[Joint House and Senate Hearing, 110 Congress]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 110-810
 
                   LEAVE NO FAMILY BEHIND: HOW CAN WE
    REDUCE THE RISING NUMBER OF AMERICAN FAMILIES LIVING IN POVERTY?

=======================================================================

                                HEARING

                               before the

                        JOINT ECONOMIC COMMITTEE
                     CONGRESS OF THE UNITED STATES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                           SEPTEMBER 25, 2008

                               __________

          Printed for the use of the Joint Economic Committee



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                        JOINT ECONOMIC COMMITTEE

    [Created pursuant to Sec. 5(a) of Public Law 304, 79th Congress]

SENATE                               HOUSE OF REPRESENTATIVES
Charles E. Schumer, New York,        Carolyn B. Maloney, New York, Vice 
    Chairman                             Chair
Edward M. Kennedy, Massachusetts     Maurice D. Hinchey, New York
Jeff Bingaman, New Mexico            Baron P. Hill, Indiana
Amy Klobuchar, Minnesota             Loretta Sanchez,  California
Robert P. Casey, Jr., Pennsylvania   Elijah Cummings, Maryland
Jim Webb, Virginia                   Lloyd Doggett, Texas
Sam Brownback, Kansas                Jim Saxton, New Jersey, Ranking 
John Sununu, New Hampshire               Minority
Jim DeMint, South Carolina           Kevin Brady, Texas
Robert F. Bennett, Utah              Phil English, Pennsylvania
                                     Ron Paul, Texas

                  Michael Laskawy, Executive Director
             Christopher J. Frenze, Minority Staff Director

                            C O N T E N T S

                              ----------                              

                                Members

Hon. Shelton Whitehouse, a U.S. Senator from Rhode Island, 
  invited to attend hearing......................................     1
Hon. Carolyn B. Maloney, Vice Chair, a U.S. Representative from 
  New York.......................................................     2

                               Witnesses

Statement of Hon. David N. Cicilline, Mayor, city of Providence, 
  Providence, RI.................................................     4
Statement of Dr. Rebecca M. Blank, Robert S. Kerr Senior Fellow, 
  Brookings Institution, Washington, DC..........................     6
Statement of Angela Glover Blackwell, founder and CEO, PolicyLink 
  Center for American Progress, co-chair, Task Force on Poverty, 
  Oakland, California............................................     9
Statement of John W. Edwards, Jr., chairman, Community Action 
  Partnership, Inc., Washing, DC; executive director, Northeast 
  Florida Community Action Agency, Inc., Jacksonville, Florida...    11
Statement of Robert E. Rector, senior research fellow, The 
  Heritage Foundation, Washington, DC............................    13

                       Submissions for the Record

Prepared statement Carolyn B. Maloney, Vice Chair................    34
Prepared statement of Senator Charles E. Schumer, Chairman.......    36
Prepared statement of Hon. David N. Cicilline, Mayor, city of 
  Providence, Providence, Rhode Island...........................    39
Prepared statement of Dr. Rebecca M. Blank, Robert S. Kerr Senior 
  Fellow, Brookings Institution, Washington, DC..................    41
Prepared statement of Angela Glover Blackwell, founder and CEO, 
  PolicyLink Center for American Progress, co-chair, Task Force 
  on Poverty, Oakland, California................................    50
Prepared statement of John W. Edwards, Jr., chairman, Community 
  Action Partnership, Inc., Washing, DC; executive director, 
  Northeast Florida Community Action Agency, Inc., Jacksonville, 
  Florida........................................................    58
Prepared statement of Robert E. Rector, senior research fellow, 
  The Heritage Foundation, Washington, DC........................    65


LEAVE NO FAMILY BEHIND: HOW CAN WE REDUCE THE RISING NUMBER OF AMERICAN 
                      FAMILIES LIVING IN POVERTY?

                              ----------                              


                      THURSDAY, SEPTEMBER 25, 2008

             Congress of the United States,
                          Joint Economic Committee,
                                                    Washington, DC.
    The Committee met at 10 a.m. in room SD-562 of the Dirksen 
Senate Office Building, the Honorable Carolyn B. Maloney, 
presiding.
    Representatives present. Maloney and Hinchey.
    Staff present: Christina Baumgardner, Heather Boushey, Nan 
Gibson, Gretta Goodwin, Colleen Healy, Aaron Kabaker, Tyler 
Kurtz, Dan Miller, Justin Ungson, and Jeff Wrase.
    Vice Chair Maloney. The Committee will come to order. 
Chairman Schumer is unable to attend today's hearing on 
poverty, and has asked me to chair, and I want to thank all of 
our witnesses for being here to testify.
    I have heard from Senator Reed. He is going to try to get 
here. He is involved in the entire financial situation, as is 
Senator Whitehouse. I'm so thrilled that he is here for a 
special welcome to the Mayor from the great State of Rhode 
Island.
    Before I go to my opening statements, I'm going to 
recognize Senator Whitehouse and thank him for being here, and 
let him welcome Mayor Cicilline, and have his opening comments.

 OPENING STATEMENT OF HON. SHELTON WHITEHOUSE, A U.S. SENATOR 
                       FROM RHODE ISLAND

    Senator Whitehouse. Well, first, let me thank you, 
Congresswoman Maloney, for your courtesy in allowing me to come 
and intrude on this Committee. I'm not a Member of the 
Committee, and it's a great courtesy on the part of you and 
Chairman Schumer, to allow me to do this.
    I appreciate it very, very much, and I'm delighted that you 
have invited Mayor Cicilline from Rhode Island's capital city, 
Providence, to be a part of this very important panel that you 
have called together today.
    We are seeing now--and one of the reasons everyone is so 
busy today is that we are seeing now the consequence, the harsh 
consequence of many years of truly awful economic policy by the 
Bush administration.
    We have caused this day to come, or I should more clearly 
say, they have caused this day to come, and along the way, 
there were many warning signs about what the Bush policies were 
doing to our economy.
    There is nowhere, I think, in this country where those 
warning signs were felt more painfully, were felt earlier, were 
heard more clearly, than in America's cities and by America's 
mayors, where the pain from those policies has been evident for 
a long, long period of time.
    So the role of mayors now, in working toward a new sense of 
economic fairness in this country, I think is vital, and I'm 
delighted that David is here as a mayor. I'm particularly proud 
of him because of the wonderful job that he's done in 
Providence.
    Providence has a bit of an interesting and challenging 
history. I spent 3 years beginning and overseeing a criminal 
investigation into public corruption of a predecessor of 
David's. I spent many years trying to work with the Providence 
Police Department, which had wonderful people, but which was a 
deeply, deeply challenged institution, based on its leadership, 
and he has in many different respects brought a new day to 
Providence, and in particular, on these economic issues, where 
he has reached out to the community and developed a variety of 
strategies and institutions through which he is trying to 
overcome the difficulties that the national economy has forced 
on our cities, and keep Providence as a place just recently 
recognized yesterday as one of the hundred best places in 
American for young people to live.
    And so I'm very delighted that he's here, and I again, 
appreciate your courtesy in allowing me to welcome such a 
prominent and respected Rhode Islander to your Committee.
    Vice Chair Maloney. I thank you so much, Senator 
Whitehouse. You honor us with your presence.

  OPENING STATEMENT OF HON. CAROLYN B. MALONEY, VICE CHAIR, A 
               U.S. REPRESENTATIVE FROM NEW YORK

    I, particularly, want to thank Senator Kennedy for 
requesting today's important hearing on poverty in America. 
Senator Kennedy has devoted his career to being a strong and 
vocal champion for the poor.
    Our hearts go out to him and his family, and we wish him 
well with his recovery.
    I also want to thank each and every witness for being here 
and for all of their hard work in combating poverty. Today, our 
Nation's leaders are focused on the unfolding financial crisis.
    Yesterday, in testimony before this Committee, Federal 
Reserve Chairman Bernanke said that the United States is, 
quote, ``facing grave threats,'' end quote, to financial 
stability, and warned that the credit crisis has started to 
damage household and business spending.
    We need to act swiftly to pass the legislation that will 
bring stability to our financial system, but also shield Main 
Street from paying too high a price for the mistakes made on 
Wall Street.
    The financial crisis may seem far removed from the problem 
of poverty. The bottom 80 percent of households only own 9.4 
percent of all stocks, including stocks in retirement funds.
    But the financial troubles on Wall Street have already been 
working their way down to Main Street. Unemployment is rising, 
and real wages are now as low as they were in September of 
2001.
    As Chairman Bernanke said yesterday, and I quote, 
``Economic activity appears to have decelerated broadly.'' He 
went on to say that if we do not address the financial crisis, 
more jobs will be lost.
    Poverty tends to rise and fall with the strength of the 
economy. During the economic expansion of the Clinton era, when 
unemployment hovered around 4 percent, poverty fell to 11.3 
percent, its lowest level in decades.
    However, the weak recovery of the 2000s under the current 
Administration did not lead to further reduction in poverty, 
and it now stands more than a full percentage point above its 
2000 level.
    Today in the United States, 1 out of every 8 people--over 
37 million--is living in poverty. That so many of our citizens 
toil in poverty is a testament to how far we need to go to 
ensure that all of us enjoy the fruits of our economic growth.
    The majority of people living in poverty are among the 
working poor. Poverty in America is the result of millions of 
jobs that do not pay enough to ensure families can make ends 
meet.
    Over a quarter of U.S. jobs pay very low wages and do not 
provide health insurance or a retirement plan, according to the 
Center for Economic and Policy Research.
    Other nations have made great strides against poverty by 
establishing clear policy agendas. For example, the United 
Kingdom has embarked on an ambitious plan to cut poverty in 
half in 10 years, and we should look to them as a model.
    As they have demonstrated, reducing poverty, requires a 
variety of policy steps, from raising the minimum wage and 
expanding the earned income tax credit, to guaranteeing child 
care assistance. Parenthood should not put you on a pathway 
toward poverty.
    We must ensure that everyone, including low-wage workers, 
can find the right balance and not have to choose between their 
children and a paycheck.
    In recognition of this as part of their anti-poverty 
agenda, the UK policymakers passed legislation that always 
allows workers to request a flexible schedule. Senator Kennedy 
and I have introduced similar legislation, the Working Families 
Flexibility Act, and I hope we can work together to get it 
passed in the next Congress.
    To fight poverty, we must understand who is poor. Most 
analysts agree that the U.S. poverty measure is outdated and 
inappropriate for measuring true need.
    Our measure does not take account of how taxes, non-cash 
benefits, and work-related and medical expenses affect well 
being.
    Further, the U.S. poverty measure does not account for how 
the cost of basic goods and services have changed since the 
1960s, or how costs differ by geography.
    Our panelists today will provide recommendations for 
addressing the measurement issue.
    I look forward to today's testimonies, to help us 
understand how we can take action to reduce poverty in America.
    I first would like to recognize and introduce Mayor David 
Cicilline. Mayor Cicilline served four terms as a State 
Representative from Providence's East Side where he earned a 
reputation as a fierce champion of political reform and gun 
safety and his dedication to ethics in government.
    In 2002, David Cicilline announced his candidacy for Mayor 
of his hometown of Providence, Rhode Island. Mayor Cicilline 
swept a four-way primary election and went on to win the 
general.
    He graduated from Brown University and earned his J.D. from 
the Georgetown University Law Center. I welcome Mayor 
Cicilline, and you are recognized for 5 minutes.
    [The prepared statement of Representative Maloney appears 
in the Submissions for the Record on page 34.]

