Introduction

Guaranteeing the right to vote and to participate in public and political affairs for all citizens is an important responsibility. Given the precarious position that IDPs can find themselves in and considering the extent to which they may need to rely on national authorities for assistance, IDPs have a legitimate and a heightened interest in influencing the decisions that affect their lives by participating in elections.   

Internally displaced persons often exist on the margins of society and are subject to a number of vulnerabilities because of their displacement. For instance, IDPs face an immediate need for protection and assistance in finding adequate shelter, food, and health care. Over time, they can suffer discrimination in accessing public services and finding employment on account of being an IDP from another region or town. IDPs also face an especially high risk of losing ownership of their housing, property, and land, something which can lead to loss of livelihoods and economic security as well as physical security. Women and children, who often make up the majority of IDP populations, face an acute risk of sexual exploitation and abuse.  

In addition to influencing public policy, elections can also be about reconciliation and addressing divisions and inequities that exist within society. For these reasons and others, IDPs should be afforded an opportunity to fully participate in elections as voters and as candidates.   

As noted in a press release of the Representative of the Secretary General of the United Nations on the Human Rights of Internally Displaced Persons following an official mission to Georgia in December 2005, 

“[IDP] participation in public life, including elections, needs promotion and support. Supporting internally displaced persons in their pursuit of a normal life does not exclude, but actually reinforces, the option of eventual return. … Well integrated people are more likely to be productive and contribute to society, which in turn gives them the strength to return once the time is right."[1]

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Since the conflicts over Abkhazia and South Ossetia in the early 1990s, violence has erupted several times in Georgia, most notably in August 2008. Large-scale human rights violations characterized the August 2008 war, including the displacement of almost 150,000 people. By the time the fighting ended, Georgia had lost the last areas it controlled in South Ossetia and Abkhazia, and Russia subsequently recognized the independence of both. While most of those displaced in the August 2008 war have returned, over 200,000 people from earlier conflicts remain displaced.

On November 19, the Brookings-Bern Project on Internal Displacement will host a discussion of current issues around human rights, democracy and displacement in Georgia. The event will feature a presentation by Tinatin Khidasheli, international secretary of the Republican Party of Georgia, and Giorgi Chkheidze, executive director of the Georgian Young Lawyers’ Association. Following their remarks, Sam Patten, senior program manager for Eurasia at Freedom House, and Nadine Walicki, country analyst for the Internal Displacement Monitoring Centre, will join the discussion.

Senior Fellow Elizabeth Ferris, co-director of the Brookings-Bern Project, will provide introductory remarks and moderate the discussion. After the program, panelists will take audience questions.

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Editor's Note: This is the second part of a two piece series on internal displacement that originally appeared online in TerraNullius. The first part is available here.
 
This post continues our discussion of the study entitled "From Responsibility to Response: Assessing National Response to Internal Displacement" recently released by the Brookings-LSE Project on Internal Displacement.

Addressing housing, land, and property (HLP) issues is a key component of national responsibility. Principle 29 of the non-binding but widely accepted Guiding Principles on Internal Displacement emphasizes that competent authorities have a duty to assist IDPs to recover their property and possessions or, when recovery is not possible, to obtain appropriate compensation or another form of just reparation.

The 2005 Framework for National Responsibility – which set the benchmarks we applied in our current study – reaffirms this responsibility (in Benchmark 10, “support durable solutions”) and flags a number of the challenges that often arise, such as IDPs’ lack of formal title or other documentary evidence of land and property ownership; the destruction of any such records due to conflict or natural disaster; and discrimination against women in laws and customs regulating property ownership and inheritance. The Framework for National Responsibility stresses that, “Government authorities should anticipate these problems and address them in line with international human rights standards and in an equitable and non-discriminatory manner.”

The extent to which a government has safeguarded HLP rights, including by assisting IDPs to recover their housing, land, and property thus was among the indicators by which we evaluated the efforts of each of the 15 governments examined in our study. Our findings emphasized the importance of both an adequate legal and policy framework for addressing displacement related HLP issues and the role that bodies charged with adjudication and monitoring can play in ensuring implementation.

HLP Law and Policy Frameworks

One of the most encouraging signs of governments taking seriously their responsibility to address internal displacement has been the development, adoption and implementation in all regions of the world of specific laws and policies that respect the rights of IDPs. Some of the countries surveyed have developed laws, decrees, orders, and policies that protect IDPs’ HLP rights, but these measures are also not without their limits and challenges. A few examples are presented below.

In Colombia, while Law 387 on Internal Displacement (1997) stipulates the right of IDPs to compensation and restitution (Article 10), the government has been hard-pressed to establish measures enabling them to realize that right (see further, below). In Colombia, the constitutional complaint process – the acción de tutela petition procedure – has made the government accountable to IDPs and has influenced government policy toward IDPs, including the policy of allocation of government assistance such as housing subsidies.

In Georgia, the legal framework for IDP protection includes a property restitution law for IDPs from South Ossetia, adopted in 2007, which provided for the establishment of a Commission on Restitution and Compensation; however, this body never became operational and the status of the law is unclear following the August 2008 conflict. The State Strategy on IDPs, also adopted in 2007, protects IDPs against “arbitrary/illegitimate eviction” and sets out a large-scale program for improving the living conditions of IDPs in their place of displacement, all the while reaffirming their right to property restitution.[1]

Displaced families whose homes were destroyed or damaged during the August 2008 received $15,000 from the government to rebuild their homes, although many IDPs have held off reconstruction efforts due to concerns about insecurity. The RSG on IDPs recommended in 2009 the established of a comprehensive mechanism for resolving HLP claims for both the South Ossetia and Abkhazia conflicts. In addition, in 2010, Georgia adopted procedures for vacating and reallocating IDP housing, which, among other things, addresses those cases in which removal of IDPs from a collective center is ordered by the government and may require an eviction, and spells out safeguards for guaranteeing the right of IDPs.[2]

Iraq’s 2005 Constitution protects Iraqis against forced displacement (Article 44(2)). Through its Property Claims Commission, formerly the Commission on the Resolution of Real Property Disputes established by Order No. 2 (2006), Iraq has sought to recover property seized between 1968 and 2003, although significant gaps and challenges remain. For those internally displaced between 2006 and 2008, Prime Ministerial Order 101 (2008) sets out a framework for providing property restitution for registered IDPs with a view to encouraging and facilitating their return to Baghdad governorate, the origin of the majority of post-2006 IDPs and the location of the majority of post-2006 returnees. However, there have been few claims; many IDPs lack the necessary documentation, do not trust government institutions, fear retribution or cannot afford the requisite costs.[3]

In Afghanistan, where national authorities have not yet defined “internally displaced persons,” property and land rights of IDPs are either specifically addressed or generally implicated in substantive and procedural provisions found in a series of executive acts that have been issued since 2001, including the most IDP-specific of them, Presidential Decree No. 104 on Land Distribution for Settlement to Eligible Returnees and Internally Displaced Persons (2005). This decree sets forth a basic framework for distributing government land to both IDPs and returnees as a means of addressing their housing needs. However, IDPs seeking access to land are required to provide their national identity cards (tazkera) and documentation proving their internal displacement status—documentation which they may have lost. Moreover, the decree does not recognize other fundamental rights or needs of the internally displaced; it is valid only in areas of origin; and its implementation has been marred by inefficiency and corruption within the very weak ministry that is tasked with its implementation.

