Gov. Rick Snyder proudly labels Michigan the “Comeback State” and legislators, citing rising business start-ups and falling unemployment rates, sing from the same hymnal.
But here’s the reality: At the grassroots level, Michigan still faces a troubling problem with widespread poverty, particularly among children.
The annual “Kids Count” report released recently received minimal media attention though the message was rather grim: 48 of Michigan’s 83 counties suffer from economic troubles so intense that 25 percent or more of their children live below the poverty line. That is an astounding, disturbing figure.
In fact, if you drew a somewhat horizontal line across Michigan from Bay City and Saginaw to Muskegon, nearly every section of the state north of that divide remains racked by severe economic shortcomings for families and children.
Yet, the task of tackling poverty barely sparks a glimmer on the horizon as the Legislature looks ahead to the 2015-16 session.
The Republican majorities in the House and Senate certainly aren’t contemplating any new government programs that would spend our way out of economic distress at the bottom rungs of society’s ladder. But thinking smarter about helping those in the economic depths is certainly within reach.
The GOP should realize that a proven anti-poverty measure is in view, on the May 5 ballot, buried within the Proposal 1 tax plan for roads. The Earned Income Tax Credit for the working poor would be restored to its previous level – prior to the budget cuts of 2011 – if the ballot question passes. That provision alone would lift more than 15,000 low-income families out of poverty.
The EITC works its magic by using the tax code to provide credits – refunds – to those who work for a living, but struggle to make a living. Ronald Reagan long ago called the EITC, which is also offered at the federal level, the “best anti-poverty, the best pro-family, the best job-creation measure” ever created.
The overall cost to the state treasury in lost revenues with this small-government approach is minimal, but the boost to working-class families is overwhelming. For example, the Legislature’s 2011 budget axe meant that EITC tax refunds to the poor plummeted from about $28 million to $8 million in each of Macomb and Oakland counties.
In addition, a recent study found that most EITC recipients claim the credit only temporarily when a job loss or other significant event reduces their income.
Unfortunately, if Proposal 1 fails – as it appears is quite possible –it’s likely that shoring up the EITC will not find a place on Lansing’s agenda again for many months – if not years.
As lawmakers try to get their arms around the newfound $9 billion liability facing the state due to special tax cuts and credits provided to individual businesses by the Michigan Economic Development Corporation, the temptation in the House and Senate will be to cut social programs, including those aimed at reducing poverty.
Of course, if those “job-creating” MEDC tax credits had worked as advertised, poverty wouldn’t be such a concern anymore in Pure Michigan.
To keep the budget balanced, conservatives may gravitate toward slashing welfare programs that receive blame for creating government dependence, but those cuts have already taken place when no one was looking.
The new rules established in welfare reforms approved by Congress in 1996 were not tied to the inflation rate. The result? The TANF program that provides cash assistance to the poor assisted 68 of 100 families with children living in poverty in ’96. In 2010, as the Great Recession subsided, only 27 of 100 such families received benefits.
Meanwhile, by some measurements, struggling families across Michigan fare no better now than during the recession.
The number of kids 5 years old and under living in extreme poverty rose 50 percent during the Great Recession, and that increase has not yet shown signs of subsiding.
In 2013, nearly 740,000 K-12 students in the state stood as eligible for free or reduced-cost school lunches. That figure, consisting mostly of free lunches, remains above the level of 2009, when the recession hit bottom.
The federal government picks up the bill for these school nutrition programs, but that’s a distinction that doesn’t mean much to the average taxpayer.
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