     STATEMENT OF HON. DAVID N. CICILLINE, MAYOR, CITY OF 
              PROVIDENCE; PROVIDENCE, RHODE ISLAND

    Mayor Cicilline. Thank you, Vice Chair Maloney. It's a 
great honor to be here as a representative of mayors and other 
elected officials from across the country who are working to 
address the serious economic issues that are the subject of 
this hearing.
    For many generations, during those moments when America has 
faced difficult economic times, some view our cities as our 
greatest burden. In the national imagination, cities were 
frequently viewed as the ball and chain of the national 
economy, dragging America down.
    Words like ``devastated,'' ``blighted,'' and ``ruined,'' 
were so often associated with the word, ``urban,'' that they 
effectively became synonymous.
    But something remarkable began happening a decade or so 
ago. American cities began a striking comeback, benefiting from 
effective Federal policies in the 1990s, as well as the 
transition to a knowledge-based economy, and cities are again 
the center of culture, innovation, and most of all, economic 
growth.
    Additionally, cities house our great scientific research 
centers that will give birth to the innovations that will power 
America with new forms of energy.
    Also, contrary to most people's ideas about urban America, 
cities are the greenest places we can live, based on existing 
consumption patterns.
    Cities are the solution, but as a Nation, we are not 
tending our metropolitan garden. In recent news, the evolution 
of cities has continued in spite of national policy, not 
because of it.
    As a result, we are severely restraining or metropolitan 
transformation, at a time when we need to accelerate it. We 
need a Federal partnership again.
    Foremost among those constraints--without a doubt--is 
poverty. Poverty is to a family and to a community, what 
inflation is to an economy. Its consequences spill over into 
everything else and have a lasting and devastating impact.
    But what makes it worse is that there are effective 
measures we know we can take to prevent poverty from 
persisting. Not surprisingly, the headway we made on poverty in 
the 1990s, coincided with this metropolitan comeback, but in 
recent years, that headway has been reversed.
    In my view, one of the reason for this is the sharp decline 
in funding first focused on by the Children's Advocacy Group, 
on whose advisory board I sit, who, in a recently released 
report revealed that the share of non-defense spending on kids 
has declined by a full 10 percent in just 5 years.
    But I know you're presented with statistics and requests 
for funding all the time. I just want to share with you my 
perspective, as the Mayor, of the work that we're doing, and 
that's currently working to reduce poverty in our community.
    Many people view poverty as a complex and interrelated set 
of problems. I view it very simply: Poverty is a lack of 
opportunity, so to me, the fight is not so much a war on 
poverty, as it is a war for opportunity.
    The long-term answer does not lie in merely relieving the 
stresses and pain of poverty; the long-term answer lies in 
rebuilding upward mobility in America.
    The wary for opportunity means rebuilding the economic 
ladder. When there is upward mobility, there is hope. Families 
will work harder to make sure their children are educated, stay 
out of trouble, and develop a strong work ethic, but when there 
is not, it creates an environment for many of the social ills 
that can ruin lives and drive up the cost of social programs.
    Unfortunately, all across the country, the economic ladder 
has been badly weakened in recent years. It used to be that the 
American dream was available to anyone who was willing to work 
hard enough, but in today's economy, too many families are 
doing everything right and still getting left behind.
    At my second inauguration in 2006, I identified restoring 
economic prosperity as one of the highest priorities for my 
city. I signed an Executive order creating a task force made up 
of our foremost experts on workforce development, poverty, and 
early childhood development and family supports.
    I asked them to offer me their best recommendations for 
what we can do at the city level, as a government and as a 
community, to reestablish upward mobility for our working poor 
and to help rebuild the middle class in our city.
    Similar efforts were undertaken by Mayor Villaraigosa in 
Los Angeles, and Mayor Bloomberg in New York City. In 
Providence, this task force developed a set of action steps 
called Pathways to Opportunity, to move people into the 
workforce, keep them in the workforce, and open up more 
opportunity to get ahead, once they're in.
    With that report in hand, I formed a partnership with the 
N. E. Casey Foundation, to open an office that is charged with 
overseeing the implementation of these recommendations in 
coordination with the city and the agencies that helped to 
develop them. It also serves as a community-based site for 
residents to connect to new opportunities.
    We launched a number of ambitious projects as part of this 
new initiative. We have young people from across the city, who 
are integral parts of a major construction project in our 
schools, that involves cutting-edge green technology and 
learning how to build lead-to-lead standards.
    We have partnered with our hospitals that are facing a 
serious nursing shortage to get young people access to the 
skills they need to begin a good career in the healthcare 
field.
    Taking the lead from the Brookings Institute work on the 
high cost of being poor, we're working with local banks and an 
organization called Bank on Providence. It's developing 
financial instruments specifically designed for low-wage 
families and individuals who have no prior banking 
relationship.
    I'm also working with the State Legislature to regulate the 
ability of predatory lenders and check-cashers to extract 
usurious rates and charges from their customers, most of whom 
haven't had access to mainstream banking.
    We're aggressively engaging with ex-offenders to 
reintegrate them back into the community, and many, many other 
efforts. I see my time is up, but I'll just end by saying, 
Madam Vice Chair, that if I had more time, I'd talk about the 
wonderful after-school programs that we're creating in the 
community, the policing model in Providence, and all the things 
that impact on poverty.
    But I want to conclude with a general comment. Our cities 
represent tremendous opportunities for the 21st century 
economy. We can unleash that potential by making opportunity 
for every American, a national priority again.
    After all, the other name for a robust economic ladder and 
upward mobility is the American dream. That's what made our 
economy the envy of the world and it's the only way we can 
preserve its position in our global economy. Thank you.
    [The prepared statement of Hon. David N. Cicilline, w/
attachment, appears in the Submissions for the Record on page 
39.]
    Vice Chair Maloney. Thank you. Your time is up, but your 
entire statement will be in the record, along with your very 
interesting report that you have submitted.
    I agree with you, the cities are the center of thought and 
activity. I come from a city, and a lot of great things are 
happening in yours, so we appreciate your being here today.
    Mayor Cicilline. Thank you so much.
    Vice Chair Maloney. Professor Rebecca M. Blank is the Henry 
Carter Adams Collegiate professor of public policy at the 
University of Michigan.
    She is also professor of economics and the co-director of 
the National Poverty Center at the Ford School.
    She is currently on leave as the Robert V. Kerr Visiting 
Fellow at the Brookings Institution. She is the author of 
``Working and Poor: How Economics and Policy Changes Are 
Affecting Low-Wage Workers; Measuring Racial Discrimination.''
    Professor Blank graduated in Economics from the University 
of Minnesota, and received a Ph.D. in economics from the 
Massachusetts Institute of Technology. We thank you for being 
here, for your books, for your research, and for your testimony 
today.
    Thank you.

   STATEMENT OF DR. REBECCA M. BLANK, ROBERT S. KERR SENIOR 
         FELLOW, BROOKINGS INSTITUTION, WASHINGTON, DC

    Dr. Blank. Thank you, Congresswoman Maloney. I appreciate 
being invited here. I should say that the bio you have is a 
little old. I'm actually permanently at the Brookings 
Institution right now, so I've moved to Washington, DC.
    Vice Chair Maloney. OK.
    Dr. Blank. The Census Bureau recently released the official 
numbers on income and poverty for 2007, and I want to 
underscore a few key facts from that release.
    First, poverty did not fall to any appreciable extent 
throughout the economic expansion of the 2000s. If you look in 
past decades, when unemployment rises, poverty goes up; when it 
falls, poverty goes down.
    When unemployment fell after 2003, poverty essentially 
stayed flat. This sluggishness on the part of the poverty rate, 
reflects general sluggish growth in income by all people in the 
bottom half of the income distribution. Both those in the 
middle, as well as at the bottom of the distribution had lower 
incomes in 2007 than they did in 2000.
    Of course, if the 2007 data doesn't look as good as we had 
hoped, 2008--I promise you--will look substantially worse, 
given the rapidly rising unemployment and the recent economic 
news that's been dominating all of the newspapers. Poverty is 
going to be a major issue in the agenda of the next 
Administration.
    I've been asked to spend most of my time this morning 
focusing, however, not on these numbers, but on the measurement 
of poverty itself.
    There's widespread agreement that our poverty measure is 
badly flawed and needs to be updated. A bill to improve and to 
produce a modern poverty measure, was just introduced in the 
House by Congressman McDermott, and Senator Dodd is working on 
companion legislation in the Senate.
    Our current poverty measure was defined in 1963 by the 
Social Security Administration. It contains two components: A 
line, a poverty line, and a resource definition, against which 
you compare families' resources to see if they're above or 
below that line. Let me talk about each, in turn.
    The current poverty line is easy; it's three times a 
subsistence food budget. The subsistence food budget was 
defined by the USDA in 1961 based on 1955 household consumption 
survey data.
    The multiplier of three came about because the average 
family in 1955 spent one-third of their income on food. If you 
spend a third of your income on food, take three times the food 
budget and you have a poverty line.
    With only minor changes, our current poverty line is this 
number, c alculated in 1963, based on 1955 data and updated by 
the Consumer Price Index. There is no other economic statistic 
in use today that relies on 1955 data and on such outmoded 
methodologies.
    The resource measure in the poverty line was, very simply, 
a family's cash income. While that might have made sense in the 
early 1960s, it is also badly outdated. It is no longer an 
adequate description of the sort of resources that families 
have available.
    If a disabled individual starts to receive Medicaid, this 
doesn't show up in their poverty count. If a family receives 
food stamps, it doesn't affect the poverty count. If a worker 
receives an EITC refund check, it doesn't affect the poverty 
count.
    Why does this matter? Our measured poverty rate, is simply 
insensitive to most of the dollars and most of the policies 
that we have expanded in the last three decades. In a 
fundamental way, our poverty measure has undercounted policy 
gains and made it easy to claim that public spending on the 
poor has had little effect.
    Now, this doesn't mean that our official measure is 
completely meaningless. In a year like 2007, with no policy or 
tax changes, it does measure what the economic effects were on 
the low-income population.
    But we can and should do better in an official economic 
statistic.
    In the mid-1990s, the National Academy of Sciences was 
asked by Congress, to make a recommendation for improving the 
measure of poverty, and they came out with a rather major 
volume that describes how to improve this statistic.
    The panel recommended calculating a poverty line based on a 
set of expenditures--food, shelter, clothing, utilities, plus a 
little bit more.
    They recommended a resource definition that started with 
cash income, but took account of taxes, added in in-kind 
benefits, and subtracted off unavoidable payments on medical 
expenses or on work expenses.
    All of these changes have been much discussed in the years 
since then, and in fact, a good number of states and localities 
have been expressing interest in this new line, as well. This 
last summer, for instance, New York City developed a city-
specific poverty measure, based on the National Academy 
approach.
    It's time to break through the political logjam that has 
prevented the development and the utilization of an updated 
poverty measurement. The new legislation in front of the House 
and the Senate, will do this, directing the Census Bureau to 
develop a modern poverty measure, using the National Academy 
recommendations.
    Of course, improving the measure of poverty will not reduce 
poverty. We also need to combine that with policies such as--
and you mentioned these earlier--expanding the EITC to workers 
who do not have children in their household; increasing 
assistance to help working mothers, in particular, to pay for 
childcare.
    In addition, we need to assure the presence of an effective 
safety net, helping, in particular disconnected women--women 
neither working nor on welfare--to be able to stabilize their 
incomes.
    We also need to make sure that unemployment insurance 
serves those who are without a job. Right now, it serves less 
than 40 percent of them.
    Our official statistics indicate that poverty in this 
country rose last year. It's going to rise further and faster 
in the year ahead.
    We need the legislation that will help us measure this 
problem and know what its boundaries are and who is most 
affected by it. We also, of course beyond good measurement, 
need good policy as well, supporting those who are working and 
giving assistance to those for whom jobs are not immediately 
available. Thank you.
    [The prepared statement of Dr. Rebecca Blank appears in the 
Submissions for the Record on page 41.]
    Vice Chair Maloney. Well, I want to thank you for your hard 
work. I will certainly be a co-sponsor of Congressman 
McDermott's bill, and agree wholeheartedly that without good 
data, we don't have good policies, and if we can improve our 
way of measuring it, it would be tremendously important. Thank 
you for your testimony.
    Dr. Blank. Thank you.
    Vice Chair Maloney. Ms. Blackwell is the founder and chief 
executive officer of Policy Link, a national research and 
action institute advancing economic and social equity.
    In 1987, she founded the Urban Strategies Council in 
Oakland, California, and received recognition for pioneering a 
community building approach to social change, through in-depth 
understanding of local conditions, community-driven systems 
reform, and an insistence on accountability.
    Ms. Blackwell earned a Bachelor's Degree from Howard 
University, and a Law Degree from the University of California 
at Berkeley. She co-chairs a Center for America Progress Task 
Force on Poverty, called Hope, Opportunity, and Mobility for 
Everyone; Home, the National Initiative to End Poverty.
    We thank you for your hard work and leadership in this 
area, and please proceed.

