By Lorenzo L. Perez¹
The American democracy is under a lot of stress and American voters are deeply divided along party lines frequently reflecting among other things racial and religious differences. This makes it difficult to analyze objectively and separately from political parties’ affiliations, social policy initiatives addressed to reduce poverty and open opportunities to all. Fortunately, the social doctrine of the Catholic Church provides guidelines to assess social policy proposals and the social science literature provide evidence on the possible results of various proposals. This article reviews briefly the main principles of the social doctrine of the Church and uses them to evaluate some recent social policy proposals in favor of children and their families as well as in favor of affordable housing.
Basic Principles of Catholic Social Doctrine
The basic principles of Catholic Social Doctrine are the respect for the dignity of the human person; the principle of the common good and the universal distribution of the earth’s goods; the principle of solidarity; and the principle of subsidiarity.² The respect of the dignity of the human person as a creature of God is the foundation of all other principles and the context of the social doctrine of the Church. The Church emphasizes the centrality of the human person in every sector and expression of society but the human person may never be thought as only an absolute individual being, built up by himself or herself and as if human characteristic traits depended on no one else but himself or herself. A just society can become a reality only when it is based on the dignity of the human person. The person represents the ultimate end of society. This principle calls for concerns about the situation of all members of society particular those who are poor and marginalized.
1 Retired economist.
2 For a more thorough discussion of the social doctrine of the church see the author’s article on the El Ignaciano of June 2020 on “The issues that Catholics and other people of goodwill should take into account in US presidential elections”.
The principle of the common good stems from the dignity, unity, and equality of all people. The common good indicates the sum total of social conditions which allow people, either as group or as individuals to reach their fulfilment more fully and more easily. Human dignity is respected and the common good is fostered only if human rights are protected and basic responsibilities are met. The economy must serve people, not the other way around. Pope Francis noted in Evangelia Gaudium (The Joy of the Gospel) in 2013 that a growth in justice requires more than economic growth, it requires decisions, programs, mechanisms and processes specifically geared to a better distribution of income, the creation of sources of employment and an integral promotion of the poor which goes beyond a simple welfare mentality.
The responsibility for attaining the common good, beside falling on individual persons, belongs also to the State since the common good is the reason that the political authority exists. To ensure the common good, the government of each country has the specific duty to harmonize the different sectoral interests with the requirements of justice. The proper reconciling of groups’ interests and those of individuals is, in fact, one of the most delicate tasks of public authorities.
Among the numerous implications of the common good, immediate significance is taken by the principle of the universal destination of goods. This principle is based on the fact that “the original source of all that is good is the very act of God who created the earth and man, and who gave the earth to man so that he might have dominion over it by his work and enjoy its fruits” (Gen 1 28-29). God provided the earth to the whole human race for the sustenance of all its members without excluding or favoring anyone. The universal right to use the goods of the earth is based on the principle of the universal destination of goods. Each person must have access to the level of the well-being necessary for their full development.³ The principle of the universal destination of goods requires a common effort to obtain for every person and for all peoples the conditions necessary for integral development, so that everyone can contribute to making a fairer world. The principle of the universal destination of goods requires that the poor, the marginalized and in all cases those whose living conditions interfere with their proper growth should be the focus of particular concern. In this context, Saint Pope John Paul II stated in “Sollicitudo Rei Socialis”, 42, that the goods of this world are originally meant for all and that private property, in fact is under a social mortgage, which means it has an intrinsically social function, based upon and justified precisely by the principle of the universal destination of goods.
3 Pontifical Council for Justice and Peace: Compendium of the Social Doctrine of the Church (CSDC), page 75.
The principle of subsidiarity stresses that it is impossible to promote the dignity of the person without showing concern for the family, groups, associations, and local territorial realities. Pope Pius XI issued the Encyclical Quadragesima Anno (in the 40th year) in 1933 emphasizing this concept on the 40th anniversary of the issuance of Pope Leo XII’s encyclical Rerum Novarum (Rights and Duties of Capital and Labor). This was the time of the advancement of communism. In Quadragesima Anno Pope Pius XI stated: “Just as it is gravely wrong to take from individuals what they can accomplish by their own initiative and industry and give it to the community, so also it is an injustice and at the same time a grave evil and disturbance of right order to assign to a greater and higher association what lesser and subordinate organizations can do. Every social activity ought of its very nature to furnish help to the members of the body social, and never destroy and absorb them.”
