In Mike Lillis's November 9th, 2010 article in The Hill, he mentioned that the executive committee of the Congressional Black Caucus voted unanimously to extend membership to two newly-elected African-Americans to the House of Representatives. Allen West of Florida and Tim Scott of South Carolina won as Republicans. While it is not unprecendented, it has been rare for a non-Democrat to serve on this caucus. It appears that Allen West will accept membership, but Tim Scott will not. By bringing more diversity in terms of party ideology, some are hoping that this will bring a fresh perspective on fighting poverty.
There are various ways to attack poverty, but one of the keys is raising productivity. There is a perception that Republicans are thought to be uncaring toward the poor. This is because their tax policies favor efficiency over equality and their priorities on government spending typically tilt to national defense over social programs. However West disagrees with that label and says, "...it’s so important that we break down this monolithic voice that continues to talk about victimization and dependency in the black community."
Let's look back to the mid-1990s, Congressional Republicans were insistent on reforming welfare by imposing limits on payout, which President Clinton agreed to despite the ominous warnings from liberals. By spending less on welfare, the U.S. was able to lower their budget deficit and cause interest rates to fall. Lower interest rates resulted in more investment and job creation. As a result of an improved job market, former welfare recipients found it easier than many thought to land jobs. Others surmised that when the safety net ends, most people will be motivated to look for work and improve their situation. In economics, we call this people responding to incentives and can be more effective in achieving social mobility.
On the other hand, education and social services are also elements necessary to improving productivity. During the early-1980s, a movement similar to the one we are experiencing today where the American people were concerned about the expanding role of government. The aftermath was dramatic cuts in public education and social programs contributing to decay and unrest in many urban communities. One can say that the exodus of jobs and unstable family structures call for increased mentoring and social services that are typically underserved through private charities. Many point to less federal funding to communities as one of the reasons for the rise in drug trafficking and murders.
Another potential problem is access to quality health care and again there are differing philosophies. While black Republicans will assert that greater government will limit choice and compromise quality for all Americans, members of the Congressional Black Caucus are alarmed at the rising premiums of health care and how that will impact the most vulnerable citizens. Particularly, when private health insurance companies previously were able to deny coverage based on pre-existing conditions. On the other hand, critics to health care reform would like the market system work more freely. They feel that more competition will lead to more choices and lower prices.
In Principles of Macroeconomics and Mankiw's Basic Tools of Finance, we discuss adverse selection, which says that high-risk individuals are more likely to purchase insurance over low-risk individuals. That is precisely the problem with forcing insurance companies to take on individuals with pre-existing conditions. They are more likely to make expensive payouts on health care and will need to gain access to younger, more low-risk individuals to cover the increased costs. Otherwise, they will have to resort to higher premiums for that higher risk segment. This is one of the reasons why the controversial health care mandate, which forces Americans to purchase health insurance or face a monetary penalty, is essential to making this initiative work.
In attacking complex issues of poverty, I do believe that Americans should be receptive to new ideas and perspectives. It is hoped that when Allen West officially joins the Congressional Black Caucus that his views are heard and given serious consideration. Undoubtedly, allowing market forces to interact in education, social services, and health care will increase the cost on more vulnerable segments of society. However, Americans must realize that resources used in providing education, social services, and health care are scarce and have to be paid for directly by the less fortunate or funds must be redistributed from middle class and upper class Americans, who are becoming weary of carrying this burden. As a Christian, I feel it is my duty to help the impoverished, but I also want to seek solutions that will help lift more people out of generational poverty. If that means being open to policies that will lead to empowerment rather than enabling them toward the same self-destructive behaviorial traits that limit advancement, then I believe we should be open to those ideas.
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