 STATEMENT OF ANGELA GLOVER BLACKWELL, FOUNDER AND CEO, POLICY 
  LINK, CENTER FOR AMERICAN PROGRESS; CO-CHAIR, TASK FORCE ON 
                      POVERTY, OAKLAND, CA

    Ms. Blackwell. Thank you and good morning. I do chair the 
Center for American Progress Task Force on Poverty, along with 
Peter Edelman of the Georgetown University Law School.
    And in addition to the 37 million people living below the 
poverty level that you mentioned, an additional nearly 50 
million, live below 200 percent of the poverty level, making 90 
million people living below 200 percent of the poverty level 
one health crisis, one family emergency away from poverty's 
door.
    It really doesn't have to be this way. The Center for 
American Progress Task Force, recommends that the United States 
set a national goal of cutting poverty in half in the next 10 
years.
    To accomplish this goal, the Task Force proposes 12 
recommendations grouped under four principles: Promote decent 
work--people should work and jobs should pay enough to ensure 
that employees and their families, avoid poverty; provide 
opportunity for all--children should grow up in conditions that 
maximize their opportunities for success, and adults should 
have opportunities throughout their lives to connect to work 
and become better educated; ensure economic stability--
Americans should not fall into poverty when they cannot work or 
when work is unavailable; and help people build wealth--all 
Americans should have the opportunity to build assets that 
allow them to weather periods of flux and volatility.
    These four principles and the following recommendations 
will cut poverty in half only if they work in tandem.
    Through the strategies outlined below, America can 
cultivate a new cycle of prosperity. To promote decent work, 
the Center for American Progress Task Force recommends that we 
raise and index the minimum wage to half the average hourly 
wage; expand the earned income tax credit and the child tax 
credit; promote unionization by enacting the Employee Free 
Choice Act; and guarantee childcare assistance to low-income 
families; and promote early education.
    Compared to other countries, in this country the poverty 
rate does not represent low work effort. People who work, 
really should be able to maximize that work to get out of 
poverty, and by doing just three of these things--increase the 
minimum wage, expand the earned income tax credit and child 
credit, and provide childcare assistance--we could cut poverty 
by 26 percent, instantly, according to modeling done by the 
Urban Institute.
    To provide opportunity for all, the Task Force recommends 
that we create 2 million housing opportunity vouchers that will 
allow low-income families to live in communities rich with 
opportunity.
    We need to connect disadvantaged and disconnected youth to 
work and school, simplify the Pell Grants so that higher 
education is more accessible to all, and help former prisoners 
find stable employment and reintegrate into communities.
    To ensure economic security, the Task Force recommends that 
we ensure equity for low-wage workers in the unemployment 
insurance system and that we modernize means-tested benefits 
programs to develop a coordinated system to help workers and 
their families.
    And to help poor families build wealth, the Task Force 
recommends that we reduce the high cost of being poor and 
increase access to financial services, and expand and simplify 
the saver's credit to encourage savings for education, home 
ownership, and retirement.
    In addition, the Nation's infrastructure is crumbling, and 
as we think about doing that, we need to think not only about 
how to invest in infrastructure, but how to build the workforce 
capacity so that low-income people can get those jobs.
    Many low-income people are being left behind because the 
communities they live in are being left behind, without 
broadband, without public transportation.
    And we need never forget that many people who are poor are 
poor because of poor health, and while we work to try to 
increase access to healthcare coverage, we need to know that 
the places where people live are often making them sick. People 
who are in low-income communities have little access to fresh 
fruits and vegetables because of the absence of grocery stores, 
little access to exercise because there aren't safe streets or 
places to exercise. These need to be part of our investments.
    Poverty is multidimensional. Its causes and its effects are 
myriad and its solutions are multidimensional, and when done 
well, the benefits can be multidimensional, as well.
    For example, investing in the construction of a hospital in 
a low-income community, when the project is tied to job 
training and local hiring, delivers immediate construction 
jobs, eventual health services, and long-term community 
benefits.
    Creating tax credits and incentives for affordable housing 
in mixed-income communities can bring families in closer 
contact with jobs, put children in contact with good schools.
    Poverty results in adverse economic effects for the entire 
Nation, and alleviating poverty can improve all of our lives. 
Thank you.
    [The prepared statement of Angela Glover Blackwell appears 
in the Submissions for the Record on page 50.]
    Vice Chair Maloney. Thank you so very, very much, for many 
ideas and directions that we can work in in public policy.
    John W. Edwards, Jr., is chair of the board of trustees for 
the Community Action Partnership. The Partnership's mission is 
to be a national forum for policy on poverty and to strengthen, 
promote, represent, and serve its network of member agencies, 
to assure that the issues of the poor, are effectively heard 
and addressed.
    He is executive director of the Northeast Florida Community 
Action Agency, which assists low-income persons with specific 
services involving their day-to-day existence, including, but 
not limited to: LIHEAP, the Low-Income Home Energy Assistance 
Program; temporary food assistance; and home weatherization.
    We thank you and recognize you for 5 minutes. Thank you, 
Mr. Edwards.

 STATEMENT OF JOHN W. EDWARDS, JR., CHAIRMAN, COMMUNITY ACTION 
    PARTNERSHIP, INC. WASHINGTON D.C.; EXECUTIVE DIRECTOR, 
  NORTHEAST FLORIDA COMMUNITY ACTION AGENCY, JACKSONVILLE, FL

    Mr. Edwards. Good morning and thank you for being here. As 
you mentioned, I represent the 1,000 Community Action Agencies 
nationwide, and you have adequately covered, basically, our 
mission.
    I won't repeat what Dr. Blank and Ms. Blackwell and others 
have said, and you as well, Mrs. Maloney, related to the 
statistics and whatnot, but I would like to make some comments 
with regard to the changing nature of poverty in America, who 
we are seeing throughout this country at the local ground level 
of the 1,000 Community Action Agencies nationwide.
    In addition, I would like to also talk with you 
specifically about some of the demographics of the people that 
we're seeing in America today, and that will give you, I 
believe, some idea in terms of the nature of the people who are 
coming to Community Action Agencies around this country.
    Then finally, I have a few recommendations for you to 
consider as you look at policy and laws governing how we help 
more people to get out of poverty in America.
    What we do know, is that the face of poverty is changing 
every day. We have seen that through the number of people who 
are coming to Community Action Agencies nationwide.
    We are seeing more people who are coming to us who are 
traditional families. That means a working husband, a working 
wife, and children.
    That's nontraditional to us, because historically, we've 
not seen that level of family unit coming to our doors to avail 
themselves of our services.
    What we do know, is that more middle class families are 
asking for public assistance today, than ever before, and 
that's reflective of the state of the economy, loss of jobs, 
outsourcing of jobs to other countries, and the like.
    I just came from a 3-day meeting of community action 
professionals that we had in Philadelphia over the last 3 days. 
There were 17 States represented there: Washington, Oregon, 
California, Montana, Wisconsin, Missouri, Kentucky, South 
Carolina, Florida, Indiana, Virginia, New Hampshire, Iowa, 
Pennsylvania, Nevada, Illinois, and Alabama.
    So I took this little research, if you will, by asking them 
a question based on their experiences, most of which are 
executive directors and other practitioners in Community Action 
Agencies nationwide. What they reflected is that they're seeing 
now, 80 percent of their population are nontraditional people 
who avail themselves to Community Action Agencies.
    And I think that's remarkable, in terms of seeing a 
different person who lives in poverty today. These are 
nontraditional, why? Because they don't come to us, they 
haven't come to us in the past.
    The other thing is that because of the state of the 
economy, related to layoffs in the finance industry and the 
like, which also indicates that there is a tremendous draw on 
resources throughout Community Action Agencies in this country.
    In addition to that, there is a recent trend toward more 
people asking for basic assistance of food, shelter, cooling, 
heating costs, transportation, childcare, and the like.
    And clearly, I agree with Dr. Blank in terms of what she 
indicated about the poverty level and how that was all 
configured, you know, over 40 years ago, so I won't repeat that 
because I concur with what she said, and of course, my 
testimony is there.
    What I do want to do is spend a couple of minutes giving 
you an idea of 22 months of demographics of people that we have 
seen in Northeast Florida. We're based on Jacksonville, but we 
have offices in the six counties surrounding Duval County or 
the city of Jacksonville.
    In the last 22 months, we've seen 24,466 people, and of 
those people that we've seen, 15,000 are females, 9,400 are 
males. We're also seeing a situation where most of the people 
that we're seeing are working-age people, in other words, 
they're between the ages of 18 and 54, and of the 24,000 
people, about 16,000 of those are in those age categories, 
which are people who should be working.
    Educationally, most of the people we see have either a high 
school diploma or less, so of the 10,000 people from which we 
collected data, around 8,500 of them have high school education 
or less.
    In addition to that, we also see that most people don't 
have income based on employment, and clearly in our country, 
that's one of the best ways that we're going to be able to do 
that. Most people rent their homes and the like.
    Obviously, the Federal formula just needs to be changed, 
based on what Dr. Blank said and other statistical information 
that's reflected in my report.
    And then finally, I want to indicate this report, ``Rooting 
Out Poverty,'' that the Community Action Network has developed, 
and two themes: Building an economy that works for everyone, 
and invest in the future.
    And so when we look at these kinds of things, we would 
really like to emphasize that the LIHEAP program, the Low-
Income Home Energy Assistance Program, needs to be expanded. 
Certainly, the earned income tax credit needs to be expanded, 
full appropriations for the Community Services Block Grant and 
the like would be wonderful to help many of the Americans get 
out of poverty today. Thank you.
    [The prepared statement of Mr. Edwards appears in the 
Submissions for the Record on page 58.]
    Vice Chair Maloney. Thank you so much. You entire testimony 
and your report, will be part of the record. We really thank 
you for bringing information, really, from the front lines of 
the war on poverty, and the work that you've been doing is 
greatly appreciated.
    Robert Rector is a Heritage Foundation senior research 
fellow. Prior to joining the Heritage Foundation, he worked as 
a legislative assistant in the Virginia House of Delegates, and 
as a Management Analyst at the U.S. Office of Personnel 
Management.
    He is the author of ``America's Failed $5.4 Trillion War on 
Poverty: An Examination of U.S. Welfare Programs,'' and co-
editor of ``Steering the Elephant: How Washington Works.''
    Rector holds a Bachelor's Degree from the College of 
William and Mary, and a Master's Degree in political science 
from Johns Hopkins University. Thank you for being here today, 
for your books, and for the testimony. All of your statement 
will be put in the record, and we recognize you for 5 minutes.
    I want to also mention that my colleague, Congressman 
Hinchey has joined us, so we're pleased he's here.