The principle of subsidiarity is opposed to certain forms of centralization, bureaucratization, and welfare assistance and to the unjustified and excessive presence of the State in public mechanisms. However, various circumstances may make it advisable that the State step in to supply certain functions that cannot be provided at lower levels of governance such as macroeconomic policy and legal interventions in lower levels of government where there are clear violations of human rights (e.g., actions of the federal government in the fight for civil rights in the United States).
The principle of solidarity highlights in a particular way the intrinsic social nature of the human person, the equality of all in dignity and rights and the common path of individual and peoples towards an ever more committed unity. Never before has there been such a widespread awareness of the bond of interdependence between individuals and peoples which is found at every level. In the presence of interdependence and its constant expansion, however, there persists in every part of the world stark inequalities between developed and developing countries and within countries. These inequalities are promoted by various forms of exploitation, oppression, and corruption that have a negative influence on the life of many states. The acceleration of interdependence between persons and people needs to be accompanied by equally intense efforts on the ethical-social plane, in order to avoid the dangerous consequences of perpetrating injustice.
Economic and social policy issues are value issues and in a viable democracy voters need to have empathy with positions different from theirs.
Before discussing specific policy proposals, it is important to note that economic and social policy positions are value issues. E. J. Dionne, a columnist of the Washington Post, in his column dated December 6, 2021, noted that the prevailing tendency is to place our conversations into discrete boxes: economic questions (inflation and growth), values issues (which tend to be abortion, LGBTQ rights, and racial justice), and spending programs like the ones promoted by the Biden administration. Dionne emphasized that how we deal with economic and social problems says a great deal about what we value. People of faith who pledge alliance to the social doctrine of the Church need to evaluate policy proposals under their light.
At the same time, it is important to recognize the deep division existing in the country and the tendency to mistrust policy proposals from people of different parties. Historically, the American system of checks and balances has worked pretty well—but not entirely because of the constitutional system designed by the founders.⁴ Democracies work best where constitutions are reinforced by unwritten democratic norms. Levitsky and Ziblatt note that two basic norms have preserved America’s checks and balances in ways that we have come to take for granted: mutual toleration, or the understanding that competing parties accept one another as legitimate rivals, and forbearance, or the idea that politicians should exercise restraint in deploying their institutional prerogatives. Norms of toleration and restraint have served as the soft guardrails of American democracy, helping it avoid the kind of partisan fight to death that has destroyed democracies elsewhere in the world, including Europe in the 1930s and South America in the 1960s and 1970s.⁵
In these circumstances, this article discusses social policy proposals that can be defended from the perspective of the social doctrine of the Church and have a chance to be supported by many people, if not immediately, at least over time. It is important that new policy proposals are presented with empathy to different policy positions and in a way that elicits bipartisan support. Today the Social Security System and Medicare are two government programs that have wide support in the population despite the fact that their approval was subject to acrimonious political debates. New proposals for government programs should at least have a chance to be supported by the majority over time.
⁴ Steven Levitsky and Daniel Ziblatt: “How democracies Die”,2018, page 8.
⁵ Levitsky and Ziblatt, op. cit., page 9.
