Congressman Danny K. Davis
Remarks at the Annual Leadership Assembly
December 8, 2001 Dearborn, Michigan

Good morning.

I want to begin by emphasizing the importance and timeliness of your focus on poverty at the meeting here in Dearborn today.

The stubborn persistence of poverty in America is one of the most inexplicable features of our national life. America in the 21^st   century is the wealthiest nation in history. It has the resources to provide for all of its citizens. Certainly we have the resources to end hunger and homelessness and to offer quality health care and education to all our people.

And yet, in our great national paradox, we have not.  The gap between the few ultra wealthy and the, overwhelming majority of working people, that gap which was once quite small has grown and is now wider than at any time since the great depression.

It has, in the judgment of many, become so large that it undermines our sense of a nation of equals. Poverty and income inequality present a real challenge to our notion of America as a nation of equals.

In 1997, the top 1% of the U.S. population, 2.6 million people, had as much after tax income as the 100 million Americans with the lowest incomes. At the same time, household debt reached historic highs.

The total value of all forms of outstanding household debt was greater than the total disposable income of all households. The wealthiest I% reduced their share of the debt by 27% while the middle 20% of households increased their share of the debt by 38.8%. There was no progress in reducing poverty between 1995 and 1999 despite an increasing economy. Reductions in poverty as a result of economic growth were entirely offset by increased poverty due to cuts in government safety net programs.

The poor in the United States are less likely that the poor in other countries to leave poverty. On average 28.6% of the U.S. poor are able to escape their economic situation, while in Sweden the rate is 36%, in Germany the rate is 37%, in Canada the rate is 42% and in the Netherlands the rate is 44%.

Counting the poor has become a cynical art. Measures of poverty have come and gone, many of them arbitrary from their inception. The current "poverty level" has never been permitted to adjust to cost of living increases and other impacts.

The debate over defining poverty, and who is poor, has been used to limit the ability of public policy to address poverty in a meaningful way.

As William Greider has pointed out:

"The effect of the poverty line is to obscure the existence of a vast pool of struggling families who are above the poverty line, who are not "officially" poor, and to exclude them from the political equation."

"Helping the poor is considered virtuous, even among conservatives, helping the non-poor is considered wasteful or even fraudulent. The problem of poverty is presumed to reside in the poor people themselves, not in the structure of wages available in the private economy."

According to a recent study by the Economic Policy Institute, 29% of working families in the United States with one to three children under age twelve, do not earn enough to afford basic necessities such as food, housing, health care and child care, even during a period of national prosperity.

Nearly one-third of families with incomes below twice the poverty threshold faced at

least one critical hardship, like going without food, getting evicted or having to double-up in housing with another family or not having access to medical care during an acute illness. The report calculated a "basic budget" level for each state - the budget a family would need to afford food, housing, childcare, health insurance, transportation and utilities.

Even for families that include a full time worker, nearly one-quarter of families below twice the poverty line face one or more critical hardships. Of families with incomes below the basic budget line half include a parent who worked full time and nearly 60% are two parent families.

More than 75% are headed by a worker with a high school degree or more. About one-third live in the suburbs, one-third in the cities and one-third in rural areas.

Just over half of all families living below the basic budget level are White families. However about half of all Black and Hispanic families fall below basic budget levels.

No one argues for income equality in the sense we demand equality in the polling place. Nevertheless, there is, somewhere, a line where economic inequality becomes incompatible with democracy. The market place makes no allowance for democracy and there is no greater challenge to our democracy than economic injustice, and poverty in the first place.

So out of concern for basic economic justice, out of the fundamental need for capitalism to balance production and consumption and a profound need to preserve our sense of nation we face no more critical task than shaping a national economic policy which addresses the issue of poverty.

The question of poverty and income inequality has moved center stage as, for the first  time in a decade, America is mired in recession. More than 8.2 million Americans are now out of work. More than 700,000 workers have lost their jobs since September 11. Our economy is shedding 100,000 jobs a week.

As usual, the most vulnerable are the hardest hit. Unemployment of African Americans and Hispanics have increased at least 50% faster than the national average. For African American teens the increase is 400% faster.

Employment rates for women who are heads of household have soared.

Also soaring is homeless rates. According to the Coalition for the Homeless, a record number of people, more than 29,000 were spending the night in shelters in New York during November - up from 8,000 in October.

Meanwhile the so-called safety net, gutted by welfare reform has begun to reveal fearsome gaps. Even before the downturn began, more than 100,000 families lost their income support because of time limits.

In the first three years of TANF, 540,000 families had benefits terminated for not complying with program rules.