  STATEMENT OF ROBERT E. RECTOR, SENIOR RESEARCH FELLOW, THE 
              HERITAGE FOUNDATION, WASHINGTON, DC

    Mr. Rector. Thank you very much for the opportunity to be 
here to testify today. I have seven basic points that I would 
like to make today.
    The first point is that the welfare state in the United 
States is simply enormous. Last year, this year in fiscal 2008, 
Federal, State, and local governments spend $679 billion on 
means-tested welfare assistance to poor and low-income people.
    Total means-tested welfare spending this year considerably 
exceeded the entire budget of the Defense Department, including 
all expenditures in the war on Iraq. Since the beginning of the 
War on Poverty, the United States has spent over $14 trillion 
on means-tested assistance to the poor. Over the next 10 years, 
if current expenditure levels continue, we will spend $9 
trillion on assistance to the poor, providing cash, food, 
housing, medical care, and targeted social services.
    As a result of that $9 trillion, we can expect--as we found 
in the past--that the capacity of low-income people to support 
themselves will actually go down.
    Point number two: Most so-called poor people in the United 
States are not poor in any normally understood sense of the 
word. For most Americans, the word ``poverty'' suggests 
destitution, an inability to provide food, basic shelter, or 
clothing. But if that's what you mean by ``poverty,'' virtually 
none of the 37 million people defined as poor by the Census 
Bureau, in fact, meet those criteria.
    My favorite statistic from the Government's own data on the 
poor is that two-thirds of them have cable and satellite 
television. According to the Government's own data, the typical 
American defined as poor by the Government has a car, air 
conditioning, a refrigerator, stove, clothes washer, dryer, 
microwave. This individual has two color televisions, cable or 
satellite TV, has a VCR and a DVD player, and a stereo.
    By his own report, he's able to obtain medical care for his 
family whenever needed, his home is in good repair and is not 
overcrowded. By his own report, his family is not and has not 
been hungry, and he has had sufficient funds to meet all his 
family's essential needs.
    While this individual's lifestyle is certainly not opulent, 
it is extremely far from the popular images of dire poverty 
promoted by activists.
    Point number three: The United States does not have a 
higher poverty level than countries in Europe. Statistics that 
purport to show that, use a skewed standard in which poverty is 
more difficult to escape from in the United States because the 
hurdle is higher here than in other countries.
    If you use a uniform standard, the income of the bottom of 
the U.S. population is roughly similar to that of most European 
countries.
    Point number four: Poverty levels in the United States 
remain high because the United States is currently aggressively 
importing poverty from abroad through both legal and illegal 
immigration. For example, when we hear about poor children in 
the United States, no one realizes that 1 out of 8 of the poor 
children in the United States, as measured by the Census, is 
actually the child of an illegal immigrant.
    Over the last 25 years, through both legal and illegal 
immigration, we have imported 12 million high school dropouts 
into the United States.
    These individuals cause a massive increase in welfare 
expenditures. Currently, 1 out of 4 poor people in the United 
States is an immigrant who we have brought here from abroad. It 
is impossible for us to reduce poverty if we are aggressively 
importing it as rapidly as we can from other nations.
    Point five: The major cause of child poverty in the United 
States is the high level of out-of-wedlock childbearing. In the 
last measured year, 38 percent of American children were born 
out of wedlock. If the mothers of those children were actually 
married to the fathers of the child--the actual father of the 
child--70 percent of them would immediately be raised out of 
poverty, but we will do nothing whatsoever to correct this 
problem because promoting marriage is politically incorrect in 
our country.
    Point six: The second major cause of child poverty is very 
low levels of parental work. In any given year--it does not 
vary much from one year to another--when you look at poor 
families with children, on average they have only about 600 or 
700 hours, maybe 800 hours of work in that family per year. 
That's about 16 hours a week.
    These families are poor because no one is working very 
much. If you raise that family to the point where labor in the 
family was the equivalent of one worker working full-time, 
full-year, 75 percent of those families would be immediately 
raised out of poverty without any additional expenditure from 
the taxpayer.
    Point Seven: In order to reduce poverty, we need to address 
the root causes of poverty, not merely the symptoms. That means 
we must address low-skilled immigration, the collapse of 
marriage, and the very low work effort of low-income families.
    Our goal should no be to reduce poverty, but to promote 
prosperous self-sufficiency, to promote a society in which 
individuals can support themselves above the poverty line, 
without endless and ever-expanding handouts from the taxpayers. 
Thank you very much.
    [The prepared statement of Mr. Rector appears in the 
Submissions for the Record on page 65.]
    Vice Chair Maloney. Thank you very much, and I thank all 
the panelists for their important testimony and for being here 
today.
    Yesterday, Federal Reserve Chairman Bernanke warned us that 
if Congress does not approve of the Treasury's $700 billion 
backstop, then unemployment will increase and the economy will 
enter a potentially protracted recession.
    I would like to ask any of you to comment and articulate 
how the troubles on Wall Street are affecting poor and near-
poor families, and I open it up to whomever would like to 
comment.
    Dr. Blank.
    Dr. Blank. I'll make a comment on that. So our economy runs 
on trust. We believe that those little pieces of green paper in 
our pockets mean something.
    What has been happening in the last number of months has 
been a real breakdown in trust in the financial institutions of 
this country for a variety of reasons.
    We can talk about who's to blame or not to blame for any of 
that, but at the end of the day, the effect of this is going to 
ripple through the rest of the economy in all sorts of ways. 
Consumers, as a result of this, are going to be much more 
cautious about spending in the next several months, and that's 
going to reduce consumer spending.
    Businesses are going to be much more cautious because 
either they can't get credit, or they're simply not going to go 
about investing in the very near term. The effect of all of 
this is to slow down the economy and lead to rising 
unemployment.
    Trying to take actions to stop the problems within the 
financial sector are absolutely mandatory for preventing an 
extended and long-term recession in the rest of the economy.
    Vice Chair Maloney. Thank you.
    Mayor Cicilline, would you like to comment on that?
    Mayor Cicilline. We are seeing in cities all across this 
country, and certainly in Providence is no exception, the 
consequences of the downturn in the economy already. We have 
record high unemployment in the State of Rhode Island with an 
increasing number of people availing themselves of community 
action centers, and of assistance in housing. There are 
difficulties in people finding and retaining employment and 
great anxiety about their future.
    So that we are seeing, as a result of reductions in 
investments in education and in child care and in Community 
Development Block Grants, and all the things that support 
strong communities, strong neighborhoods, and strong families, 
the consequences frankly of the past number of years.
    My concern of course is that the markets be stabilized of 
course, but it is very important that the challenges that 
American families are facing in cities all across this country 
also be addressed, particularly in the area of housing, health 
care, and educational opportunity.
    Vice Chair Maloney. Mr. Rector, and then Ms. Blackwell.
    Mr. Rector. The figure of $700 billion in the bailout is of 
course very large, but I would remind this Committee that next 
year, according to the projections of OMB, total means-tested 
welfare spending in a single year alone will exceed $700 
billion.
    Over the next 10 years we are going to spend close to $9 
trillion on welfare. And most of this spending consists of 
obligations on the part of the taxpayer with little or no 
obligation on the part of the welfare recipient.
    And so just as when we look at the Wall Street bailout, I 
think we need to look--not have unilateral obligations on the 
taxpayer.
    One of the major failures of the welfare state is that it 
is primarily a unilateral taxpayer obligation with little or no 
requirement on the part of the recipient and the poor to take 
steps to improve their own well being.
    Vice Chair Maloney. Ms. Blackwell.
    Ms. Blackwell. Agreeing with the comments of the Mayor and 
Dr. Blank, I just want to add that we need to make sure that in 
the bailout that we are paying attention to those who are 
impacted by the foreclosure crisis.
    At the base of all of this is Americans working very hard 
trying to play by the rules and achieve the American dream 
having the rug completely pulled out from under them, and that 
is essential in terms of making sure that they do not continue 
to suffer.
    But also, when we think about this issue of what we are 
doing in Washington, it is moving from Wall Street to Main 
Street all the way to people living on the street. People who 
are poor, and homeless, and dependent on food banks, and soup 
kitchens, and homeless shelters are going to feel this as well, 
because we have shifted so much of the responsibility for the 
people who are most vulnerable to private donors, to 
foundations, and to corporate giving.
    As we see the impact on those people, we need to make sure 
that the safety net is strong, and that those people who are 
most vulnerable in society are not just thrown out with no 
support at all.
    Vice Chair Maloney. That is very important, and Democrats 
are paying attention to that, and many of my bipartisan friends 
also. We also passed a very important bill in the Financial 
Services Committee, the Hope Housing Bill, that has many 
initiatives in there to work with localities, to work with 
individuals, to help people stay in their homes.
    The economy is experiencing a crisis in its financial and 
credit markets, and the labor market is experiencing a 
downturn. To address some of these problems Congress is 
considering a second stimulus package.
    Do you think that an economic stimulus package would help 
reduce poverty? If so, how? And how would you target such a 
package? Mayor Cicilline and I will go to other people who 
would like comment, and then my colleague has some questions.
    Mayor Cicilline. Yes, Vice Chairman. I think a second 
stimulus package would certainly assist, and I would strongly 
urge the Congress to consider including in that a real 
investment in rebuilding America's cities and its 
infrastructure.
    There are cities all across this country that are dealing 
with very old infrastructure. We at the U.S. Conference of 
Mayors, along with the American Society of Civil Engineers, do 
a report card on the state of America's infrastructure each 
year, and in every category--bridges, roads, water systems--the 
grades are F, and D- and D+.
    This is an opportunity to rebuild our cities, rebuild the 
infrastructure to support an economy of the 21st century so we 
can move goods and services, and at the same time create good 
jobs that cannot be shipped overseas, that are in our cities, 
in our communities to help rebuild the economic life of 
families who live in our cities.
    So I hope as part of the stimulus package there will be a 
serious investment in infrastructure.
    Dr. Blank. Can I add on to that, for more immediate short-
term needs with the problem of rising unemployment, I think 
there are two things that it is really important to have in 
that stimulus package, and I know they are in certain drafts of 
it right now.
    One is a short-term increase in Food Stamp benefits, which 
is an excellent way to get a lot of dollars to the families 
that are being most impacted by rising unemployment and by a 
failing economy.
    Secondly, to increase the appropriations to LIHEAP, the Low 
Income Home Energy Assistance Program, given the high fuel 
prices right now, particularly in the Northeast and northern 
parts of the country. Over this coming winter that is going to 
be absolutely mandatory and needs to be part of the package.
    Vice Chair Maloney. Any other statement?
    Mr. Edwards.
    Mr. Edwards. Yes. Thank you very much. In addition to what 
is being said, of course what we are seeing is that we would 
like to see more people use the money in the stimulus package 
to help with investing in assets, long-term assets, home 
ownership, maybe even starting small businesses, saving for 
post-secondary education, those kinds of things over the long 
haul that would help people to really assist themselves to come 
out of poverty.
    Vice Chair Maloney. And Mr. Rector.
    Mr. Rector. I think it is important before we propose new 
spending that we actually have an accurate assessment of what 
is currently being spent.
    I am very shocked that most of the people on this panel 
seem to be coming here before you and suggesting that welfare 
spending has somehow declined in recent years. Welfare spending 
on the poor is at a record level. It has never been higher. Per 
capita welfare spending is at a record level. It has never been 
higher, after adjustment for inflation.
    I really think that most of this testimony is abusing and 
maligning the taxpayers of the United States, and I think 
before we propose new waves of spending we ought to at least 
get an accurate accounting, and get some kind of credit to the 
taxpayers for what they are currently spending, which as I said 
exceeds the entire budget of the Defense Department, including 
the War in Iraq.
    Dr. Blank. May I say something about those numbers?