Although the 2006 peace agreement in Nepal  included a commitment to return occupied land and property and to allow for the return of displaced persons, four years after the peace agreement (and three years after the adoption of a national policy), between 50,000 and 70,000 people remained displaced.  Nearly half of the returnees interviewed by the Nepal IDP Working Group reported serious land, housing and property problems.  Of the more than 10,000 claims for compensation for property filed in 2007 only 2,000 families had received support to reconstruct or repair their houses by 2009.  It is widely reported that IDPs with non-Maoist political affiliations have been the least likely to recover land and property.

In Turkey, the government has yet to take full responsibility for displacement caused by its security forces against a largely Kurdish population. In its Law 5233 on Compensation of Damages That Occurred Due to Terror and the Fight against Terror (27 July 2004) and its Return to Village and Rehabilitation Program, displacement is defined in terms of “terrorism” or the “fight” against it. This law does not specifically focus on internal displacement, but it does benefit IDPs among other affected populations. Law 5233 and its related amendments and regulations compensate for “material damages suffered by persons due to terrorist acts or activities undertaken during the fight against terror” between 1987 and 2004. Compensation is provided for three types of damage: loss of property; physical injuries, disabilities, medical treatment, death and funerals; and inability to access property due to measures taken during “the fight against terrorism.”

According to the law, compensation is to be determined by damage assessment commissions (DACs) at the provincial level, with funding provided by the Ministry of the Interior. From 2004 to August 2009, the commissions received just over 360,000 applications. Of those, over 190,000 claims were decided: 120,000 were approved and the claimants awarded compensation; the remaining 70,000 were denied. Around $1.4 billion in compensation was awarded, of which close to $1.1 billion has been paid.[4] The existing legal and policy framework do not adequately address the obstacles to return, including the village guard system, insecurity and the presence of landmines and unexploded ordnance.

In Kenya, the government’s promotion of return included a National Humanitarian Emergency Fund for Mitigation and Resettlement of Victims of 2007 Post-Election Violence which was to meet the full costs of resettlement of IDPs, including reconstruction of basic housing, replacement of household effects and rehabilitation of infrastructure. But in practice, the government has been criticized for promoting return before conditions were safe. The government has also tended to focus on IDPs who own land and to attach durable solutions to land; there is no clear strategy for dealing with landless IDPs, such as squatters and non-farmers.

Awareness among IDPs as to their housing, land, and property rights under existing law – where there is law addressing those rights – is inadequate in many instances. For example, in Turkey, about half of IDPs surveyed in 2006 were not aware of their entitlements under the Return to Village and Rehabilitation Program or the Law on Compensation. [5]

National Human Rights Institutions and Constitutional Courts

In some cases, national human rights institutions (NHRIs) and constitutional courts have a critically important role to play in supporting as well as in holding governments accountable to guarantee the rights of IDPs. In a number of the countries our study examined, the work of NHRIs on internal displacement has included a focus on HLP issues.

In Georgia, for example, the Public Defender has been actively monitoring and reporting on the country-wide housing program begun in 2009 and has raised concerns about evictions of IDPs and the quality of housing in relocation sites. The Public Defender’s office also has undertaken a study on the conditions of the hidden majority of IDPs living in private accommodation rather than in collective centers.

The Afghanistan Independent Human Rights Commission has reported on and raised concerns about the large number of IDPs living in urban slums and informal settlements and about the fact that many IDPs were unable to return to their homes due to disputes over land and property.

Constitutional courts have in some instances played a role in strengthening the national legal framework for protecting the property rights of IDPs. Notably, Colombia’s activist Constitutional Court, in its Decision T-821 in October 2007, ordered the government to ensure respect for IDPs’ right to reparation and property restitution. In January 2009, the Constitutional Court ordered the government to comprehensively address land rights issues and to establish mechanisms to prevent future violations.

Subsequently, the government has sought to ensure these rights by adopting in 2011 the historic and ambitious Law 1448, known as the Victims and Land Restitution Law. In this law, government acknowledges for the first time ever the existence of an internal armed conflict in Colombia, and recognizes as “victims” those individuals or communities whose rights were violated under international humanitarian law or international human rights law. The law regulates reparations for all victims of the armed conflict since 1985 – numbering over 5 million – including through land restitution or compensation for IDPs which is to occur over the next decade.

However, restitution of land does not guarantee returnees’ security and may even endanger people given that land disputes and seizures remain a driving force of displacement. Aiming to prevent further victimization of returnees as a result of insecurity and violence, the government established a new security body, the Integrated Center of Intelligence for Land Restitution (Centro Integrado de Inteligencia para la Restitución de Tierras, also known as CI2-RT) within the Ministry of Defense. Additional participants include the Office of the Vice President, the Ministry of Justice and Interior, the Department of Administrative Security (DAS), Social Action (Acción Social), Incoder, and organizations representing victims of violence. Time will tell how successful the implementation of this ambitious law will be.

In Georgia, the Constitutional Court has also played an important role by recognizing the rights of IDPs to purchase property without losing their IDP status or in any way jeopardizing their right to return.

Conclusion

Securing HLP rights for IDPs is, of course, a key component of finding durable solutions to displacement. The study found that land and property disputes are almost always sources or manifestations of lingering conflict and often an obstacle to IDPs’ free exercise of their right to return.  While some governments have made efforts to provide mechanisms for property restitution or compensation, those mechanisms have rarely been adequate to deal—at least in a timely manner—with the scale and complexity of the problem. National human rights institutions and constitutional courts can play a key role in holding governments accountable for HLP and other rights and freedoms of IDPs.

