What this election means for low-income families

Oct 31, 2012

We've written about this before, but it bears repeating: There has been very little talk of poverty during the presidential campaign, and yet nearly a quarter of all American children live in poverty. Since neither Barack Obama nor Mitt Romney have been too candid on where they stand on policies that directly impact kids from low-income families, we decided to take a look ourselves.

The audio version of this story included tape from a second grade classroom's presidential "mock election." Scroll down to the end of this post to view the results.

Politics, poverty, and early education

Let’s start with early education and our first expert, Hannah Matthews at the Center for Law and Social Policy, a nonpartisan advocacy group for low-income families.

She says it's "a real mistake" on both candidates' parts that we haven't heard any real specifics on early education, "particularly given the conversations that have been going on around jobs and the economy, childcare [and] early education, these are critical investments both in the economy as well as to help parents go to work to be able to support their families."

But Matthews says past budgets can be illustrative. So we'll start with President Barack Obama's record:

Obama's American Recovery and Reinvestment Act (ARRA) of 2009 increased funding for Child Care subsidies by $2 billion over two years, Head Start by $1 billion and Early Head Start by $1.1 billion (all one time funds). Since 2009, child care funding has increased by approximately $300 million and Head Start funding (which includes Early Head Start) has increased by nearly $900 million.

Governor Mitt Romney hasn't offered many too many details on early education. He did put out this 34-page white paper on education; there is not one mention throughout of preK, preschool or early childhood education, even though there is a pile of research that shows how important early childhood education is, especially for America's most vulnerable children.

And while Romney has shied away from budget specifics, groups that have analyzed his proposals say if Romney stays true to his campaign promises to cut taxes, cap federal spending and increase defense spending, he’ll have to make deep, deep cuts to discretionary programs like Head Start.

Politics, poverty, and healthcare

Our expert for this section is Irwin Redlener, co-founder of the nonpartisan Children's Health Fund. (Relener is also one of six child advocates who sent a letter to the candidates asking them to respond to three questions about how they would combat poverty among America's children: Obama responded with a two-page letter; Romney declined to respond.)

To Redlener, the big issue here is the Affordable Care Act, aka Obamacare. He says Obamacare is "not the plan he would have preferred, but at the end of the day it's a huge benefit for low-income families." Because of the law, 14 million children have seen expanded coverage for preventive care, and insurance companies can no longer deny coverage to children with pre-existing conditions. Despite the expansion, analysts estimate nearly 30 million people will still remain without health coverage.

Candidate Romney says he will work to repeal Obamacare on Day One if he’s elected, but has offered few details on what he’d replace it with. "From a children's advocacy point of view," says Redlener, "we're concerned" about that.

Romney also wants to turn reduce Medicaid spending and turn it over to the states in the form of block grants. According to a recent analysis, that will save the federal government $1.7 trillion (a majority of the savings would come from repealing Obamacare), but it would also result in up to 38  million fewer poor people getting Medicad coverage in 2022.

Redlener says turning Medicaid over to the states would be "a disaster" from his perspective. "So many states are struggling economically, and what we can envision is in bad economic times states severely cutting back on Medicaid resources, fewer poor families and low-income families will have access to critical children’s healthcare services."

Politics, poverty, and tax policy

To help us make sense of all the tax policy jargon, we'll turn to Elaine Maag, a senior research associate with the nonpartisan Tax Policy Center.

When it comes to low-income families, there are three things to look at:

  • the 2001 tax cuts for low-income families
  • the Earned Income Tax Credit
  • the Child Tax Credit

Both Obama and Romney want to keep the 2001 tax cuts in place for low-income families. (Romney would also keep the 2001 tax cuts in place for wealthy families; Obama would let those tax cuts expire.)

So let's compare where the two candidates stand with regards to the tax credits mentioned above - the Earned Income Tax Credit (EITC) and the Child Tax Credit. Both impact poor and near poor families and both are refundable, meaning those families get a check back from the government even if they don’t earn enough to pay taxes. The EITC

President Obama during the Recovery Act of 2009 made it so more people qualified for the credits, and in some cases received more money back. Governor Romney wants to roll back the refundable tax credits to pre-stimulus levels.

Elaine Maag, our tax policy analyst, says Obama’s increase in refundable tax credits will cost the federal government about $9 billion, but "all of these programs together, that is not where huge tax dollars are; they're meaningful for low-income families, but in the larger picture this is not how you’re going to solve the deficit problem."

Now many on the right believe that Romney's plan to lower tax rates for everyone - rich and poor - will result in stronger economic growth. But exactly how much growth? "That's where the academic debate lies," says Curtis Dubay, a tax policy analyst with the right leaning Heritage Foundation.

"The question isn’t whether lower marginal tax rates encourage economic growth. We know they do. The question is how much will they encourage growth? That remains up to debate. But we know the direction and we know that we’ll get stronger growth and we know that that will help the poor."

Though The New Republic's Jonathan Cohn points out, there are several economists who would challenge DuBay's idea:

Another person qualified to answer these questions is Paul Krugman, who noted recently that "the economic record certainly doesn’t support the notion that superlow taxes on the superrich are the key to prosperity. During that first Clinton term, when the very rich paid much higher taxes than they do now, the economy added 11.5 million jobs, dwarfing anything achieved even during the good years of the Bush administration." MIT's Peter Diamond and Berkeley's Emmanuel Saez take the same essential view. Writing in the Wall Street Journal, they recently observed that "In the postwar U.S., higher top tax rates tend to go with higher economic growth—not lower." Yes, they said, taxes can slow growth. But they'd have to be a lot higher than they are now and a lot higher than virtually anybody is currently proposing.

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The audio version of this story featured a presidential "mock election," which took place in a second grade classroom in Wayne County. The results from the "mock election" were: Obama (24). Romney (5).