    Vice Chair Maloney. Dr. Blank.
    Dr. Blank. The spending on means-tested programs has gone 
up in recent years. A great deal of that increase has all gone 
into health insurance costs, and rising prices in the health 
insurance industry I think are not the main issue that Mr. 
Rector here is talking about. There's a whole set of reasons 
for that that have little to do with what we are doing for 
means-tested programs, but it is driving means-tested programs 
up.
    If you look at health insurance spending, a 
disproportionate share of those rising prices are coming from 
payments to institutionalized individuals, either disabled or 
elderly. That is not the image of the poor that Mr. Rector is 
presenting to you, but that is where the vast majority of the 
increases in dollars are going. And I think we need to know 
that.
    Vice Chair Maloney. Thank you. I would like to now 
recognize Congressman Hinchey from New York State who has been 
an active and important Member of Congress and of this 
Committee especially.
    Mr. Hinchey.
    Representative Hinchey. Madam Chairwoman, thank you very 
much. I very much appreciate being here.
    I want to just open up by apologizing for not being here 
earlier so I could have listened to the testimony that was 
being presented. I was at a caucus meeting for the Democratic 
Party which was focused on this bailout suggestion which has 
come from the Secretary of the Treasury, $700 billion to bail 
out the financial circumstances that our economy is 
confronting.
    That $700 billion request I think is just another example 
of how so much attention in the economic circumstances of our 
country has been based upon the top levels, the upper levels, 
and that would include things like the tax cuts, for example.
    I would disagree with Mr. Rector that not enough attention 
is being focused on the working people of our country and the 
results of that failure of attention has on the general 
population.
    For example, we have seen that just in this year--which is 
not nearly over yet--we have already lost more than 600,000 
jobs across America. And as the population goes up and the loss 
of jobs continues to go up, that has a very profound effect on 
all of the people across America.
    So the economic circumstances that we are dealing with is 
very, very serious. We have seen an increase in the number of 
people in poverty. We have seen a decline in the middle class. 
We have seen a decline in the standard of living of most of the 
people across our country. We have seen a greater concentration 
of wealth in the hands of fewer people than we have seen at any 
time in our history since 1929. All of these things are causing 
a very serious set of circumstances that have to be dealt with. 
I think obviously the lifting of people out of poverty is the 
main part of that.
    So I would just ask this question, if you wouldn't mind 
responding to it: We are considering a stimulus package now. 
Obviously a stimulus package is necessary because of the 
downturn in the economy and the way that that downturn is 
impacting on working people all across the Nation.
    So I wonder if you might have some suggestions about what 
might be contained in this stimulus package, what we might do 
to effectively upgrade the economic circumstances particularly 
of working Americans.
    Mr. Mayor, if you would like to start, I would appreciate 
it.
    Mayor Cicilline. Sure. In addition to the investments in 
infrastructure, one of the things that has been a very 
successful way to both stimulate our economy, but also to 
rebuild cities and to help those who are in most need of 
assistance, has been the Community Development Block Grant 
Program.
    Every city that has communities that are in need that meet 
those guidelines has ready to go programs, and systems in place 
that can quickly move those resources into the neighborhoods 
and into the cities and into the communities.
    They have already identified those that are eligible for 
the program that are in desperate need: poor, elderly, 
disabled, communities that need that kind of assistance. It is 
a system which has worked. It is a system that is modest. It 
has been reduced every year for the last 4 or 5 years at a time 
when we should have been increasing it.
    I would say, these are not handouts. These are making 
investments in families, and neighborhoods, and cities in this 
country that produce huge returns. So increasing that 
investment by, as the U.S. Conference of Mayors has 
recommended, doubling the Community Development Block Grant 
Program so we can really make investments to the people who 
most need it in the communities. Rebuilding our infrastructure. 
Reestablishing partnerships with the Federal Government in the 
COPS Program that keep our communities safe. Job training 
programs that help to bring young people into the work force. 
Supporting after school programs, and increasing funding there.
    Those are things that will not only stimulate our economy 
but strengthen our neighborhoods, and strengthen our families 
who will then contribute to strengthening our economy.
    Vice Chair Maloney. Mr. Edwards.
    Mr. Edwards. Yes. Thank you very much.
    In addition to that, anything that rewards work. I think 
that in our economy what we really want to be able to do is to 
help people to be gainfully employed. Somehow we need to figure 
out a way to ensure that when people do work that they have 
good wages, good benefits, so that they themselves can get out 
of poverty.
    So such things as expanding the Child Tax Credit would be 
certainly something that we would recommend. Certainly 
increasing the Earned Income Tax Credit. And really fully 
funding the Community Services Block Grant is a program that 
really helps people to get out of poverty in America.
    Representative Hinchey. Mr. Rector.
    Vice Chair Maloney. And then Ms. Blackwell.
    Mr. Rector. One of the recommendations of things that 
should be included in the stimulus package is an expansion of 
the Food Stamp program. I would strongly oppose that because 
welfare and assistance in the United States should not be a 
one-way handout. It should be based on giving assistance, but 
requiring constructive behavior on the part of the recipients.
    The current Food Stamp program is a fossil which does not 
reward work. It rewards idleness. It discourages labor. And it 
penalizes marriage. It does everything exactly the opposite of 
what you would want to do.
    I would say that if you wanted to consider reforming or 
expanding the Food Stamp program, one of the principal things 
that you would do in it is require able-bodied non-elderly 
adults who receive benefits to either work or prepare for work 
or undertake organized job search, or something like that, in 
exchange for the aid that they get.
    We did that, at least temporarily, as part of welfare 
reform in the 1990s and we had a dramatic reduction in poverty 
as a result of that policy.
    Unfortunately, there is a very strong political momentum 
against that type of work obligation, and as a result we have 
made no additional progress. I have proposed for 10 years that 
the sorts of reforms that we did in the Aid to Families With 
Dependent Children Program to induce and promote work should 
also be done in Public Housing and Food Stamps, but so far 
Congress has taken no steps whatsoever to improve those 
programs.
    Representative Hinchey. Well I think it is clear that work 
has to be encouraged, and I think there are an awful lot of 
people out there who want jobs.
    Let me just give you an example. 84,000 jobs were lost in 
August; 61,000 of those were manufacturing jobs. We are losing 
the best jobs that we have with the highest salaries. Now more 
than 9.4 million Americans are unemployed, and almost 2 million 
of those Americans who are unemployed have been unemployed for 
more than 27 weeks. So they are not eligible for the 
Unemployment Benefits.
    You have an unemployment rate right now that has gone up to 
6.1 percent, but when you include in that unemployment rate 
people whose unemployment has run out--in other words, they 
have been unemployed for 27 weeks or more--and you include 
people who are working maybe 1 or 2 days a week, but are really 
desperately trying to find a real job, then the unemployment 
rate goes up above 10 percent.
    So that is some of the situation that we are confronting. I 
would agree that we need to encourage people to work, and we 
need to help find jobs for them, but it is increasingly 
difficult to find jobs in an economy that has been organized in 
a way to downgrade those jobs.
    So, Ms. Blackwell.
    Ms. Blackwell. Thank you. I certainly agree that we need to 
increase Food Stamps, we need to focus on green jobs, and we 
need to make sure that people can get to work and that people 
who go to work can support their families.
    I want to underscore the comments made by the Mayor, 
though, about the need to invest in the Nation's 
infrastructure. Poverty policy needs to get embedded in all of 
our spending so that we are always thinking about whenever we 
are spending dollars how do we do that in a way that we reduce 
poverty?
    And so an investment in infrastructure, particularly when 
we are looking at the fact that most Americans live in our 
metropolitan areas, is an investment that actually reaches the 
people. It allows those communities that are being left behind 
because they are trying to build a 21st century economy on a 
100-year-old infrastructure to begin to have the environment 
that allows them to be competitive.
    We need to focus on the jobs, and not just say we want to 
make sure jobs go to low-income people, but invest in our 
community colleges to help them prepare the work force for the 
21st century infrastructure investments.
    And when we are thinking about economic stimulus, we need 
to think about the fact that so many communities do not have 
the kind of economic activity that allows them to be viable and 
to be healthy.
    For example, we have food deserts all over this country 
where people who live in low-income communities--particularly 
African American communities--have no access to fresh fruits 
and vegetables.
    What that means is they have no access to grocery stores. 
The jobs are missing. The economic activity is missing. And the 
essentials for healthy living are also missing. So when we are 
doing the stimulus package we need to pull all of those things 
together. Thank you.
    Representative Hinchey. Thank you. Dr. Blank, do you have 
anything to add to that?
    Dr. Blank. The only thing that I would say is strictly in 
response to your comments about rising unemployment. I would 
underscore the need not just in terms of the stimulus package 
but in the longer run to really reform our whole Unemployment 
Insurance system.
    Less than 40 percent of the unemployed are able to receive 
Unemployment Insurance. Many of the lowest income workers are 
never eligible for it when they lose their jobs. And the whole 
point of the system is to provide a safety net when jobs are 
not available to those who want to work and who have been 
working.
    Mayor Cicilline. May I just add one thing? I just want to 
strongly underscore Dr. Blank's recommendation for inclusion of 
LIHEAP in the stimulus package. Senator Reid, my Senator, has 
been one of the Nation's leaders on that program, and it will 
be particularly urgent for cities. And cities are where the 
rubber meets the road, when we have families who do not have 
heat and can no longer afford to heat their homes. The things 
that follow from that are the people's properties are 
foreclosed. The people start huddling in abandoned houses, 
fires get started, and all the kind of really dangerous 
consequences that follow.
    So I would really urge the Congress to include an increase 
in LIHEAP in the stimulus package as well.
    Representative Hinchey. Thank you.
    Vice Chair Maloney. Thank you very much.
    Dr. Blank, in your testimony you talked about having a 
modern poverty measurement, but you wanted this responsibility 
in the Census Bureau instead of OMB. Could you elaborate why 
you would prefer it in the Census Bureau over OMB?
    Dr. Blank. So our current poverty measure is the only 
official economic statistic that is regularly reported on and 
used as widely as it is that resides not in one of our 
statistical agencies but inside the Office of Management and 
Budget.
    It was basically ordered in the late 1960s by OMB that this 
definition that I discussed would be produced and reported on 
regularly by Census.
    The problem is that OMB sits within the Executive Office of 
the President. So any changes in the statistic have to go 
through the entire byzantine process of political approval 
inside the White House, and it is simply not to the benefit of 
any President to make changes to statistics in ways that either 
raise or lower those numbers, because they will be accused of 
playing politics, however good their motives. It makes no sense 
to have the White House in control of your statistics. There is 
a reason why almost no major industrialized nation puts its 
statistical agencies under its immediate executive.
    Vice Chair Maloney. But the Census Bureau does have a 
poverty measurement in the Census Bureau now. I believe it's 
called the SIPP Program. How is that different from what you 
are trying to do? Because they do measure. They release their 
own numbers on poverty, don't they?
    Dr. Blank. One thing the Census has done a very good job 
on--recognizing the problems with the current poverty measure--
is that they have produced quite a variety of alternative 
measures. I think they report on somewhere around 26--it may be 
24, it may be 28--but they regularly give you other poverty 
numbers.
    These are in web pages that you have to go looking for. It 
is not the same as a released piece of data that receives 
attention, and one discusses its implications and is used 
broadly throughout the Nation.
    So that the need is to basically take the National Academy 
recommendations and to produce a poverty number that is 
released at the same time as that OMB number. I have no 
problems with continuing our historical number. It's one we 
have looked at for a long time. But to have an alternative 
measure here along the lines that this new House legislation 
