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Private opulence, public squalor: How the U.S. helps the rich and hurts the poor

An unhoused individual sleeps under an American flag blanket in New York City on Sept. 10, 2013. In 2021, approximately 11% of Americans lived below the federal poverty line.
Spencer Platt
Getty Images
An unhoused individual sleeps under an American flag blanket in New York City on Sept. 10, 2013. In 2021, approximately 11% of Americans lived below the federal poverty line.

Over 11% of the U.S. population — about one in nine people — lived below the federal poverty line in 2021. But Princeton sociologist Matthew Desmond says neither that statistic, nor the federal poverty line itself, encapsulate the full picture of economic insecurity in America.

"There's plenty of poverty above the poverty line as a lived experience," Desmond says. "About one in three Americans live in a household that's making $55,000 or less, and many of those folks aren't officially considered poor. But what else do you call trying to raise three kids in Portland on $55,000?"

Growing up in a small town in Arizona, Desmond learned firsthand how economic insecurity could impact a family's stress level. He remembers the gas being shut off and his family home being foreclosed on. Those hardships would later drive his research — specifically the question of how so much poverty could exist within a country as wealthy as the U.S.

Desmond's 2017 book Evicted, for which he won the Pulitzer Prize, examined the nation's affordable housing crisis through the lens of those losing their homes. His new book, Poverty, by America, studies various factors that contribute to economic inequality in the U.S., including housing segregation, predatory lending, the decline of unions and tax policies that favor the wealthy. Desmond says that affluent Americans, including many with progressive political views, benefit from corporate and government policies that keep people poor.

"Most government aid goes to families that need it the least," Desmond says. "If you add up the amount that the government is dedicating to tax breaks — mortgage interest deduction, wealth transfer tax breaks, tax breaks we get on our retirement accounts, our health insurance, our college savings accounts — you learn that we are doing so much more to subsidize affluence than to alleviate poverty."

Despite the daunting statistics, Desmond remains optimistic that the U.S. can make progress in its war on poverty. He says that labor unions and housing activists are creating movements that are "stirring and growing around the country."

"My hope, too, is in the fact that ending poverty in America is better for all of us," he says. "It is clearly better for folks that are facing homelessness and hunger and humiliation. But it's also better for those of us who have found security that are diminished and depressed by all this poverty in our midst. So I do think there's quite a lot to be hopeful about."

Interview highlights

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On what we can learn from LBJ's "war on poverty"

The poverty rate between 1964 and '74 fell by half. So the "Great Society" and the war on poverty made an incredible difference. ... These were really robust interventions into the lives of the poorest families in America. They made food aid permanent. They expanded Social Security. There were so many elderly Americans dying penniless before the war on poverty and the Great Society. And there was this massive gain in pulling older folks out of poverty. ...

And I feel that that should give us a lot of hope, actually, because there's some of us that say, "Well, government aid doesn't work. It's not powerful." But the Great Society in the war on poverty have this incredibly historical precedent for the good work the government can do.

And it's also important to realize that when those programs [were] rolled out, Congress looked a lot like Congress does now. It was polarized. It was obstructionary. The Southern Democrats were aligning with Republicans to block progressive reform. And even in that situation — a situation that looks a lot like Washington today — these incredible reforms were passed. So why? And I think the reason is — and this is an idea that I borrowed from Julian Zelizer's fantastic book, The Fierce Urgency of Now -- the reason is grassroots organizers, like the civil rights movement and the labor movements in particular, put unrelenting pressure on lawmakers to move their hand. So I think if we want to confront this problem, I think that our hope lies in the movement.

On how homeowner tax breaks help the wealthy at the expense of the poor

If we're homeowners and ... we deduct the interest of our mortgage from our tax bill — that's a government benefit. And many of us say, "Well, that's very different than a housing subsidy or food stamps." But I disagree. Both of those things cost the government money. Both of those things drive up the deficit. And both of those things put money in our pocket. So instead of taking the mortgage interest deduction, the government could just mail you a check. That would be the savings you would take. So it's the same difference. ...

If you look at the amount of money we spent on homeowner tax subsidies, like the mortgage interest deduction, that's around $190 billion a year. Well, how much have we dedicated to housing assistance for low-income families? About $50 billion a year. So it's just a colossal difference. And, you know, if we didn't have so many evictions and so many families paying 50, 60, 70% of their income on rent today, maybe we could live with that inequality. But it doesn't make any sense to have an enormous, painful rental housing crisis and to be spending so much money on mostly families with six-figure incomes who are the biggest beneficiaries of the mortgage deduction.