State reserves for income support programs are drying up rapidly. Illinois and Michigan are among States most at risk. Food stamps have traditionally been one of the basic protections of the safety net. However, over the past few years participation rates have fallen sharply because of barriers to access.

One of the other basic fixtures of the safety net has been unemployment insurance. Benefit levels now replace only 33% of the average workers lost earnings – down

from 36% in 1990. The percentage of unemployed workers who actually get unemployment benefits has also declined over the past 40 years peaking at 49% in 1975 and declining to a mere 37% in 2001.

We know that recessions are particularly cruel to state budgets. Those who have been following events in Illinois know that Medicaid is high on the endangered list.

We need an economic stimulus to jump start our economy and we need it today.

While some talk about tax cuts which will primarily benefit the wealthiest 1% of taxpayers, and doing nothing for the bottom 75%, let me suggest that any serious

economic stimulus package must consider, and be focused on, the needs of the poor and the most vulnerable among use We must provide protection for those at greatest risk of economic hardship – low wage, entry level and part time workers, women, minorities, the underprivileged, small businesses, marginal communities and those who have lost their jobs.

Specifically, what does this mean?

I believe it means raising the minimum wage to a livable wage. Time does not permit me to fully explore the importance of the living wage movement.

Suffice it to say that the living wage movement has become one of the most potent and effective tools for attacking poverty. Chicago and Cook County are just two of the many units of local government, which have passed a living wage ordinance.

Extending unemployment and medical benefits both as regards to time and eligibility has become a central feature of the current legislative initiative in the Congress and offers one of the fastest and most efficient means of stimulating the economy.

President Bush remains opposed to the notion and it remains to be seen if the position of the Democrats in Congress will prevail. Providing direct loans and grants to small businesses affected by the September 11 terrorist attacks has become a hot topic of discussion especially since the Congress passed the airline bailout. I believe that it makes a lot of sense to look toward assisting small businesses which today generate the majority of jobs in our nation.

Re-authorizing a TANF program, which not only takes people off welfare, but takes people out of poverty is one of the largest issues facing Congress next year. The unfortunate fact is that welfare reform has been successful. The problem is that it was never intended to meet the needs of the poor but to shed public responsibility for addressing poverty.

Welfare rolls have declined, but many of those who have left TANF are in worse economic condition than they were before they left.

Real welfare reform must address at a minimum:

1) improving the safety net for children while helping parents meet work-related goals;

2) empowering families to find resources and tools needed to meet their needs and goals as a family;

3) ensuring families with multiple barriers to employment and economic independence receive necessary services including mental health and substance abuse treatment;

4) revising the time limits on eligibility;

5) redefining the goal of reform to reduce poverty, especially child poverty, not just caseloads.

We will never eliminate poverty until we recognize the need for a federally funded day care program for children of all ages. 49 states have child care costs greater than tuition to public colleges.

Yet, quality day care is not only a critical prerequisite for parental employment, it is critical for healthy child development.

Affordable housing and the eradication of poverty go hand in hand. I am a big fan of transit oriented development which uses public mass transit as an anchor for economic development and where mixed use developments are build near transit hubs which provide access to employment centers. We are also working hard to expand HUD opportunity housing investments and public commitments to SRO housing as well as targeted housing assistance for the homeless.

Finally, and critical for our growth as a nation, is a system of national health care including prescription drug coverage and the treatment of mental illness on a par with all other illness.

No nation in the world has the health care resources, the technology, the trained health care professionals of America. But our health care delivery system is broken and our priorities, especially our lack of focus on prevention, are sadly misplaced.

I hope that the results of the November election in Portland Maine will be a bell­weather of things to come in health care. Portland voters passed a referendum on universal health care despite the fact that opponents spent hundreds of thousands of dollars, more than Congressional candidates spend in Maine, to defeat the measure.

A single-payer, universal health care system would be more efficient, would cost less as a result of eliminating mountains of paperwork, would offer more choice and would provide coverage to every one of our people.

Well, those are a few of the priorities that I see in fighting poverty. But, I suspect I'm preaching to the choir here - you have been deeply involved in these issues for years.

Just like the choir you carry a heavy load - and are a big, but too often invisible part of the solution.

All these ideas mean nothing if we fail to organize the political, social, economic, moral, and spiritual commitment and muscle to make it happen.

And that's what this meeting is all about: making it happen. For that, you have my highest respect and appreciation.

I applaud your commitment. I salute you accomplishments. I commend your energy.

And I join you in your determination to help shape an America where poverty and all of the social, moral, mental and physical ills associated with poverty are eradicated forever.

How far away is that dream? I hope and dream and pray: not far.

Thank you.

Congregational  development