proposes I think would vastly improve our understanding of who 
is poor.
    Vice Chair Maloney. Mr. Rector.
    Mr. Rector. I would just like to go on record to strongly 
oppose this new type of poverty measure. I regard it as highly 
deceptive. It is in fact a moveable measure. It is kind of like 
running a race but when you get close to the goal line at the 
end of the race we quietly, in the middle of the night, move 
the goal line further on and you have to continue to run 
further.
    Also, one problem about this type of relative poverty 
measure, is you cannot solve poverty by economic growth under 
such a measure because poverty is measured more or less as a 
relative share compared to the median family income.
    So if everybody's incomes go up proportionately, there is 
no change in poverty. The only way that you can really reduce 
poverty under this proposed system is by radical income 
leveling, by taxing the middle and redistributing. And again 
it's kind of like playing football game when you get down to 
the five yard line, then you go out and quietly move the goal 
post back further. I think it is a way of basically defrauding 
the taxpayers of the United States.
    Vice Chair Maloney. I would like to ask Dr. Blank. Any 
change in the official poverty measurement suggests that there 
may be a change in the number of American households defined as 
poor. The Commission of Economic Opportunity in New York City 
has utilized this alternative definition that you've discussed, 
and can you comment on what they have learned from that change, 
and what conditions would we need to consider before 
implementing such a change in the national level?
    Dr. Blank. Yes. New York City released these alternative 
numbers for their city only this last summer. One of the things 
that New York did, which the National Academy recommends 
happening on a nationwide basis, is that they actually define a 
threshold that is reflective of the prices in their particular 
local area.
    Right now we have a threshold that is identical whether you 
are in New York City or Providence, or whether you are in rural 
Mississippi.
    So the poverty numbers in New York go up, but they go up 
almost entirely because of the cost of living adjustment. If 
you look at their numbers before they do their cost of living 
adjustment from New York, they are quite similar to those that 
come out of the official national statistic.
    From what I know of New York City, it is utterly 
appropriate for them to have higher poverty counts because they 
face much higher housing expenses in particular for living in 
the city.
    What you find with this new measure is that it does 
redistribute poverty in slightly different ways. You find a 
greater degree of elderly poverty because many elderly people 
are paying more out-of-pocket expenditures.
    You find a little less poverty among some of your single 
parents in part because you are allocating housing benefits, 
and Food Stamps, and other things to them. So there is a 
change. But it is exactly those differences that you want to 
measure, you want to look at, they say something about the 
resources that families have available.
    Vice Chair Maloney. Thank you.
    Mr. Hinchey.
    Representative Hinchey. It seems to me, and I am sure that 
this was mentioned in the context of some of your testimony, 
that there are a number of ways in which we can deal with this 
issue, and some of them are very constructive.
    I would say that among those constructive means of doing it 
would be to make sure that education is available to every 
American. That means education at the earliest stage, 
prekindergarten education, all the way up through community 
colleges at least. So that anyone who was interested in 
education could have that interest stimulated at a very early 
age, and then addressed and encouraged throughout those very 
important parts of their life as they grow up.
    As we grow up, a lot of the things that we believe in and 
determine and focus on and develop in forms of ambition, all of 
those things are developed during that period of time. So it 
seems to me that education would be one of the most important 
things we could focus our attention on, improving our 
educational system.
    Ms. Blackwell. One of the things that I did comment on 
before you came in the room was the need to really increase 
investments in early education. We have established again and 
again that investments in early education that prepare children 
to begin school ready to learn pay off not only in terms of 
school improvements, but they pay off in terms of lifelong 
improvements. So we need to increase there.
    I also mentioned the need to simplify and expand the Pell 
Grants so that more people can have access to support to pursue 
higher education, and how important it is to make sure that we 
invest in young people who are out of school, and out of work 
to give them that second chance to be able to get either back 
in school, get into work, or figure out how to combine both so 
that they can get back on a path to prosperity.
    Representative Hinchey. Mr. Edwards.
    Mr. Edwards. Thank you. Early education is critically 
important to helping people to get out of poverty. Certainly 
funding programs like Head Start would certainly be very 
important.
    And then tie that to parents working. It is good to have 
the children, the young children involved in educational kinds 
of activities during the day, but it has to be coupled with the 
parents involved in some type of job training, or educational 
endeavor that will help them to get better paying jobs in the 
local economy.
    Representative Hinchey. Mr. Rector.
    Mr. Rector. I would disagree that Head Start is an 
effective antipoverty tool. I think it has a marginal or 
nonexistent effect on poverty. Education itself is beneficial. 
But if you were to look at the causes of child poverty, as we 
have talked about already today, low levels of education are an 
important factor. But lack of marriage is also an incredibly 
important fact. And lack of work is an incredibly important 
factor.
    Now we will spend about a hundred thousand dollars or more 
educating each poor child through the primary and secondary 
system in the United States. We spend close to $250 billion a 
year subsidizing single parents.
    I would ask, how much money do we spend trying to restore 
marriage in low-income communities? And the answer is we spend 
about $1 on promoting marriage for every $2,000 we spend 
subsidizing and increasing single parenthood.
    How much money are we spending trying to establish work 
requirements that have been shown effective to increase the 
amount of work performed by low-income parents? The answer is, 
virtually nothing.
    So we already put in an enormous amount of money on 
education, and education is important. We also put in a lot of 
money on job training, which is not particularly effective at 
all. But the other two elements of this strategy, marriage and 
work, are severely neglected by our current public policy.
    Representative Hinchey. Yes, Mr. Mayor.
    Mayor Cicilline. Congressman, I just want to agree with you 
strongly that I believe the single most powerful tool we have 
to reduce poverty and create opportunity for children and 
families is education. That is both from early childhood 
education, pre-K and Head Start programs, high quality 
educational opportunities through junior college and college, 
and also alternative educational opportunities like Youth 
Build, and Year Up, and other programs that provide young 
people with access to trades and vocations.
    Those are very--in my city at least--those are incredibly 
successful programs that are giving young people access to good 
paying jobs to support a family. Obviously, high-quality public 
education and a system of public education is key to that. And 
so continuing to make good investments to create that kind of 
opportunity I think is our single best way to reduce poverty in 
this country.
    Representative Hinchey. Dr. Blank, anything additional? No?
    Dr. Blank. Only to agree on the comments about education.
    Representative Hinchey. One of the other things that of 
course we need to deal with is the salaries that people are 
paid, the minor amount of income, upgrading the level of income 
that people have.
    I think that that is something that has not been focused 
on. The low income situation in America today is one of the 
worst that we have had in decades, quite a few decades at 
least.
    So I am wondering about that situation. And also the fact 
that we are not yet engaged in equity pay in terms of the fact 
that women, for example, get on average about $.77 as opposed 
to $1 that is paid to men doing the same kind of job. So that 
kind of equity in education would deal much more effectively 
with the situation which was mentioned earlier where you have 
families where the family is controlled and led only by the 
mother and the father is not there. So raising up that level of 
pay obviously would be something very significant. And 
increasing the minimum wage which I think is something that 
must be done.
    What would you say about that?
    Dr. Blank. Could I respond to the low-wage issue? The 
problem of falling wages among lower and less educated workers 
has been a very real problem in this economy, as you point out, 
and particularly for less-skilled men.
    There has been a real decline in labor force participation 
among less-skilled men, and particularly among less skilled men 
of color, which is of course a serious problem if you want 
people working, tied into the mainstream economy, able to 
support themselves and their families.
    That decline in wages has been very directly linked to the 
decline in labor force participation. Not surprisingly, if you 
don't get paid as well, you don't work as much. It is just not 
worth it to you.
    That is one of the reasons why I think a number of people--
and again Congresswoman Maloney mentioned this earlier--are 
very, very concerned about expanding the Earned Income Tax 
Credit so that it provides more support to workers, even those 
who do not have children in their immediately family. It is a 
policy that would encourage greater labor force participation 
at the same time that it subsidizes those low wages that you 
have just mentioned.
    Ms. Blackwell. We also need to remember all of the people 
who are not in communities because of prison. One of the 
recommendations from the Center for American Progress Task 
Force is to really invest in re-entry programs for people who 
have served their time and are returning to the community.
    Since 1950 we have seen a 900 percent increase in the 
number of incarcerated black men, and the legacy of absence 
that this creates in communities in terms of people who are not 
there is something that very much needs to be addressed. And we 
need to make sure that people can get a second chance, can come 
back, can get jobs, and can become contributing members of the 
society.
    And so those kinds of programs, programs like YouthBuild, 
combined with continuing to raise the minimum wage--the raise 
that happened was a very good thing, good progress--we need to 
continue to raise the minimum wage and to index it to be half 
the average hourly wage, increase the Earned Income Tax Credit 
and make it more available, promote unionization so that people 
who have jobs can know that they have good jobs, and guarantee 
child care so that we will not pull so much resources out of 
salaries for people to pay child care. But absolutely we need 
to focus on the equity in terms of earnings issue.
    Vice Chair Maloney. The gentleman's time has expired.
    I would like to ask Ms. Blackwell and Mr. Edwards 
specifically this on the jobless claims rate. The Department of 
Labor reported that the jobless claims are at the highest level 
in 7 years. And now the claims for unemployment benefits are at 
493,000 for the week ending September 20; 400,000 per week is 
typically seen as recession-level claims.
    So I specifically would like to ask--and I recognize myself 
for this questioning period for 5 minutes--millions of 
Americans that are poor and working families have one wage 
worker, yet despite having a worker in the family these 
families are just not getting by.
    This highlights the importance of strong work support as a 
poverty reduction strategy. What do you believe are the most 
important steps that we can take to support low-income workers 
in obtaining and maintaining employment?
    I would like to start with Ms. Blackwell and Mr. Edwards.
    Ms. Blackwell. Low-income workers, much of what we have 
already talked about responds to that, but we really do need to 
recognize that so many people who are low-income are working.
    When people lose their jobs they ought to have access to 
Unemployment Insurance, and we need to expand the Unemployment 
Insurance so that more people have access to it.
    People who are working should get the benefit of the Earned 
Income tax credit. People who are jobless need to have more 
access to Earned Income tax credits. And families who have 
multiple children need to have it extended on that side. To 
repeat, that when people go to work they need to have a minimum 
wage that actually is closer to being a living wage, and there 
needs to be support for people to be able to have the child 
care that they need and not have to continue to live in 
poverty.
    Vice Chair Maloney. Mr. Edwards.
    Mr. Edwards. Yes, thank you very much.
    Vice Chair Maloney. Then Mr. Rector.
    Mr. Edwards. Thank you very much. Let me start with what 
Ms. Blackwell just mentioned.
    The living wage is critically important to this. I know 
that that may be a taboo word at this level in our Government, 
but clearly the living wage, or a living wage is critically 
important to helping people to get out of poverty.
    You know, what we are experiencing today is really a 
downturn in the economy. Anything that happens on Wall Street, 
clearly there's a trickle-down effect that really hurts the 
people at the bottom rung of the ladder. So we really need to 
invest more time and energy and money into job training and 
help people to get into jobs that really pay decent wages.
    Vice Chair Maloney. Thank you.
    Mr. Rector, and then Dr. Blank, and then my time is 
expired.
    Mr. Rector. Low wages are not a significant cause of 