[1] Government of Georgia, State Strategy for Internally Displaced Persons–Persecuted Persons, Chapter V.

[2] The Standard Operating Procedures for Vacation and Reallocation of IDPs for Durable Housing Solutions (2010) (www.mra.gov.ge)

[3] IDMC, Iraq: Little New Displacement but around 2.8 Million Iraqis Remain Internally Displaced: A Profile of the Internal Displacement Situation, 4 March, 2010, p. 240 (www.internal-displacement.org)

[4] IDMC, Turkey: Need for Continued Improvement in Response to Protracted Displacement: A Profile of the Internal Displacement Situation, 26 October 2009, p. 12, citing correspondence with the government of Turkey, 17 September 2009 (www.internal-displacement.org)

[5] Hacettepe University, Institute of Population Studies, "Findings of the Turkey Migration and Internally Displaced Population Survey," press release, 6 December 2006, cited in IDMC, Turkey: Need for Continued Improvement in Response to Protracted Displacement: A Profile of the Internal Displacement Situation, 26 October 2009, p. 11 (www.internal-displacement.org)

It’s a fair question to ask: what was all the fuss about last October? The elections in Georgia and Azerbaijan came and went and the results were no surprise. Azerbaijani incumbent Ilham Aliyev won and Georgia's Mikhail Saakashvilli did not. The Azerbaijani elections were bogus; the Georgian elections were not. So what? Life goes on.

But perhaps it is not that simple. Most outside observers saw these elections as a barometer of democratic progress in a region where the West — and the U.S. in particular — has invested time, resources and effort over more than 20 years to help these countries to build a better future for themselves. As stakeholders in the democratic process in the South Caucasus since Armenia, Azerbaijan and Georgia gained their independence in 1991, Europe and the U.S. must fuss over the outcomes of the Azerbaijani and Georgian elections. 

Beyond Election Day

Evaluating these elections and their impact on the domestic social and political landscape as well as foreign relations requires, however, a focus on more than just election day. The excellent report from the European Stability Inititive on the election observation mission to Azerbaijan makes a strong case for not judging democratic progress based only on how the elections may appear to be conducted on election day.

The Georgian elections proved that post-Soviet governments could change, politicians could change and a European path be chosen. The Azerbaijani elections proved that a regime could “buy” favorable reports from short-term observers imported for election day, carry on with election rigging, continue human rights violations and ignore international criticism, whether from the Department of State or the Organization for Security and Cooperation in Europe’s long-term observer mission.

Why the difference between the two neighboring countries? There are several reasons. First, Georgia’s generally free and fair 2012 parliamentary elections set a strong example for the 2013 presidential elections, and Georgia welcomed outside involvement and observation. Azerbaijan, on the other hand, prevented the visit of U.S. Deputy Assistant Secretary for Democracy and Human Rights Tom Melia before its elections. Second, Georgian political parties, including the opposition, agreed on electoral ground rules. Third, the Georgian population demanded leadership change. Fourth, the outcome of elections in Georgia was accepted as a transparent way to — for the first time in modern Georgian history — transfer political legitimacy.

Test of Democratic Evolution

The real test of democratic evolution has to do with actions — over a period of months before and after election day — as well as rhetoric that affect the integrity of the elections. The pre- and post-election environments in Azerbaijan consist of continuing intimidation of the political opposition and independent NGO leadership, suppression of freedom of expression and official dismissal of any need to change. While Georgia had a pretty good pre-election period, the post-election period remains fraught with challenges to the effectiveness of Parliament and other fragile institutions, and whether the current government will pursue criminal charges against former President Saakashvili.

Is it Our Business?

There are different views regarding whether democratic evolution — in its broadest sense — is our (e.g. the West, U.S.) business at all. Who are we — despite our support for democratic change — with all our defects to establish standards for others to follow? At least for the short-term the Maidan events in Ukraine put this point into practical focus. If a country wants to be part of the West there are certain standards of economic and political reform that must be met as part of that association. In other words values matter. The traditional excuses of geopolitical importance or interests of energy security for failure to accept even the minimal international norms for treatment of a country’s own citizens are gone.

A major issue for the post-election period has become the choice between closer association with the EU or Vladimir Putin’s Eurasian Union. This choice really is about values that countries choose to be identified by. Armenia and Georgia made clear choices at Vilnius summit for the Eastern Partnership: Georgia and Moldova for the EU; Armenia for Eurasian Union. Ukraine was asked to make a decision but chose to walk the line between short-run financial expediency and a long-term commitment to a European future. Azerbaijan decided to choose none of the above; “neutrality” the regime called it. All the while proclaiming — along with its apologists in the West — the strategic importance of Azerbaijani energy for Europe’s future.

These countries can no longer talk their way around this or employ foreign surrogates to do this for them. Arguments for overlooking bogus elections, corruption and human rights abuses based on overriding strategic importance to the U.S. (e.g. war against terror, Northern Distribution Network, energy security) are excuses for inaction on the fundamental values that must be at the core of our relationships in the 21st century.

When countries like Azerbaijan fail to live up to these standards we do not walk away. Rather we continue to insist on solid, value-based behavior by those who profess they are partners with us. That means economic and political reforms to complete the transition from post-Soviet to 21st Century status. This requires observance of human rights, respect for freedom of expression, and release of political prisoners. It also requires a pattern of increasingly democratic elections. That’s why we need to care about elections in the south Caucasus.

We must congratulate Tbilisi on its accomplishments in the October electoral process. At the same time we must encourage the Georgian government to move along with strengthening institutions like Parliament and the judiciary so Georgia can avoid a political justice system.

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Recent events in Ukraine have raised important questions about Russian ambitions in the former Soviet space and the future political perspectives of the countries caught between Russia and the European Union. These countries are facing substantial obstacles in their efforts to maintain balanced relations with the United States, the European Union and the Russian Federation because of increased Russian political, economic and military pressures. In Ukraine, the annexation of Crimea and the ongoing turmoil in the East threaten the Ukrainian government's ability to maintain its independence and the sovereignty of Ukraine. Georgia and Moldova have expressed their intention to sign Association Agreements with the European Union, but increasingly face the prospects of destabilizing Russian economic sanctions and even the possible rekindling of their “frozen conflicts” in Abkhazia, South Ossetia and Transnistria.

