[Comment] A New Strategy Against Poverty

from Spotlight on Poverty

Newt Gingrich answers Barack Obama's call for an honest discussion about poverty.

In early March, Senator Barack Obama gave a speech in Philadelphia in which he invited Americans to engage in an honest discussion about poverty, race, and the future of those Americans who are currently unable to pursue happiness. It was a powerful speech and deserves response, and I am writing here to answer his call and suggest that we find real solutions. To find real solutions, we have to have real honesty and a serious dialogue in which unpleasant facts are put on the table and bold proposals are discussed.

Real change requires facing reality. I think it will be very hard to go around this country and find anyone willing to stand up and suggest that the current system is working for the poorest of Americans. The tragic truth is that the current system is not working because of two topics we don’t like to talk about: bad culture and bad government.

The bad cultural signals are routine in the mass media. This is the core challenge: should ours be a country in which every person learns to work, save, and have a better future? Or is this a country where you shouldn’t have to do all those things, where someone else will take care of you? This failure to take into account the realities of economics and to focus on creating a culture of productivity and prosperity can have devastating results.

Let me briefly discuss my experience with welfare reform, and then offer seven specific ideas we should consider in beginning a new fight against poverty.

The welfare policies we had were a disaster. I’m very proud to have been part of the group that passed welfare reform. When we passed welfare reform, here are some of the consequences.

During the late 1990s, employment of never-married mothers increased by nearly 50 percent, of single mothers who are high-school dropouts by 66 percent, and of young single mothers ages eighteen to twenty-four by nearly a hundred percent. The child poverty rate fell from 20.8 percent in 1995 to 17.8 percent in 2004, lifting 1.6 million children out of poverty. The poverty rate among black children fell from 41.5 percent in 1995 to 32.9 percent in 2004—a stark contrast from the period 1971 to 1995, when this poverty level had not changed much. The poverty rate also fell from 53.1 percent to 39.8 percent for children from single-mother families. Welfare caseloads began to decline in earnest after 1996 and have fallen by 56 percent since then.

The right policies also make a huge difference. But we cannot forget the importance of culture to poverty. The first step is for people to decide the culture that they want. If they want a culture of prosperity, they must establish the values of that culture. You then have to redesign government so it is rewarding those who follow the culture of prosperity and making it expensive for those who in fact are determined to reject being part of the world of prosperity. Because you want to send signals that say this is the right way to go, this is the wrong way to go. This is the heart of how healthy societies operate.

We need bold, courageous solutions that dare to be politically incorrect. So how do we endure and prevail? There are seven areas that I will describe briefly.

First, it is important to recognize that we have an absolute, verifiable model of minimizing crime. It’s not a mystery. It’s not a secret. The difference in the murder rate per 1,000 people between Philadelphia and New York is breathtaking. And yet where are the leaders who want to know how to transfer this knowledge to their cities? The amount of unnecessary crime that we tolerate in America is breathtaking.

Second, I believe that adolescence is a failed, nineteenth-century idea. Prior to the middle of the nineteenth century, people were either children or they were young adults. Now we have invented a middle zone, where kids are bored, trapped in mindless bureaucracies, critiqued routinely, and end up hanging out, watching junk television, doing drugs, and having sex. I believe we should begin an experimental policy, where if you work either part-time or full-time at ages fourteen through sixteen, there would be no taxes on your money. You get 100 percent of what you earn as take-home pay, reinforcing a culture of self-sufficient work.

I would also propose that we fundamentally redesign learning in America on an achievement base in which students are rewarded for finishing school earlier. Every year earlier that you graduate will be transformed into an automatic scholarship that would reduce the costs if you agree to national service. So, a student who graduates in three years would get the entire cost of their senior year covered and returned in a scholarship. We would take the entire cost of your junior and senior year if you can graduate in two years.

Third, wealth creation for all Americans must be encouraged. Across the world, jobs get made in places with low tax, limited regulation, and limited litigation models. Many leaders in America right now have a notion that we should punish businesses so that they won’t send jobs overseas. Instead, we must compete with Ireland with a 12.5 percent corporate tax rate. We should have 100 percent expensing so that people can replace their factory equipment every year. We must maximize entrepreneurship and education, and increase visas to get educated workers into America.

Fourth, we have enormous opportunities to fundamentally rethink disability in America. There are millions of Americans, from “workmen’s comp” to birth defects to people who have car wrecks, that could lead dramatically better and fuller lives with a capital investment, information technology, modern capability approach. We must fundamentally address how we think about disabilities.

Fifth, we must save failing cities like Detroit by dramatically shrinking government, with lower taxes and pro-business policies. We should create “opportunity zones” in which it is possible for all investment in Detroit to be tax free. This would create an “Ireland-effect” and would increase wealth substantially. But it has to be a dual change. It has to be a change in the local and state governments, as well as a change in the federal government. Because without fundamental local changes, it will not work.

Sixth, we cannot address poverty in American without fundamentally questioning the current social contract with Native Americans. We have allowed a politically controlled model of cultural isolationism—and citizens that have no private property—in which people have no rights to acquire personal wealth, no ability to rise, and it has produced a disaster. Native Americans are 100 times more likely to have a baby damaged by fetal alcohol syndrome than Asian Americans. And yet, that’s not a medical problem. That’s a cultural problem. It’s a function of a society with no hope, no future, no opportunity, no wealth creation. This entire topic, of the rights of Native Americans, deserves a much deeper and much more profound approach and entire wave of dialogue about it.

Finally, we must rethink our prison system. It is completely unacceptable to put 3 million people in prison. And it is totally unacceptable to have the current prisons. You should not be in physical danger when you are a ward of the state. And if we truly want to help people, we have to have a model that says we want you to go to college and not to go to prison. But we also have to have a model that says that if you did break the law, we want to maximize your chance to learn so that you never break the law again.

I have given you a large and sweeping overview. I truly hope that is the beginning of a continuing dialogue in which we are not afraid to address the real reasons people in America are poor and in trouble. I hope it is one that can lead the presidential campaign to be one of genuine ideas, genuine solutions, and a belief that together, we can create real change. And that real change can lead to a dramatically better American future.

Newt Gingrich was elected Speaker of the House in 1995 and served in that role until 1999. Under his leadership, Congress passed welfare reform, passed the first balanced budget in a generation, and passed the first tax cut in sixteen years. He has published sixteen books.