poverty in the United States. Anyone who examines the Census 
Bureau for even a few moments can clearly recognize that.
    Again I would emphasize the fact that any year when you 
look at poor families with children, on average, a very small 
number of those families have full-time, full-year workers.
    On average, poor families with children are working about 
800 hours a year, or about 16 hours a week. Now let's say you 
added $2 an hour to their hourly wage rate, that is only going 
to bring the family's income up about $1,600. It has a minimal 
effect on poverty because the problem is not that their wages 
are too low--not that I wouldn't like their wages to be higher, 
I mean to be honest--but the principal problem is not that 
their wages are too low, but that there are very few hours of 
work being performed.
    And that is consistent every year you look at this data. It 
is not a result of the current depression or anything. That 
happens in good times, too.
    So if you are serious about this, instead of reworking 
trite slogans, the real issue is how do you increase the hours 
of work? Because just raising wages is almost totally 
irrelevant to the real problem. OK?
    Secondly, most people who get minimum wage are not poor. 
They're teenagers, or young adults in middle class families. 
It's an extraordinarily poorly targeted policy to say that you 
want to raise the minimum wage in order to deal with poverty. 
OK?
    It just costs the tax--the consumer a lot of money and you 
are benefiting a whole bunch of teenagers like my son who 
really don't need a wage increase. OK? It's not the group that 
you're trying to benefit.
    Vice Chair Maloney. Thank you. Dr. Blank, and then my time 
has expired.
    Dr. Blank. Just a quick comment on low wages. Low wages and 
labor force participation are very closely linked. When wages 
go up, labor force participation goes up. So that you have a 
multiplier effect from this, which is one reason why I think--I 
certainly care about things like the EITC expansion, and the 
levels of minimum wage, but I want to say that not only when we 
think about assistance to the poor and getting them into jobs 
and employment, we should be very clear that at the end of the 
day it is not the employment programs and the wage subsidies 
that matter the most; what matters the most is that there are 
jobs out there for them to move into.
    Therefore, having a macroeconomy that is not in recession, 
where jobs are expanding and where low-wage workers who are 
looking for work can easily find it is by far the most 
important anti-poverty program. That takes us right back of 
course to the macroeconomy and to the current discussions of 
what is happening on Wall Street and how it affects Main 
Street.
    Vice Chair Maloney. Thank you.
    The Chair recognizes Congressman Hinchey for 5 minutes.
    Representative Hinchey. Well I very much appreciate what 
you said, and I think it is absolutely true. The situation with 
wage equity is very, very important. The availability of jobs 
is essential to the economy and to the circumstances of people. 
And the level of the minimum wage is also very important.
    It is very important to all those people who are working at 
the minimum. And I think it is a lot more than just a few 
children.
    The fact of the matter is that when you increase the 
minimum wage you increase effectively the wage of almost 
everybody else. When you jack up the minimum wage to where it 
ought to be--and the minimum wage has not been increased now in 
a very long time in any significant way; it is far below where 
it ought to be--the minimum wage today should be somewhere in 
the neighborhood of $10. That is where it really should be.
    And if you increase the minimum wage even a little bit 
above where it is, you are going to increase the wages of other 
people who are now above the minimum wage and have a very 
positive effect on the economy. And you have a very positive 
effect on the economy because most of the economy--more than 
two-thirds of it--is driven by the Gross Domestic Product. And 
the Gross Domestic Product is driven by working people, blue 
and white-collar working people.
    So I think what we are talking about here is very 
important, and it is something that really needs an awful lot 
of attention.
    There is another element, too, that I think needs a lot of 
attention, and that is health care. The situation with health 
care I think is causing a lot of problems for low- and now 
increasingly middle-income people. Because more and more people 
are finding themselves without health insurance. And they are 
also seeing that when they do have health insurance that the 
cost of that health insurance is going up very dramatically.
    So I would be interested, if anyone would like to comment 
on the initiative that really needs to be taken to promote a 
national health insurance program in order to drive down the 
cost of health care and to make health care available for all 
Americans, particularly early health care when people begin to 
feel that they need some health care attention, but are not 
eligible to get it, and they are not eligible to get it if they 
do not have any health insurance until they are really 
seriously ill and they have to go into the emergency room of a 
hospital and then make it more expensive for everyone.
    So if there is anything that you would like to say about 
health care and what we need to do with health insurance, I 
would be interested in hearing it.
    Ms. Blackwell. Actually I will leave it for others to talk 
about what we need to do about health insurance, but I do want 
to state that we need to make sure that every American has 
access to health care when they need it, and we need to have a 
system of universal access to health insurance and health care 
services.
    I want to use my time, though, to talk about the fact that 
so much of poor health in this country is not tied to health 
care, but it is tied to environmental factors, and behavior. 
What we really need to focus on is that 70 or 80 percent of 
health that is not about access to health care at all; it has 
to do with people living in communities with air pollution. It 
has to do with people not having access to fresh fruits and 
vegetables. In too many communities in this country it is 
impossible for anybody to go out in their neighborhood and buy 
a tomato--buy a tomato! So we need to invest in making sure 
that people have access to fresh fruits and vegetables. Parks 
and safe streets where they can exercise. And communities where 
the air is safe to breathe.
    If we would pay more attention to making sure that every 
community is a healthy community, we would have less strain on 
our health care system. But absolutely every American ought to 
have access to health care.
    Representative Hinchey. Mr. Edwards.
    Mr. Edwards. Yes. Just to give you just an indication of 
what we are doing in northeast Florida, of the 24,466 people 
that we saw in a 22-year period--this is coming from our 
management information system--21,115 of those individuals had 
no health insurance; 3,342 had health insurance. So obviously 
health insurance is real, real critical.
    People are going to get health care somewhere, somehow, and 
they are going to abuse, perhaps the emergency room situation 
because they do not have health care, and they have to go to 
either the emergency room, or to public health facilities in 
order to access health care.
    A universal health care system is critical.
    Vice Chair Maloney. Could the gentleman sum up? Your time 
is about to expire.
    Mr. Edwards. I did.
    Vice Chair Maloney. Oh, you did? OK.
    Mr. Edwards. That was a period.
    Vice Chair Maloney. OK, Mr. Rector, very quickly.
    Mr. Rector. One thing I think it is important to recognize 
is that when you are looking at low-income uninsured people, 
about a third of them in the census report are illegal aliens. 
I hope no one is suggesting that we need to provide Medicaid 
coverage or something to illegal aliens. That is a growing 
problem.
    The other thing I would say is that there is a considerable 
waste in Medicaid that could be harnessed, which is that in the 
Medicaid program if an individual currently has employer 
coverage they can drop that coverage and obtain Medicaid. That 
is a very significant problem that's called ``crowd out'' and 
it costs the taxpayers billions and billions of dollars a year.
    If you had reasonable rules about dropping the coverage 
that you have in order to get on Medicaid, you could save a lot 
of money and redirect those savings to provide expanded care 
for other people. It is basically a total waste the way the 
system works now.
    Vice Chair Maloney. Thank you. The Chair recognizes herself 
for 5 minutes.
    Economic growth suggests that poverty not only affects 
individuals, but also creates larger challenges for economic 
growth. There has been a great deal of literature written about 
this, and can you discuss the effect of poverty on economic 
growth? Anyone? Who would like to discuss this? The effect of 
poverty on economic growth.
    Mayor Cicilline, you probably have a lot of experience in 
that.
    Mayor Cicilline. There is no question that the ability to 
create good-paying jobs and move people out of poverty by 
having a high-quality system of public education, by ensuring 
that people are growing up in health communities as Ms. 
Blackwell was mentioning, and having access to quality health 
care are all things that are essential to strong communities 
and to strong cities.
    So that as we try to grow jobs in our communities, and as 
we try to create economic opportunities in our communities, the 
issue of poverty is at the center of all of that work--ensuring 
that people have access to good jobs, have access to good 
health care, have access to quality education, live in a 
neighborhood that is safe from violence, that has good public 
spaces for exercise, but all of that are the things that lead 
to a positive image of a city, and a positive image of a place 
to work and bring capital and make investments to create 
economic opportunity.
    So they all relate to each other. And the effects of 
poverty obviously affect most personally and directly on the 
child and the family that lives in poverty. But it has a 
corrosive effect on the whole community. Anyone who is a member 
of a community who lives in a place where there are people who 
remain poor continue to feel the effect of that.
    So we have a joint responsibility as residents of a 
community to eradicate poverty, and economic development is a 
key way of doing that.
    Vice Chair Maloney. Mr. Rector, and then Dr. Blank.
    Mr. Rector. I would say that poverty has no effect on 
economic growth other than on the incomes of the poor people. 
Obviously if you can get their incomes up they are better off, 
but if you mean does poverty reduce the standard of living of 
the average American, the answer is no.
    What does reduce the standard of living of the average 
American is welfare spending. Having spent $14 trillion on the 
war on poverty with very little effect, not only imposes a 
direct cost on the taxpayers who had to pay for that spending, 
but if even a portion of that money had been invested in 
capital or in new technology or in entrepreneurial activity, 
the overall economy and the standard of living of the average 
American would be considerably higher.
    As we look forward to spending the next $9 trillion on 
welfare over the next decade, the same rule applies. Now I am 
not suggesting that we ought not to spend that $9 trillion. I 
do think we have obligations to the poor. But I also think we 
have an obligation to spend that money wisely in a way that is 
not just one round of one-way handouts after another. We need 
to reform welfare so that it requires and demands and 
encourages constructive behavior on the part of the poor, and 
which begins to end the self-inflicted behaviors which are the 
major cause of poverty, particularly the 38 percent out-of-
wedlock childbearing rate, and the very, very low levels of 
work among poor adults.
    Vice Chair Maloney. Dr. Blank.
    Dr. Blank. There is a substantial body of literature that 
is growing rapidly looking at the effects of poverty on 
children and on adults. It finds that not only that poverty has 
these effects, but the longer that a family and children spend 
in poverty the greater the effects.
    So you find that longer periods in poverty produce greater 
health problems. It produces lower educational achievement. It 
produces greater likelihoods of being involved in crime.
    Now all of those things--low educational achievement, poor 
health, and high rates of crime--are basically impediments to 
productivity and to economic growth in this country.
    So I would not think that the only reason you want to 
reduce poverty is because it is going to make all the rest of 
us better off. I mean, there are a variety of reasons to reduce 
poverty because we have responsibilities to these individuals 
and the lives that they lead as fellow American citizens. But 
it is true that if we do reduce poverty, the rest of us will be 
better off, as well.
    Vice Chair Maloney. Thank you very much. My time has 
expired, but I would like to close by first thanking my 
colleague for being here today and participating, but all of 
you. Many of you travelled quite a distance to be here. Your 
testimony, your insight, your research will help all of us 
formulate hopefully new policies for the 21st century to help 
us combat poverty, which will help not only the individual but 
our overall economy, in my belief.
    I also want to close by remembering Senator Edward Kennedy 
and his lifelong commitment to ending poverty, to attacking 
poverty. I send him all my best wishes, as I am sure all of you 
do, for his speedy recovery. He did request this hearing, and 
my thoughts are with him. The entire transcript will be given 
to him to study during his period of recovery.
    And I want to end by just really thanking all of you for 
your life's work, your research, and your dedication to helping 
individuals and helping our country. Thank you so much for 
being part of this hearing.
    The hearing is adjourned. Thank you.
    [Whereupon, at 11:31 a.m., Thursday, September 25, 2008, 
the hearing was adjourned.]
                       Submissions for the Record