On April 29, the Center on the United States and Europe at Brookings (CUSE) will host the ambassadors of Georgia, Moldova and Ukraine—Ambassadors Archil Gegeshidze, Olexander Motsyk and Igor Munteanu—as well as Eric Rubin, U.S. deputy assistant secretary of State for European and Eurasian Affairs, to discuss the dilemmas of these countries and possible solutions. Fiona Hill, director of CUSE, will introduce the speakers and moderate the discussion.

After opening remarks, panelists will take questions from the audience.

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• A Discussion with the Ambassadors of Georgia, Moldova and Ukraine

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Russia’s annexation of Crimea in March and the continuing crisis in Ukraine have triggered the most heated confrontation between Russia and the West since the Cold War. The standoff over Ukraine has raised critical questions about Russia’s ambitions in the post-Soviet space and the future political perspectives of the countries caught between Russia and the European Union. Despite political and economic pressure and ongoing occupation by Russia, Georgia is pursuing democratic transformation and a path toward the West.

On May 5, the Center on the United States and Europe (CUSE) at Brookings hosted Georgian Defense Minister Irakli Alasania for an address on Georgia’s vision for Euro-Atlantic integration during a period of increased insecurity in the region. In his remarks, Minister Alasania shared his insights on the upcoming NATO summit and Georgia’s approach to enhancing its relations with the West while attempting to normalize relations with Russia to lower tensions still simmering from the war six years ago.

Irakli Alasania previously served as Georgia's permanent representative to the United Nations from 2006 to 2009 and before that as special representative of the president in Georgian-Abkhazian negotiations. He is the founder and chairman of the Our Georgia-Free Democrats Party and one of the founders of Georgian Dream Coalition.

CUSE Director Fiona Hill provided introductory remarks and moderated the discussion.

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• Georgia's Euro-Atlantic Aspirations and Regional Security

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Harsh geopolitical realities and historic legacies have pushed the South Caucasus states of Armenia, Azerbaijan, and Georgia back onto the foreign policy agendas of the United States, the European Union (EU), and Turkey, at a time when all three have pulled back from more activist roles in regional affairs. The South Caucasus states have now become, at best, second-tier issues for the West, but they remain closely connected to first-tier problems. To head off the prospect that festering crises in the Caucasus will lead to or feed into broader conflagrations, the United States, EU, and Turkey have to muster sufficient political will to re-engage to some degree in high-level regional diplomacy. In “Retracing the Caucasian Circle Considerations and Constraints for U.S., EU, and Turkish Engagement in the South Caucasus,” authors Fiona Hill, Kemal Kirişci, and Andrew Moffatt explore the rationale and assess the options for Western reengagement with Armenia, Azerbaijan, and Georgia given the current challenges and limitations on all sides. Based on a series of study trips to the South Caucasus and Turkey in 2014 and 2015, and numerous other interviews, the authors review some of the current factors that should be considered by Western policymakers and analysts.

Constraints and considerations for U.S., EU, and Turkish engagement in the South Caucasus:

• Divergent trends in the South Caucasus
• Russia’s influence in the South Caucasus
• Regional conflicts
• The United States’ diminishing role in the South Caucasus
• Failure to integrate the South Caucasus into the EU
• Foundering relations with Turkey
• Dashed expectations in the South Caucasus of Western engagement

Despite the challenges that have beset the West’s relations with the South Caucasus and the growing disillusionment in Armenia, Azerbaijan, and Georgia, giving up on engagement is not an option.

Policy options for the future:

• The United States, EU, and Turkey must work together, rather than separately
• “Under the radar” coordination on creative interim solutions and working with other mediators
• Focus on the development of “soft regionalism”
• Work with Georgia as the hub for furthering soft regionalism
• Devise adaptable policies as relations with Iran and China develop in the region

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To build on its longstanding interest in the evolving transatlantic relationship and to address the serious differences that have emerged between America and Europe after the September 11 terrorist attacks and throughout the ongoing war on terrorism, Brookings announces the launch of its new Center on the United States and Europe. The center offers a forum for research, high-level dialogue, and public debate on issues affecting U.S.-Europe relations.

At the inaugural conference to launch the new center, experts discussed the theme "The United States and Europe: One Year after the War in Iraq." Panelists at this special event included Javier Solana, Robert Kagan, Charles Grant, Klaus Scharioth, Andrew Moravcsik, Martin Indyk, Ulrike Guerot, Pascale Andreani, Cesare Merlini, Reuel Marc Gerecht, Gilles Andreani and others.

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Welcome and Introduction:
Philip H. Gordon , Director, Center on the United States and Europe

Is the European Union Failing? Politics and Policy after the Referendums
Philip H. Gordon , Director, Center on the United States and Europe

Panelists:
Gerard Baker, The Times (London)
Joschka Fischer, Member of Bundestag and former German Foreign Minister
Noëlle Lenoir, President of the European Institute of HEC, former French Minister for European Affairs
Andrew Moravcsik, Princeton University/Brookings

Is Russia Lost? The Future of Russian Democracy and Relations with the West
Fiona Hill, Senior Fellow, The Brookings Institution

Panelists:
Daniel Fried, U.S. Assistant Secretary of State for European Affairs
Anatol Lieven, New America Foundation
Strobe Talbott, President, The Brookings Institution
Dmitri Trenin, Carnegie Moscow Center

Is America above the Law? A U.S.-Europe Dialogue about the War on Terror
Jeremy Shapiro, Director of Research, Center on the United States and Europe

Panelists:
Joschka Fischer, Member of Bundestag and former German Foreign Minister
Tom Malinowski, Human Rights Watch
Pauline Neville-Jones, Chair, British Conservative Party National and International Security Group
Victoria Toensing, former U.S. Justice Department Official
Ruth Wedgwood, Johns Hopkins-SAIS

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On April 30, 2007, the Brookings Center on the United States and Europe held its fourth annual conference. As in previous years, the annual conference brought together scholars, officials, and policymakers from both sides of the Atlantic to examine the evolving roles of the United States and Europe in the global arena. Panel discussions covered some critical issues about Europe and the U.S.-Europe relationship: "The French Elections", "NATO and Afghanistan" and "Islam in Europe". Panelists included, among others, Lt. General Karl Eikenberry, Deputy Chairman of the NATO Military Committee; Ashraf Ghani, former Finance Minister of Afghanistan; Tufyal Choudhury of Durham University; Philip Gordon of the Brookings Institution; and Corine Lesnes from Le Monde.

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On May 20, 2008, the Center on the United States and Europe held its fifth annual conference. As is in previous years, the Conference brought together leading scholars, officials, and policymakers from both sides of the Atlantic to examine issues shaping the transatlantic relationship and to assess the evolving roles of the United States and Europe in the global arena.

