The Dollar Cost of Poverty

“[R]esearchers at Columbia University’s Mailman School of Public Health found that poverty, low levels of education, poor social support and other social factors contribute about as many deaths in the U.S. as such familiar causes as heart attacks, strokes and lung cancer.” [Science Daily, 18 June 2011]

The annual cost of heart disease and stroke is $683-billion per year. Total cancer cost is about $50-billion. [Centers for Disease Control and Prevention] Therefore, the costs of poverty plus the leading causes of death cost the US well over a trillion dollars annually, perhaps $1.4 trillion. If just half of that were eliminated by better health and less poverty, the federal deficit of $1.26 trillion would be reduced by more than half. Reducing military costs to 2000 levels would put a balanced budget within easy reach. Eliminating the various subsidies to big corporations that don’t need it would take it the rest of the way.

Instead, Republicans want to simply do away with all of the social services that the poor and middle class depend on. Attempting to reduce the budget deficit by reducing services is likely to increase social costs because of “death by poverty” costs, as it were. Any budget savings would be reduced by the cost of these increased deaths. This is bass ackwards economically, and moves us in a direction opposite to the way we should be moving.

In order to reduce the national debt, there must be a surplus in the annual budget. Some reduction in annual budget deficit can be obtained with austerity, as Republicans want to impose, but there are two problems with this: First, reducing social services, even to zero, cannot by itself balance the budget. Second, as we see from the Columbia report, reduced services are likely to result in increased expense, not the other way around. At best, any savings is likely to be considerably smaller than Republicans imagine.

Our government social services are not nearly as generous as Republicans are trying to claim. All of them came into being because there was a serious need for them. But only the rich are represented in Congress, so what affects the poor and middle class are fair game for Republican target practice.

No one denies that these services, particularly Social Security and health care, need to be brought under control. But health care costs, the largest item in the federal budget at present, could easily be reduced by half with a universal national plan, which Republicans liken to Marxism. This, of course, is nonsense. Republicans have been claiming we are on the verge any minute now of becoming a Marxist-socialist-communist nation. They have been saying this since 1856.

The reason our budget deficit is so large is that tax revenue has fallen. And why is that, aside from Bush’s $1.7 trillion tax giveaway to the rich? Unemployment, lower wages and job speed-up (such as distributing work from a fired employee without hiring a new person) all play their parts. Here’s what our employment situation looks like (posted by Paul Krugman). Obviously, the employment elevator is stuck at the basement level.

The way to improve tax revenue and therefore build a budget surplus is to cure the unemployment epidemic that has been ongoing for 3½ years. This cannot be done by picking on the poor, because the “poverty death penalty” will end up costing us nearly as much as we might save, not to mention that it won’t put anybody back to work. The way to improve tax revenue is to restore a more equitable tax structure and put the unemployed back to work with an adequate employment stimulus.

As usual, this is not rocket science. As usual, Republicans don’t want to hear it, because it doesn’t mesh with their preconceived, ideological notions.


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2 CommentsLeave a comment

  1. great chart!


    • Compliments of St. Louis Fed. via Paul Krugman.


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