Proposals in favor of children and poor families
A strong case can be made in favor of programs for children and poor families on the basis of the respect for human dignity and solidarity. In this context, one can point also to a resounding agreement among the authors of a recent joint report of a working group of the American Enterprise Institute (AEI, a conservative think tank) and the Brookings Institute (a liberal think tank) of the need to rebalance national investments toward children.⁶ The participants of the working group believe that childhood is a consequential and cost-effective time to make investments that last a lifetime. Yet, many children in the United States do not have the resources or relationships they need to build a strong foundation for their future. The main conclusion of the working group is that public investment, adequate family income that is based in part on parental employment, and loving relationships in safe and nurturing environments are all critical to ensuring that children have what they need to prosper. The working group recognized the desirability of two parents’ households (in line with the spirit of subsidiarity) and support policies to strengthen marriage.
The AEI-Brookings working group makes recommendations to address the inadequate economic resources that too many families live with in order to improve children’s well-being and reduce the hardship they experience. The working group also recommends that the policy proposals be budget neutral (meaning that additional resources be raised to cover the additional costs or other expenditures be curtailed). Specifically, the working group report supports increasing resources available to low-income families with children through changes to the Child Tax Credit (CTC) of the federal government and of its Supplemental Nutrition Assistance Program (SNAP). Under the American Rescue Plan of 2021, the CTC provided families $3,000 for children 6 to 17 years old or $3,600 for children age 5 or younger subject to income thresholds which reduced the benefits for higher income earners. These benefits were sent via monthly checks for every qualifying child without increasing too much the federal bureaucracy.
⁶ AEI-Brookings Working Group on Childhood in the United States, February 8, 2022.
Michael Gerson, another Washington Post columnist, has noted that the expansion of the CTC under the American Rescue Plan legislation—that expired at the beginning of 2022—took an estimated 3 million children out of poverty, while shifting the benefits of federal policy in favor of the young.
The AEI-Brookings working group believes that making the tax credit for children available to households with no taxable earnings and increasing SNAP benefits by 20 percent for families with children ages 5 and younger would reduce child poverty and help children to succeed later in life. In this context the working group also advocates for increasing the generosity of the Earned Income Tax Credit believing that it is proven pro-work and antipoverty program.
Congressional efforts to expand the CTC benefits permanently have failed so far due to the high cost over time of doing this, the resistance to cut other existing programs, and the dogmatic opposition of many representatives and senators to increasing taxes. However, under the principles of respect of human dignity and the principle of solidarity voters are called to be supportive of efforts to increase the CTC. It may need to be done gradually to limit the impact on the federal fiscal deficit.
Another program that is a candidate for expansion in the United States is preschool education and day care facilities. Enrollment in pre-school programs among 3- and 4-year-old is only reaching now 50 percent. Debate over preschool’s effectiveness has sparked controversy for decades. One common source of skepticism is an influential finding that, while pre-school programs tend to improve children’s test scores in the short term, those gains tend to fade out by the time they reach elementary school. But studies of test scores and elementary-school outcome provide, at best, an incomplete answer to the question that needs to be answered: does preschool help children build skills that will benefit them through life, even into adulthood? Recent studies of the Head Start program introduced as part of President Lydon B. Johnson’s “War on Poverty” in the mid-1960s show that Head Start had striking impacts on the long-run educational and economic success of its students. The period of the early years of the Head Start program represented an enormous expansion of access to public preschool. Children ages 3 to 5 years old saw a substantial increase in the likelihood of earning a four-year college degree. The effect is largest for younger cohorts, who were eligible to attend Head Start for more years and benefited from the gradual improvement in classroom quality.
⁷ Analysis of survey data from April to December 2021 by Elizabeth Ananat and coauthors of the National Bureau of Economic Research find small and statistically insignificant impacts of the tax credit on both employment and labor force participation. In particular, families who earned under $25,000 before the expansion of the CTC responded no differently than higher income families.
⁸ The Brookings Institution, Brown Center Chalkboard: Is universal preschool worth it? Head Start offers encouraging long-term results, February 2022.
⁹ Op. cit., page 1.