Gary Schmitt of the American Enterprise Institute; Sir Lawrence Freedman of King’s College, London; Gideon Rachman of the Financial Times; former Norwegian Foreign Minister Jan Petersen; and Strobe Talbott, President of The Brookings Institution joined other prominent panelists and CUSE scholars for this year’s sessions. The series of panel discussions explored transatlantic relations beyond the Bush presidency, Sarkozy’s plans for France’s EU presidency, and the future of Russia under Medvedev.

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Americans often think of our country as being one of great opportunity – where anyone can rise from very modest circumstances, if they work hard and make good choices. We believe that often remains true.

But, for children and youth growing up in poverty, such upward mobility in America is too rare. Indeed, just 30 percent of those growing up in poverty make it to middle class or higher as adults. Though we’ve made progress in reducing poverty over the past several decades, our poverty rates are still too high and our rate of economic advancement for poor children has been stuck for decades. That is an embarrassment for a nation that prides itself on everyone having a shot at the American Dream.

What can we do to reduce poverty and increase economic mobility? In our polarized and poisoned political atmosphere, it is hard to reach consensus on policy efforts. Both progressives and conservatives want lower poverty; but progressives want more public spending programs to improve opportunity and security for the poor, while conservatives generally argue for more responsibility from them before providing more help.

Even so, progressives and conservatives might not be as far apart as these stereotypes suggest. The two of us—one a conservative Republican and the other a progressive Democrat—were recently part of an ideologically balanced group of 15 scholars brought together by the American Enterprise Institute and the Brookings Institution. Our charge was to generate a report with policy proposals to reduce poverty and increase upward mobility. An additional goal was simply to see whether we could arrive at consensus among ourselves, and bridge the ideological divide that has so paralyzed our political leaders.

Together we decided that the most important issues facing poor Americans and their children are family, education and work. We had to listen to each other’s perspectives on these issues, and be open to others’ truths. We also agreed to be mindful of the research evidence on these topics. In the end, we managed to generate a set of policy proposals we all find compelling.

To begin with, the progressives among us had to acknowledge that marriage is a positive family outcome that reduces poverty and raises upward mobility in America. The evidence is clear: stable two-parent families have positive impacts on children’s success, and in America marriage is the strongest predictor of such stability. Therefore marriage should be promoted as the norm in America, along with responsible and delayed child-bearing.

At the same time, the conservatives among us had to acknowledge that investing more resources in the skills and employability of poor adults and children is crucial if we want them to have higher incomes over time. Indeed, stable families are hard to maintain when the parents – including both the custodial mothers and the (often) non-custodial fathers – struggle to maintain employment and earn enough to support their families. Investing in proven, cost-effective, education and training programs such as high-quality preschool and training for jobs in high-growth economic sectors can improve the skills and employability of kids from poor families and lift them out of poverty through work.

Another important compromise was that progressives acknowledged that expecting and even requiring adults on public assistance to work can reduce poverty, as we learned in the 1990s from welfare reform; programs today like Disability Insurance, among others, need reforms to encourage more work. And reforms that encourage innovation and accountability would make our public education programs for the poor more effective at all levels. We need more choice in public K-12 education (through charter schools) and a stronger emphasis on developing and retaining effective teachers, while basing our state subsidies to higher education institutions more heavily on graduation rates, employment, and earnings of their graduates.

Conservatives also had to acknowledge that requiring the poor to work only makes sense when work is available to them. In periods or places with weak labor markets, we might need to create jobs for some by subsidizing their employment in either the private or public sector (as we did during the Great Recession). We agreed that no one should be dropped from the benefit rolls unless they have been offered a suitable work activity and rejected it. And we also need to “make work pay” for those who remain unskilled or can find only low-wage jobs – by expanding the Earned Income Tax Credit (especially for adults without custody of children) and modestly raising the minimum wage.

We also all agreed on other topics. For instance, work-based learning—in the form of paid apprenticeships and other models of high-quality career and technical education—can play an important role in raising both skills and work experience among poor youth and adults.  And, if we raise public spending for the poor, we need to pay for it—and not increase federal deficits. We all agree that reducing certain tax deductions for high-income families and making our retirement programs more progressive are good ways to finance our proposals.

As our report demonstrates, it is possible for progressives and conservatives to bridge their differences and reach compromises to generate a set of policies that will reduce poverty and improve upward mobility. Can Congress and the President do the same?

Editor's Note: this piece first appeared in Inside Sources.

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This year shone a bleak light on the deep racial divides of the U.S. The flash-points of Ferguson, Baltimore and Chicago gave new impetus to movements to reform the criminal justice system and policing. But behind the headlines, the evidence for wide, stubborn race gaps on economic and social indicators is perhaps more troubling still. 

Especially for black Americans, race gaps in family formation, employment, household income, wealth, educational quality, and neighborhood segregation have shown little­—if any—sign of improvement in recent years. The very first Social Mobility Memos was about the barriers to black upward mobility, and in recent months, we have been focusing increasingly on issues of race, place, and opportunity, and here, to close 2015, we recap 15 of our pieces on the subject, including pieces from our colleague Jonathan Rothwell on college, drugs and neighborhoods, and the first Brookings piece from our new nonresident scholar, William Julius Wilson. 

Our hope is that 2016 will see a much greater focus on race and opportunity in America. 

1. Five Bleak Facts on Black Opportunity, Richard V. Reeves and Edward Rodrigue

What would Martin Luther King Jr. think of America in 2015 if he’d lived to see his eighty-sixth birthday? No doubt, he’d be pleased by the legal and political advances of black Americans, crowned by the election and re-election of President Obama.

2. Four charts that show the opportunity gap isn’t going away, Richard V. Reeves

Child poverty rates are coming down slowly, according to figures from the Pew Research Center, except among one racial group: African Americans. This is the latest reminder that the economic gap between black and white Americans is not closing over time. Indeed, on some dimensions, it is widening.

3. Obama’s Post-Presidency? Tackling the Social Mobility Challenge for Black Men, Richard V. Reeves

President Obama’s initiative to boost opportunities for young black men—My Brother’s Keeper—looks to be a post-presidential plan, as much as presidential one. Valerie Jarrett, his closest aide, said that it was a vocation the president and first lady Michelle Obama will undertake “for the rest of their lives…That’s a moral, social responsibility that they feel will transcend the time that he’s president.”