And I guess what really angers me even about this conversation is that a lot of times when we put forward a proposal to stabilize people's housing situation or cut child poverty in half, we hear over and over and over again, how can we afford it? How can we afford it? And the answer staring us right in the face like we can afford it if many of us took a little less from the government.

On the decline in the investment in public services

When you have a country like ours, where there are millions of poor people living alongside millions of people with considerable means, a system locks in — a system for private opulence and public squalor.

When you have a country like ours, where there are millions of poor people living alongside millions of people with considerable means, a system locks in — a system for private opulence and public squalor. And this is an old phrase. It goes back to the Roman time. But it was really brought out and brought to life by the mid-century economist John Kenneth Galbraith in his wonderful book, The Affluent Society.

And it goes a little something like this: If you are a family of means, you have the incentive to rely less and less on the public sector. So we used to want to be free of bosses, but now we want to be free of bus drivers. We don't want to take the bus. We don't want to often enroll our kids in the public school system. We don't need to play in the public park or swim in the public pool. We have our own clubs, our own schools. We have our own cars. And as we withdraw into the private opulence, we have less and less incentive to invest in public services.

On the politicization of government aid

A lot of us are getting these tax breaks and we don't see that as a government helping us. We see that as us getting to keep more of what is rightfully ours. And often that leads to a kind of attitude, a political attitude, where we don't think the government is in our lives. And so those of us who are more apt to take that mortgage interest deduction are also more apt to vote against affordable housing proposals. Those of us who already have employer-sponsored health insurance — which by the way, is government subsidized in a massive way — we're often apt to vote against the Affordable Care Act. And so it does have this kind of strange political, maddening irony in our lives.

On the tax breaks for the wealthy

This one statistic that I calculated just blew me away. So a recent study was published and it showed that if the top 1% of Americans just paid the taxes they owed, not paid more taxes, ... we as a nation could raise an additional $175 billion every year. That is just about enough to pull everyone out of poverty, every parent, every child, every grandparent. So we clearly have the resources to do this. It is not hard.

Matthew Desmond is a MacArthur Fellow and a principal investigator of the <a href="">Eviction Lab</a>, a research project focusing on poverty, city life, housing insecurity, public policy, racial inequality and ethnography.
Barron Bixler / Penguin Random House
Penguin Random House
Matthew Desmond is a MacArthur Fellow and a principal investigator of the Eviction Lab, a research project focusing on poverty, city life, housing insecurity, public policy, racial inequality and ethnography.

This is a rough estimate. I arrive at this number by looking at everyone under the poverty line, calculating the average it would take to just bring them over the poverty line and adding that all up. It's pretty equivalent to what we could earn by just enforcing fair taxes at the very top of the market. What else could we do with $175 billion? We could more than double our investment in affordable housing. We could reestablish the extended child tax credit that we rolled out during COVID. ... [That]was basically a check for middle and low-income families with kids. That's all it was. And that simple intervention cut child poverty almost in half in six months. We could bring that back again with $175 billion and still have money left over.

On how simple interventions could make a huge impact

A lot of us thought that people weren't applying for food stamps or applying for wage supplements because they were stigmatized. They were embarrassed, and there is something to that. But the weight of the evidence, I think, suggests that the reason people aren't accessing aid is because it's confusing [and] hard to apply for. Often you have to apply every year again and again, and people often lose their aidjust because they couldn't make the appointment or forgot to reapply.

And so [there are] small, tiny interventions that address those problems [and] see massive returns on people accessing aid that they need. For example, if you make the font bigger and clearer and use less words, you can get many more people applying for the Earned Income Tax Credit. This benefit is designed to lift poor working families out of poverty. If you connect elderly folks with someone that just kind of walks them through the application process of applying for food stamps, you get many more folks in their silver years having access to more food security. ... There are just these incredibly simple interventions that can get people connected to aid, and we should put those in place immediately.

Audio interview produced and edited by: Heidi Saman and Susan Nyakundi. Audio interview adapted for by: Bridget Bentz, Molly Seavy-Nesper and Carmel Wroth.

Copyright 2023 Fresh Air. To see more, visit Fresh Air.

Dave Davies is a guest host for NPR's Fresh Air with Terry Gross.
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