The authors of the Brookings/Brown Center Chalkboard study have also addressed the question of whether preschool is worth the cost to taxpayers. They estimated that adjusted for inflation, the cost of Head Start in its earlier years was about $5,400 per student. From the taxpayers’ point of view, the benefits of the program came when these children reached adulthood: they were about 5 % more likely to be employed, worked about 8.7% more hours per week, and were 27% less likely to receive public assistance such as Social Security Disability Insurance (SSDI). Accounting only for extra income-tax revenue and the savings on SSDI benefits, the government’s initial investment in Head Start earned a healthy return between 5% and 9%. The study also notes that these calculations almost certainly underestimate the true effect of Head Start because they leave out savings on harder-to-measure expenditures, like the Medicare coverage granted to SSDI recipients as well as any immediate benefits with giving families access to childcare via Head Start. In addition, intergenerational positive effects of Head Start could be substantial.
Regarding day care facilities, there is a need for more public support for day care facilities after school hours. Low-income families may not be able to utilize the pre-school programs if day care facilities at reasonable costs are not available for after school hours. The availability of day care facilities would have the additional benefits of allowing parents to take full time jobs thus helping to reduce the scarcity of low-income workers.
The question on how to pay for the increase on programs in favor of children is a challenging one. The author agrees with the recommendation of the AEI/Brookings working group that existing government spending should be rebalanced to focus more on children without adding to the fiscal deficit. Increase spending on children could be financed by offsetting new spending with cuts (a) to entitlement programs that benefit upper-middle-class and affluent seniors; (b) to corporate welfare, including agricultural subsidies; (c) to subsidies to well-off households in the federal tax code; and (d) by increasing tax enforcement.
According to the Congressional Budget Office (CBO 2021) about 40 % of the federal budget goes to Americans over the age of 65, mainly through Medicare, Social Security, and, to a lesser extent Medicaid. The AEI/Brookings working group notes that a large share of Medicare and Social Security spending goes to well-off seniors who are already in good financial shape by historical standards. Studies show that the average net worth of seniors has increased more than 50 percent since 1995. Also, using consumption and income data to assess changes in living standards show that those 65 and older have much lower poverty rates than most other demographic groups and that these rates have fallen sharply over time. This information suggests that some resources could be liberated to finance pro-children’s programs by imposing more strict testing means (income requirements) for the benefits to seniors (e.g., higher Medicare premiums or lower social security benefits).
The US government benefits corporation through direct grants, subsidies, and tax expenditures.¹⁰ Studies show that the US spends billions of dollars on corporate welfare, the largest chunk is for agricultural subsidies which go disproportionately to large firms and to high-earning and higher-wealth households according to the Government Accountability Office. These programs could be reviewed to generate resources for children’s programs.
Reducing or eliminating tax deductions and exemptions as to minimize the unfairness of the tax burden across income levels could be also a key source of funding for financing the programs discussed above. Tax rates also need to be reviewed. Recently, OECD countries (an association of rich countries) under the leadership of the US Treasury Secretary Yellon agreed to have a minimum corporate income tax rate of 15 percent. This would discourage corporations to registering profits in tax heaven countries to avoid income taxes and provide additional revenues for governments. The US participation in this international agreement needs to be approved by the Congress. When seeking congressional approval of this international agreement, the opportunity should be taken to make the tax system fairer by reassessing the tax rates by income levels and by eliminating the most egregious income tax exemptions and deductions which are strongly biased in favor of high-income households. An increase in the Internal Revenue Service staff which has been decimated in recent years, would help to ensure the proper enforcement of tax regulations. Thankfully, this apparently is taking place.
¹⁰Tax expenditures are the expenditure equivalent of tax benefits.
Affordable Housing Programs
In the United States, there is an increasing problem of affordable housing in urban areas.¹¹ Frequently, low-income workers cannot afford to live in the cities where they work and have to move out to areas considerably away from where they work. This has negative implications for family life and for the opportunities available to their children. If low-income workers live in the cities where they work, the rent can be equivalent to half or more than half of their income making them live from paycheck to paycheck and being very vulnerable to the loss of employment. The US federal government has several programs to help seniors and people with disabilities to afford housing costs. There are also programs to help low-income families to qualify for mortgages. In this section, however, the article does not discuss federal programs but instead addresses a community initiative to increase the availability of affordable housing in the city of Charlottesville, Virginia. This is a good example of the application of the subsidiarity principle where a local community tries to address a problem.