4. School readiness gaps are improving, except for black kids, Richard V. Reeves

Between 1998 and 2010, inequality in school readiness—in terms of math, reading, and behavior—declined quite significantly, according to Reardon and Portilla’s analysis of ECLS data, being presented today at the Association for Public Policy Analysis and Management Annual Conference. This positive trend can be seen for gaps in both income and race (or at least, for Hispanic-white differences).

5. Rich Neighborhood, Poor Neighborhood: How Segregation Threatens Social Mobility, Patrick Sharkey

Racial segregation in American cities has declined slowly, but steadily over the past four decades. This is good news. Over the same timeframe, however, the level of economic segregation has been rising. Compared to 1970, the rich are now much more likely to live in different communities than the poor.

6. Segregation and concentrated poverty in the nation’s capital, Stuart M. Butler and Jonathan Grabinsky

The social mobility gap between black and white Americans has barely narrowed in the last decades, and sharp differences in access to opportunity persist. This racial opportunity gap can, in part, be traced back to the neighborhoods where whites and blacks grow up: research from urban sociologists like Patrick Sharkey and Robert Sampson shows the damaging effects racial segregation and concentrated neighborhood poverty can have on children’s life chances. Washington, D.C. is a case in point.

7. The other side of Black Lives Matter, William Julius Wilson

Several decades ago I spoke with a grieving mother living in one of the poorest inner-city neighborhoods on Chicago’s South Side. A stray bullet from a gang fight had killed her son, who was not a gang member. She lamented that his death was not reported in any of the Chicago newspapers or in the Chicago electronic media.

8. Guns and race: The different worlds of black and white Americans, Richard V. Reeves and Sarah Holmes

“The nation’s consciousness has been raised by the repeated acts of police brutality against blacks. But the problem of public space violence—seen in the extraordinary distress, trauma and pain many poor inner-city families experience following the killing of a family member or close relative—also deserves our special attention.”

9. Measuring the Racial Opportunity Gap, Richard V. Reeves and Quentin Karpilow

The U.S. is sharply divided by race, not least in terms of the opportunities for children—a point that a new report from the Annie E. Casey Foundation vividly shows. At every life stage, there are gaps between kids of different colors.

10. How the War on Drugs Damages Black Social Mobility, Jonathan Rothwell

The social mobility of black Americans has suffered collateral damage from the “War on Drugs.” Being convicted of a crime has devastating effects on the employment prospects and incomes of ex-felons and their children, as my Brookings colleagues and other scholars have found. These findings are often used to motivate efforts to reduce criminal behavior. They should also motivate changes in our criminal justice system, which unfairly punishes black Americans—often for victimless crimes that whites are at least as likely to commit.

11. Black Students at Top Colleges: Exceptions, Not the Rule, Jonathan Rothwell

A generation has been lost in the journey towards race equality in terms of income. The income gap between blacks and whites has been stuck since 1980. Why? Dozens of factors count, of course, but one in particular is worth further exploration: the underrepresentation of black students in elite colleges. As I noted in a previous blog, this could help to explain why blacks earn less than whites, even in the same occupation and with the same level of education.

12. The stubborn race and class gaps in college quality, Jonathan Rothwell

Increasing the number of low-income adults going to—and through—college is an important step towards greater social mobility and reduced income inequality. College is also an important tool for tackling race gaps. But the challenge is not just about quantity: college quality counts for a good deal, too.

13. Single black female BA seeks educated husband: Race, assortative mating and inequality, Edward Rodrigue and Richard V. Reeves

There is a growing trend in the United States towards assortative mating—a clunky phrase that refers to people’s tendency to choose spouses with similar educational attainment. Rising numbers of college-educated women play a key role in this change. It is much easier for college graduates to find and marry each other when there are more equal numbers of each gender within an educational bracket.

14. Sociology’s revenge: Moving to Opportunity (MTO) revisited, Jonathan Rothwell

Neighborhoods remain the crucible of social life, even in the internet age. Children do not stream lectures—they go to school. They play together in parks and homes, not over Skype. Crime and fear of crime are experienced locally, as is the police response to it.

15. Space, place, race: Six policies to improve social mobility, Richard V. Reeves and Allegra Pocinki

In his new book, “The Rise and Fall of American Growth: The U.S. Standard of Living Since the Civil War,” Northwestern University economist Bob Gordon argues that the century between 1870 and 1970 was exceptionally good for U.S. households (particularly 1920 to 1950) but that the years since 1970 have been disappointing and the future looks disappointing too.

His postscript includes a few thoughts that deserve immediate attention in today’s economic policy debates: Whatever the causes of the distressing slowdown in the growth of productivity (the amount of stuff produced for each hour of work) and the increase in inequality, what policies might both increase productivity and decrease inequality? 

Many years ago, economist Art Okun argued that we had to choose between policies that increased efficiency and those that increased equity. Perhaps. But  if there are policies that could achieve both, it’s time to try them. 

Mr. Gordon lists several at the end of his book, some conventional and others less so. They include: 

1. Make the earned-income tax credit (a bonus paid by the government to low-wage workers) more comprehensive and generous, a complement to raising the minimum wage. The earned-income tax credit, most economists agree, encourages work. 

2. Reduce the share of Americans who are in prison, which is costly, disproportionately hurts the poor, and has long-lasting negative effects on former prisoners and their families. Also, legalize drug use to save money on enforcement, raise tax revenue, and eliminate the negative consequence a criminal record has on employment.

3. Shift financing of K-12 schooling from local property taxes to statewide revenue sources to reduce inequality and improve outcomes. Shift college financing from loans to income-contingent repayment administered through the income tax system, which is what Australia does.

4. Roll back regulations that hurt the economy and the less affluent, including copyright and patent laws (which have gone too far), occupational licensing (which is a barrier to entry and employment), and zoning and land-use regulations (which boost housing costs). 

5. Reform immigration laws to encourage high-skilled workers, including those trained at U.S. graduate schools. 

Mr. Gordon notes (Page 314) “the extraordinary investment” by state and local governments in education and infrastructure between 1870 and 1940 and cites the substantial boost to productivity created by the interstate highway system. He doesn’t put increased public infrastructure investment on his list, though it belongs there. 

Every presidential candidate should be asked what policies he or she would offer to increase the pace of U.S. productivity growth and to narrow the widening gap between winners and losers in the economy. Bob Gordon’s list is a good place to start.

Editor's note: this post first appeared in the Wall Street Journal Washington Wire blog.

