The Clintons still don't know how to fight poverty

Finally, the Democratic Party is talking about poverty.

Many writers, including me, have argued that Hillary Clinton should admit the abject failure of her husband's 1996 welfare reform bill, and ideally offer something to fix the damage. Bernie Sanders has finally picked up this line of attack, castigating Bill Clinton for signing the bill and Hillary for whipping votes for it. The Clinton campaign quickly responded, just not in a way that seriously grappled with Bill Clinton's legacy or with the magnitude of the effort ahead.

On Thursday, Bill claimed welfare reform "did more good than harm," but tepidly allowed that it "needs some improvement." Worse, the Clinton camp then went on the offensive, attacking Sanders' single-payer health care proposal by putting out a new gloss on an old study, which purports to show that Sanders' single-payer health care plan would end up being a net negative, income-wise, for many poor people on Medicaid. The idea is that the increased payroll tax to pay for single-payer wouldn't be compensated with lower premiums, as people don't generally pay premiums for Medicaid.

This is the whole problem with the Clintons' — and much of the country's — approach to tackling poverty in a nutshell.

While the Clinton line may be narrowly true (though don't forget the 30 million people who are still uninsured), the important thing to remember is that the payment stream for any welfare program needs to be considered in concert with the rest of an economic platform. Sanders would also put up the minimum wage to $15 per hour, increase Social Security benefits, and spend $1 trillion on infrastructure, among other things. It's likely that that Sanders program as a whole would be a big net benefit for the poor — and if it weren't, it would be simple to adjust the tax incidence so they were.

This non-systemic thinking is characteristic of the flaws of Clinton-style thinking on welfare. Traditional welfare did have some flaws, to be sure. But its biggest one is something rarely acknowledged by mainstream Democrats: It was simply required to do too much.

Poverty is an endemic problem in all rich capitalist societies, because market labor is the major source of income but many demographic groups cannot work. Children, the aged, students, disabled, people who've stopped working to care for others, and the involuntarily unemployed make up 84 percent of the U.S. poor. Therefore, a sensible anti-poverty approach has separate programs aimed at each subgroup: child benefits for families with children, retirement benefits for the elderly, a student grant, disability benefits, unemployment insurance, and so on.

The United States treats the bottom half of its income ladder like garbage (not coincidentally, they're disproportionately black and brown), but even we have some halfway decent programs aimed at most of these groups. There are tons of tax subsidies for parents. Social Security is for retirees and for disabled people; various (terrible) tax credits subsidize individual retirement saving, and so forth. These programs are often horrendously inefficient, but they are aimed in basically the right direction.

Welfare reform was a grotesque failure because it was maniacally focused on trying to get people out of poverty through the market income channel alone. Now, more jobs are badly needed, and higher wages are good in themselves that they would reduce poverty to some extent. But relying on this alone to deal with poverty is a clear failure.

Hence, a genuinely aggressive attack on poverty would abolish the crappy tax credits that are heavily skewed towards the rich, and implement efficient transfer programs. Bolster Social Security on both the disability and retirement side, and pay for it by removing the cap on payroll taxes and abolishing retirement tax subsidies. Reverse conservative cuts to unemployment insurance. Most importantly, abolish family tax subsidies, and replace them with a flat child allowance, plus a maternity grant and paid leave for mothers and fathers.

That wouldn't get you all the way to zero poverty, and that's where traditional welfare comes in. As Annie Lowrey argues, this ought to be returned to something like its original format: unconditional cash transfers for the very poorest people. After all, though non-workers are the vast majority of the poor, there are still some able-bodied working-age people who can't get work for one reason or another, whether it's through lack of education, residing in an economically depressed area, or something similar. Such people ought to be provided at least a poverty-level income, in addition to worker training and job placement programs (which are a lot more likely to work when people are not materially desperate). Food stamps are also a critical source of support for this population; another area where conservative cuts should be reversed.

However, it's critical to note that the population of totally desperate people will be vastly reduced by the provision of all the other anti-poverty efforts. Traditional welfare will no longer need to shoulder much of the poverty burden.

Now, jacking taxes way up and flooding the proceeds towards the bottom of the income ladder is one of the more radioactive political subjects. If Bill Clinton's comments are any indicator, that campaign will not even disavow welfare reform, let alone come out for unconditional cash transfers. Even Bernie Sanders may hesitate. But at root, reducing poverty is a dead simple policy task. Only lack of political will prevents it.