In Charlottesville, there is an ecumenical group called Impact composed of 26 congregations representing Roman Catholic. Jewish, Protestant, and Muslim traditions. Impact members have been lobbying Charlottesville city and county officials to increase the availability of affordable housing and child care facilities for some time. Last year another area of concern was added to the work program of Impact: public transportation. It may come as a surprise that these issues of affordable housing, lack of adequate child care, and public transportation are social problems in Charlottesville, a city that has become a favorite retirement destination in the U.S. and where there are many high-income residents. But the members of Impact to their credit have not closed their eyes to social problems existing in their community and have decided to advocate for local budgetary actions to address these problems.
The affordable housing problem in Charlottesville is created by the fact that there are some 6,600 households (some 12 percent of the population of the greater Charlottesville of 200,000) a paycheck away from homelessness, because they spend more than half their income on housing.¹² This population is constantly at risk of eviction, and moving residence often means kids have to change school to the detriment of their education.
¹¹ This problem is separate from the serious homeless problem in some large cities which is not discussed in this article.
¹² According to the U.S. Department of Housing and Urban Development, affordable housing means the person or persons pay no more than one third of their income for housing and utilities.
Poor housing is frequently associated with poor health. Levels of affordability are often measured according to the area median income. Impact is lobbying for more affordable housing for people earning 60 percent area median income or less.¹³
Around the country, one of the best practices to address the lack of affordable housing has been the creation of Affordable Housing Trust Funds (AHTFs). These are government provided grants or loans to developers and builders of affordable housing, both private and non-profit, to encourage them to build or renovate affordable housing units. Developers and builders do not necessarily recover their costs of constructing affordable housing and the AHTFs provide resources to cover the difference. The first step in creating an AHTF has to be done by local governments. Once they are created, they leverage other federal, state, private and philanthropic dollars to meet the highest priority local needs. The experience has been that for every one dollar a locality invests in an AHTF, $8.50 is leveraged back to the local government. For example, by investing $5 million annually in an Albemarle County AHFT (the amount being proposed for the county where Charlottesville is), the county could have $42.5 million over time to spend locally on housing. When AHFTs have consistent annual funding, it positions the locality to execute a multiple housing strategy that allows for being strategic and take specific opportunities such as the sale or availability of public land for development. The AHFT investments are likely to benefit several families over the 30–40-year life of an affordable apartment building.
Charlottesville is not the only locality trying to establish or having an AHFT. In Charlottesville, there is an increasing political support for establishing a local budgetary allocation to fund an AHFT and IMPACT is working hard to see this project materialize. This effort can be replicated by people of good faith in many other communities which have also a lack of affordable housing.
This article discusses social policy proposals in favor of children and poor families that merit support on the basis of the social doctrine of the Church and the empirical evidence provided by recent social science literature. The article calls for action by voters based on their supposedly held values. Some voters may feel that they have faced the challenges of raising and educating their children with great sacrifice and without the help of the programs being advocated here.
¹³ 60 percent area median income in Charlottesville would be around $1,550 per month according to recent estimates.
They can be reluctant to commit government resources to them. However, we are all called to care for the most disadvantageous members of our society who cannot meet the challenges they face without some help. The proposals discussed in the article can be implemented and financed in different ways and the actual details are subject of negotiations within the democratic process where different views can be accommodated. What is not an acceptable position from a Christian perspective is to dismiss outright proposals to address the problems facing poor families in raising their children and finding affordable housing.
Lorenzo L. Pérez, PhD. Economics, University of Pennsylvania is a retired economist who worked for over 30 years at the IMF, and prior to that worked at the Agency for International Development and the U.S. Treasury Department.
Dr. Perez is a resident columnist of El Ignaciano.