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Low-Income Boys in Higher Inequality Areas Drop Out of School More Often than Low-Income Boys in Lower Inequality Areas, Limiting Social Mobility, New Brookings Paper Finds
“Economic despair” may contribute if those at the bottom do not believe they have the ability to achieve middle class status

Greater income gaps between those at the bottom and middle of the income distribution lead low-income boys to drop out of high school more often than their counterparts in lower inequality areas, suggesting that there is an important link between income inequality and reduced rates of upward mobility, according to a new paper presented today at the Brookings Panel on Activity. The finding has implications for social policy, implying a need for interventions that focus on bolstering low-income adolescents' perceptions of what they could achieve in life.

In “Income Inequality, Social Mobility, and the Decision to Drop Out Of High School,” Brookings Nonresident Senior Fellow and University of Maryland economics professor Melissa S. Kearney and Wellesley economics professor Phillip B. Levine propose a channel through which income inequality might lead to less upward mobility—often assumed to be the case but not yet fully proven. The conventional thinking among economists is that income inequality provides incentives for individuals to invest more in order to achieve the higher income position in society, but Kearney and Levine observe that if low-income youth view middle-class life as out of reach, they might decide to invest less in their own economic future.

See an interactive map of inequality by state, plus more findings »

The authors focus on income inequality in the lower half of the income distribution, as measured by income gaps between the 10th and 50th percentiles of the income distribution rather than income gaps between the the top and bottom of the income distribution, which has been more of a focus in popular culture. They show this "lower-tail" inequality is more relevant to the lives of poor youth because the middle is a more realistic ambition. Furthermore, their research could reconcile a puzzle: social mobility does not appear to be falling, despite the rise in income inequality. But, as Kearney and Levine point out, U.S. income inequality has been rising because the top of the distribution has been pulling away from the middle, not because the bottom is falling farther behind the middle.

The authors look specifically at high school drop-out rates through a geographic lens, noting the link between highly variable rates of high school completion and income inequality across the country. One-quarter or more of those who start high school in the higher inequality states of Louisiana, Mississippi, Georgia, and the District Columbia fail to graduate in a four-year period, as compared to only around 10 percent in Vermont, Wisconsin, North Dakota, and Nebraska—lower inequality states. Their econometric analysis goes on to show that low-income youth—boys in particular—are 4.1 percentage points more likely to drop out of high school by age 20 if they live in a high-inequality location relative to those who live in a low-inequality location.

Kearney and Levine examine a number of potential explanations for this link, including differences in educational inputs, poverty rates, demographic composition, and other factors. Ultimately, the evidence suggests that there is something specific about areas with greater income gaps that lead low-income boys there to drop out of school at higher rates than low-income boys elsewhere. The authors' research suggests that adolescents make educational decisions based on their perceived returns to investing in their educational development: a greater distance to climb to get to the middle of the income distribution could lead to a sense that economic success is unlikely—what they term “economic despair.”

"Income inequality can negatively affect the perceived returns to investment in education from the perspective of an economically disadvantaged adolescent,” they write. “Perceptions beget perceptions."

Digging into reasons students themselves give for dropping out, they find that low-income students from more unequal places are more likely to give up on their educational pursuits. Surprisingly, survey evidence shows that academic performance does not have as large an impact on low-income students in high inequality states: 51 percent of dropouts in the least unequal states reported that they dropped out because they were performing poorly, as compared to only 21 percent of students who dropped out in the most unequal states.

The finding suggests that economic despair could play an important role: if a student perceives a lower benefit to remaining in school, then he or she will choose to drop out at a lower threshold of academic difficulty. They also note that while the wage premium of completing high school should reduce the dropout rate, household income inequality has an offsetting negative effect.

The choice between staying in school and dropping out may reflect actual or perceived differences from the benefits of graduating. For instance, the authors note their past research showing that youth from low-income households who grow up in high lower-tail inequality states face lifetime incomes that are over 30 percent lower than similar children in lower inequality states. They also highlight other research showing that the overwhelming majority of 9th graders aspire to go to college, but by 11th grade, low-SES students are substantially less likely to expect they will enroll in college, even among those students with high test scores.

"There are important policy implications for what types of programs are needed to improve the economic trajectory of children from low-SES backgrounds," they write. "Successful interventions would focus on giving low income youth reasons to believe they have the opportunity to succeed. Such interventions could focus on expanded opportunities that would improve the actual return to staying in school, but they could also focus on improving perceptions by giving low-income students a reason to believe they can be the "college-going type." For example, interventions might take the form of mentoring programs that connect youth with successful adult mentors and school and community programs that focus on establishing high expectations and providing pathways to graduation. They could also take the form of early-childhood parenting programs that work with parents to create more nurturing home environments to build self-esteem and engender positive behaviors."

Read the full paper from Kearney and Levine here »

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• How “economic despair” affects high school graduation rates for America’s poorest students

The mayoral election in Baltimore has brought local economic development strategies to the forefront. In a city in which inequality—by income, by race, and between neighborhoods—has increased in the past five years, the candidates have made it clear that more action must be taken to close disparities and improve economic outcomes for all residents. In a podcast segment, I commend the much-needed focus on equity but argue that the mayoral candidates should not lose sight of another critical piece of the equity equation: economic growth. Citing lessons from my recent paper, I outline strategies that Baltimore’s presumptive leaders should pursue—as well as several they should abandon—to place the city’s residents on the path to a more prosperous, equitable future.

Listen to the full podcast segment here: 

There is a lively debate today over whether or not campaign finance reforms have weakened the role of political parties in campaigns. This seems an odd argument in an era of historically high levels of party loyalty — on roll calls in Congress and voting in the electorate. Are parties too strong and unified or too weak and fragmented? Have they been marginalized in the financing of elections or is their role at least as strong as it has ever been? Does the party role in campaign finance (weak or strong) materially shape the capacity to govern?

In addition, the increasing involvement in presidential and congressional campaigns of large donors – especially through Super PACs and politically-active nonprofit organizations – has raised serious concerns about whether the super-wealthy are buying American democracy. Ideologically-based outside groups financed by wealthy donors appear to be sharpening partisan differences and resisting efforts to forge agreement across parties. Many reformers have advocated steps to increase the number of small donors to balance the influence of the wealthy. But some scholars have found evidence suggesting that small donors are more polarizing than large donors. Can that be true? If so, are there channels other than the ideological positioning of the parties through which small donors might play a more constructive role in our democracy?

