American Politics Today - Essentials (3rd Ed)

SOCIAL POLICY| 451

Despite these patterns of inequality, people who earn more than $100,000
receive more benefi ts from the federal government ($5,690 on average) than
people who earn less than $10,000 ($5,560). How can that be? Consider, for
example, that 68 percent of the tax savings from deducting mortgage interest
goes to people in the top fi fth of the income ladder.^34 Other government policies
that help the wealthy include patent and copyright law, bankruptcy law, bailouts
of the fi nancial sector, immigration policy, enforcement of tax law, and mone-
tary policy.^35 Government programs that help the wealthy also benefi t corpora-
tions. These policies, often called “corporate welfare,” include programs such as
crop subsidies to large corporate farmers and tax deductions for oil companies
to encourage exploration and drilling.^36 Clearly, there is much more to welfare
policies than programs for the poor.
Politicians’ diff ering reactions to the types of statistics presented here remind
us that politics is confl ictual. Republicans argue that the best way to address pov-
erty is to create jobs and have a healthy economy through supply-side tax cuts that
promote the creation of capital, investment, and jobs. Democrats argue that mak-
ing the wealthy pay a larger share of their income in taxes could fund programs to
help the poor directly rather than waiting for the trickle-down eff ect of tax cuts
for the wealthy. From this perspective a trade-off exists between inequality and
reducing poverty, and progressive taxes are needed to help the poor.

Note: The data points are placed at the midpoints of the respective years. Data for people age 18 and older
are not available from 1960 to 1965.
Source: U.S. Census Bureau, Current Population Survey, 1960 to 2010 Annual Social and Economic Supple-
ments, available at http://www.census.gov/hhes/www/poverty/publications/pubs-cps.html (accessed 6/12/12).

POVERTY RATES BY AGE

Children today are in poverty at nearly twice the rate of the elderly, whereas 40 years
ago the poverty rate among the elderly was twice that of children. What changes in
social policies in the past 75 years could help explain this change?

FIGURE » 14.6

10

20

30

40

50%

1959 1965 1970 1975 1980 1985 1990 1995 2000 2005 2009

65 and older

Under 18

18 to 64

Recession

Under 18

65 and older

18 to 64