exposed the problems of the very policies that liberals have supported.

"This is not the time to expand the programs that were failing anyway," said Stuart M. Butler, a vice president of the Heritage Foundation, a conservative research and advocacy group influential on Capitol Hill.

While the right has proposed alternatives including tax-free zones for businesses and school vouchers for students, Mr. Butler said, "the left has just talked up the old paradigm: 'let's expand what's failed before.' "

Doubt about the effectiveness of some programs is only one factor shaping the current antipoverty debate. Another is political muscle: poor people do not make campaign contributions. Many do not even vote.

A third factor is the federal deficit, which leaves little money for new initiatives. And a fourth is the continuing support for tax cuts, including those aimed at the wealthiest Americans, which further limits spending on social programs.

Indeed, even as he was calling for deep spending cuts last week, Representative Mike Pence, Republican of Indiana, who leads the conservative caucus, called tax reductions for the prosperous a key to fighting poverty.

"Raising taxes in the wake of a national catastrophe would imperil the very economic growth we need to bring the Gulf Coast back," Mr. Pence said. "I'm mindful of what a pipe fitter once said to President Reagan: 'I've never been hired by a poor man.' A growing economy is in the interest of every working American, regardless of their income."

Economic growth is crucial to reducing poverty, but the effect of tax rates is less clear. In 1993, President Bill Clinton raised taxes on upper-income families, the economy boomed and poverty fell for the next seven years. In 2001, President Bush cut taxes deeply, but even with economic growth, the poverty rate has risen every year since.

In 2004, about 12.7 percent of the country, or 37 million people, lived below the poverty line, which was about $19,200 for a family of four. The figure was 7.8 percent among whites, 24.7 percent among blacks and 21.9 percent among Hispanics.

Hurricane Katrina gave those figures a face as no statistic can.

"As all of us saw on television, there is also some deep, persistent poverty in this region," with "roots in a history of racial discrimination," President Bush said in a Sept. 15 speech from New Orleans. Using the language of the civil rights movement, Mr. Bush pledged "not just to cope, but to overcome."

But liberal critics say his policies will have the opposite effect.

The week before his speech, Mr. Bush suspended the Davis-Bacon Act, a 1931 law that prohibits federally financed construction jobs from paying wages less than a local average. The administration argued that the suspension, which applied only to storm areas, would benefit local residents by stretching financial resources.

Critics said the savings would come at the expense of needy workers.

Likewise, the president suspended rules requiring federal contractors to file affirmative action plans, which his allies called cumbersome.

"He talks about lending a helping hand to the poor and disadvantaged," Jared Bernstein, a researcher at the Economic Policy Institute, a liberal research and advocacy group in Washington, said of Mr. Bush. "But these policies push the other way, toward lower wages and less racial inclusion."

In another dispute, the president has taken on a senior member of his own party, Senator Charles E. Grassley of Iowa, chairman of the Senate Finance Committee.

Mr. Grassley wants to expand Medicaid to cover all the poor who survived Hurricane Katrina, including many adults who did not previously qualify. The expansion would last five months, though it could be extended, and the federal government would cover the costs.

While most Democrats support the measure, the Bush administration strongly opposes it, arguing that evacuees would be served faster through more modest changes in existing state programs.

In part, the dispute has the feel of a proxy war about the larger fate of the program, which the administration has sharply criticized.

A similar proxy war has played out in housing policy after the Senate voted to house evacuees through the Section 8 program, which offers poor people subsidies for private housing. Critical of the program's cost, the administration instead created a parallel voucher program for hurricane evacuees.

In budget battles, the storm had one immediate effect: delaying the $35 billion in spending cuts ordered in last spring's Congressional budget resolution. About $10 billion over five years was expected to come from Medicaid and about $600 million from food stamps.

The delay occurred after some lawmakers said it was wrong to cut safety net programs with so many storm survivors seeking aid.

But the pendulum is swinging the other way. Concerned about the storm's costs, a group of 100 House conservatives released a list of suggested spending cuts totaling $370 billion over five years.

And President Bush weighed in last week, saying, "Congress needs to pay for as much of the hurricane relief as possible by cutting spending."

The chairman of the House Budget Committee, Representative Jim Nussle, Republican of Iowa, wants to increase the cuts in the budget bill to $50 billion, from the $35 billion agreed on last spring. Senate leaders are also talking of new cuts, though they have not announced a numerical goal.

As they search for spending cuts, neither chamber has turned away from the $70 billion package of tax reductions authorized last spring. Mr. Greenstein, of the Center on Budget and Policy Priorities, says those tax cuts come on top of two others, passed in 2001, that are scheduled to take effect in January and that benefit the wealthiest Americans.

Mr. Greenstein argues that the logic of shared sacrifice requires the tax cuts to be reconsidered. But most Congressional Republicans disagree, including Mr. Pence, the conservative leader.

"To allow tax cuts to lapse is a tax increase," Mr. Pence said, "and the economy would suffer."

Some conservatives say the storm, in exposing the depth of poverty, gives them a chance to push their own solutions to the problem, like school vouchers or subsidies to help poor people accumulate assets.

"What we've done for the poor hasn't worked," said Robert L. Woodson, president of the National Center for Neighborhood Enterprise, a conservative policy group. "People are going to say, 'How did these people get into this circumstance in the first place?' It gives us an opportunity to really turn over a new leaf."