Inequality

In a pseudo-memo to President-elect Obama today, Michael Gerson (former speechwriter/policy advisor to President Bush and current Washington Post columnist) has this interesting hypothetical:

"Political indifference to durable poverty in our midst has long been a scandal; from Obama it would be a tragedy. America does need to ‘spread the wealth' -- but not in the simply redistributionist sense. The racial divide in our country is widest when it comes to assets. The median net worth of white and Asian Americans in 2004 was $142,700. The median net worth of African Americans was $20,400. There are many reasons for this massive disparity, including what Lincoln called centuries of ‘unrequited toil.' Reparations are a politically self-destructive dead end. But what if President Obama, for example, proposed to set up tax-free savings accounts for every poor child at birth and seeded those accounts with a few thousand dollars? Addressing the wealth gap through the miracle of compound interest would be a lasting contribution to the justice of our country."

Here in the Asset Building Program, we couldn't agree more.

A new book has arrived in my mailbox that deserves some attention. It's called Child Poverty and Inequality and is written by Duncan Lindsey.  Duncan is a professor at the UCLA School of Public Affairs and for years has been one of the country's leading voices on child welfare . He is not only a notable historian of the evolution of family policy in the U.S., but has particularly focused on the plight faced by vulnerable children, such as those growing up in foster care and poor families. What also distinguishes Duncan's approach and what comes through in this book is his ongoing search for policy ideas that have the potential to transform what is for many children a pretty bleak landscape.

Before he gets there, he reviews the data on inequality in its various manifestations and recounts the experience since welfare reform was enacted in the mid-1990s. One of the highlights here is how declining case loads are somewhat offset by rises in food assistance. The bottom line result has been rising child poverty since the early years of the decade despite being a time of modest economic expansion.

Like generals who are always fighting the last war, California's pundits are still fighting their way out of the last budget crisis. Latest case in point: George Skelton of the Los Angeles Times, who recently complained again that California's income tax "depends too heavily on the wealthy." In Skelton's world, the wealthy are just like those men mothers always warn their daughters about: they'll show you a good time, and then disappear, leaving you heartbroken. "Their incomes rise and fall steeply with the economy," he writes, "and therefore so do state budget deficits."

Except that's not why California has a budget crisis. As the state controller reported on May 9, personal income tax collections for the first nine months of the current budget year are $1.4 billion over the estimate in Gov. Schwarzenegger's January budget and within a whisker of the amount budgeted last summer. Through the first nine months California revenues are up 1.2 percent over a year ago, thanks entirely to the income tax, which has more than made up for the decline in sales tax revenues caused by the housing crash.