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  Prepared Statement of David N. Cicilline, Mayor, Providence, Rhode 
                                 Island

    Thank you Chairman Schumer, Vice-Chair Maloney, and to all 
members of this esteemed committee.
    I am honored to be here as a representative of mayors and 
other elected city officials from all over the Nation who are 
working to address these issues.
    Mr. Chairman, for many generations, when America has faced 
difficult economic times, some have viewed our cities as our 
greatest burdens.
    In the national imagination, cities, and the people who 
lived in them, were described as the ball and chain of the 
national economy, dragging America down. Words like devastated, 
blighted, and ruined were so often associated with the word 
``urban'' that they effectively became synonymous.
    But something remarkable began happening a decade or so 
ago. American cities began a stirring comeback. Benefiting from 
effective Federal policy in the 1990s as well as the transition 
to a knowledge-based economy, cities are again the centers of 
culture, innovation, and, most of all, economic growth.
    A slew of recent research underscores the fact that in our 
shaky economy cities are not the problem. They are the 
solution.
    The reality is that the American economy is a metropolitan 
economy. In fact, the nation's 100 largest metro areas, which 
make up only 12 percent of the Nation in land area account for 
68 percent of all jobs and 75 percent of national GDP.
    Furthermore, as we expedite the transition of our economy 
into one that meets the demands of the information age and our 
need to become independent from foreign oil, the strategic 
importance of cities grows even more.
    Already, cities have 76 percent of the knowledge jobs and 
are poised to grow an even higher proportion.
    Additionally, cities house our great scientific research 
centers that will give birth to the innovations that will power 
America with new forms of energy. Also, contrary to most 
people's ideas about urban America, cities are the greenest 
places we can live based on existing consumption patterns.
    Chairman Schumer, you may already know that those living in 
the New York metropolitan region have on average half the 
carbon footprint of the average American. The more Americans 
that continue to move to cities, the less dependent America 
will be on foreign sources of energy.
    Cities are the solution. But, as a nation, we are not 
tending our metropolitan garden. In recent years, the evolution 
of cities has continued in spite of national policy, not 
because of it. As a result, we are severely restraining our 
metropolitan transformation at a time when we need to 
accelerate it.
    Foremost among these restraints, without a doubt, is 
poverty. Poverty is to a family and a community what inflation 
is to an economy. Its consequences spill over into everything 
else and have a lasting and devastating impact. But, what makes 
it worse, is that there are measures we know we can take to 
prevent it from persisting.
    Not surprisingly, the headway we made on poverty in the 
1990's coincided with the metropolitan comeback. But in recent 
years that headway has been reversed. In my view, one of the 
reasons for this is the sharp decline in funding. First Focus, 
the children's advocacy group on whose advisory board I sit, 
recently discovered that the share of non-defense spending on 
kids has declined by a full 10 percent in just 5 years. And, as 
you know, the Community Development Block Grant--one of our 
country's great domestic programs for cities--has also been 
significantly cut in recent years. Just to name two examples.
    But you are presented with lots of statistics every day and 
the call for funding is constant. So my job today is to report 
to you from a Mayor's perspective about what can work and is 
currently working to lessen poverty in our communities.
    I know that many view poverty as a great complex of 
interrelated problems, but I view it very simply. Poverty is a 
lack of opportunity. So to me, the fight is not so much a war 
on poverty as it is a war for opportunity.
    The long-term answer does not lie in merely relieving the 
stresses and pain of poverty. The long-term answer lies in 
rebuilding upward mobility in America. The war for opportunity 
means rebuilding the economic ladder. When there is upward 
mobility there is hope. Families will work harder to make sure 
their children are educated, stay out of trouble and develop a 
strong work ethic. But when there is not, it creates the 
environment for many of the social ills that can ruin lives and 
drive up the costs of social programs.
    Unfortunately, all across the country, the economic ladder 
has been badly weakened in recent years. It used to be that the 
American Dream was available to anyone who was willing to work 
hard enough, but in today's economy too many families are doing 
everything right and still getting left behind.
    At my second inauguration in 2006, I identified this as one 
of the highest priorities for my city. I signed an executive 
order creating a task force made up of our foremost experts on 
workforce development, poverty, and early childhood development 
and family supports.
    I asked them to offer me their best recommendations for 
what we can do at the city level--as a government and as a 
community--to reestablish upward mobility for our working poor, 
and to help re-build the middle class in our city.
    They developed a set of action steps called Pathways to 
Opportunity to move people into the workforce, keep them in the 
workforce, and open up more opportunity to get ahead once 
they're in.
    With the report in hand, I formed a partnership with the 
Annie E. Casey foundation, to open an office that is charged 
with overseeing the implementation of these recommendations in 
coordination with the city and the agencies that helped to 
develop them. It also serves as a community-based site for 
residents to connect to new opportunities.
    We have launched a number of ambitious projects as part of 
this initiative.
    We initiated a major long-term effort to rebuild many of 
our old and decaying school facilities and replace them with 
21st-century learning environments. As part of this, we 
launched a large-scale apprenticeship program in the 
construction trades. We have young people from across the city 
who are integral parts of these major construction efforts that 
involve cutting edge green technology and learning how to build 
to LEED standard.
    We have partnered with our hospitals that are facing a 
serious nursing shortage to get young people access to the 
skills they need to begin a good career in the health care 
field.
    Taking the lead from Brookings' work on ``the high cost of 
being poor,'' we are working with local banks in an 
organization called Bank on Providence. It is developing 
financial instruments specifically designed for low-wage 
families and individuals. I am also working with the state 
legislature to regulate the ability of predatory lenders and 
check cashers to extract usurious rates and charges from their 
customers--most of whom haven't been able to access mainstream 
banking services.
    We are aggressively engaging with ex-offenders who come 
back to their communities to make absolutely sure they meet all 
of their re-entry obligations or else face consequences. But at 
the same time ensuring that the support necessary for their 
success is in place.
    These are a few examples of the kinds of meaningful, 
measurable, and effective strategies being undertaken by this 
office. It is all about creating more opportunities and 
removing any barriers to existing opportunities.
    Mr. Chairman and honorable members of the committee, if I 
had more time I would love to also describe to you the 
incredible effect that city-wide after school is having in 
Providence. I'd like to describe the success we've had with 
integrating our police force with the communities they serve. 
There is so much that has an effect on opportunity and poverty 
that we know will be effective.
    But instead I will quickly conclude with a general comment. 
Our cities represent tremendous opportunities for our 21st-
century economy. We can unleash that potential by making 
opportunity for every American a national priority again. After 
all, the other name for a robust economic ladder and upward 
mobility is the American Dream. That is what made our economy 
the envy of the world, and it is the only way we can preserve 
its position in our global economy.
    Thank you.

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