In this paper, Thomas Mann and Anthony Corrado attempt to shed light on both of these disputed features of our campaign finance system and then assess whether campaign finance reform offers promise for reducing polarization and strengthening American democracy. They conclude that not only is campaign finance reform a weak tool for depolarizing American political parties, but some break in the party wars is probably a prerequisite to any serious pushback to the broader deregulation of campaign finance now underway.

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The Supreme Court’s recent McCutcheon decision has reinvigorated the discussion on how campaign finance affects American democracy. Seeking to dissect the complex relationship between political parties, partisan polarization, and campaign finance, Tom Mann and Anthony Corrado’s new paper on Party Polarization and Campaign Finance reviews the landscape of hard and soft money in federal elections and asks whether campaign finance reform can abate polarization and strengthen governing capacity in the United States. The paper tackles two popular contentions within the campaign finance debate: First, has campaign finance reform altered the role of political parties as election financiers and therefore undermined deal making and pragmatism? Second, would a change in the composition of small and large individual donors decrease polarization in the parties?

The Role of Political Parties in Campaign Finance

Political parties have witnessed a number of shifts in their campaign finance role, including McCain-Feingold’s ban on party soft money in 2002. This has led many to ask if the breakdown in compromise and governance and the rise of polarization has come about because parties have lost the power to finance elections. To assess that claim, the authors track the amount of money crossing national and state party books as an indicator of party strength. The empirical evidence shows no significant decrease in party strength post 2002 and holds that “both parties have compensated for the loss of soft money with hard money receipts.” In fact, the parties have upped their spending on congressional candidates more than six-fold since 1980. Despite the ban on soft money, the parties remain major players in federal elections.

Large and Small Donors in National Campaigns

Mann and Corrado turn to non-party money and survey the universe of individual donors to evaluate “whether small, large or mega-donors are most likely to fuel or diminish the polarization that increasingly defines the political landscape.” The authors map the size and shape of individual giving and confront the concern that Super PACs, politically active nonprofits, and the super-wealthy are buying out American democracy. They ask: would a healthier mix of small and large donors reduce radicalization and balance out asymmetric polarization between the parties? The evidence suggests that increasing the role of small donors would have little effect on partisan polarization in either direction because small donors tend to be highly polarized. Although Mann and Corrado note that a healthier mix would champion democratic ideals like civic participation and equality of voice.

Taking both points together, Mann and Corrado find that campaign finance reform is insufficient for depolarizing the parties and improving governing capacity. They argue forcefully that polarization emerges from a broader political and partisan problem. Ultimately, they assert that, “some break in the party wars is probably a prerequisite to any serious pushback to the broader deregulation of campaign finance now underway.”

Click to read Mann and Corrado’s full paper, Party Polarization and Campaign Finance.

Tom Mann and Anthony Corrado recently argued that campaign finance reform will likely have little effect on political polarization. Their new paper has sparked a host of debate over campaign finance, the strength of parties, and the ideological motivations of donors. Today, the Monkey Cage blog hosted Mann and Corrado’s response to a critique from Ray LaRaja and Brian Schaffner.

LaRaja and Schaffner argue that pumping more funding to parties and changing the rules to facilitate that practice will provide a respite from polarization; to argue their point, they examine polarization at the state legislative level. In their response, Mann and Corrado argue that the critique is off point, noting that “no causal link to campaign finance laws (and polarization) is demonstrated.” Ultimately, Mann and Corrado explain: “The link between party financial practices and regulatory regimes is often a matter of strategy than law, and the evidence offered in their (LaRaja and Schaffner) response certainly falls well short of making a case that greater party resources would reduce the polarization that undermines the capacity to govern.”

For more on this debate:

Read Mann and Corrado’s paper, “Party Polarization and Campaign Finance”

Read LaRaja and Schaffner’s critique, “Want to reduce polarization? Give Parties Money”

Read Mann and Corrado’s response, “Don’t expect campaign finance reform to reduce polarization”

And check out some other great research on Washington Post’s Monkey Cage Blog

One of the fundamental arguments in the “Political Realism” debate is whether or not strong political parties could make government work better. One way to assess party strength is to look at how much money parties can raise and spend.

In this vein, political scientists Ray LaRaja and Brian Schaffner have claimed that removing limits on party funding activity would make politics less polarized. I’ve been skeptical of this claim. In fact, in a short analysis, I found that the opposite is more likely the case—that states with limits on party fundraising appear to be less polarized, though I cautioned against inferring too much from this pattern.

LaRaja and Schaffner have now responded and previewed their forthcoming book, Campaign Finance and Political Polarization: When Purists Prevail, which will be out this fall from the University of Michigan Press. So, a response to their response is now in order.

I’ll start by granting a point of agreement: LaRaja and Schaffner note that I didn’t re-produce their analysis. I didn’t do this because, based on what they’ve written, it’s not clear exactly which states they consider to be “Parties Unlimited” and “Parties Limited” states. So, until they make their list public, it will be impossible to conduct a precise replication of their analysis.

The good news is they’ve promised to make their data public in the future. As they write in their recent post, “we will be posting all the data necessary to replicate (and challenge) our results upon publication of our book this fall, and we look forward to seeing what others find when they dig into the data.” They also note in their analysis that “11 states changed their laws on party limits during the period of our study (1993-2012).” Assembling this list, they note, was “possibly the most painstaking work we did on this book.” For now, their list of changes remains a well-kept secret, though the changes appear to be driving their analysis. So it will be good when all the relevant data and categorization choices are clear and on the table.

A lot depends on which states fall into which categories. But, there is a more fundamental question: does it make sense to dichotomize states into “Parties Unlimited” and “Parties Limited” states? States with limits vary considerably. Some states limit the money into parties, but allow unlimited flows to candidates; some states allow unlimited money into parties, but limit money from parties to candidates. Some limits are high, some are low. Some have exceptions for party-building activities. Rules vary between primary and general elections, as well.

Consider California. There are limits on how much parties can raise from individuals, but those limits are quite high (they are now at $35,200), and also only cover the party accounts that go to state candidates (so, for example, ballot measures are exempt or general party activities are exempted). California also has no limits on how much parties can transfer to candidates. So should California be a “limits” or “no limits” state? California also has the most polarized legislature, as measured by the distance between party medians. Depending on how you choose to classify states, you can get very different results, especially when you are only working with 20 states (LaRaja and Schaffner limit their claims to the 20 states with the most professionalized legislatures, as per the Squire Index).

LaRaja and Schaffner’s response presents a time series regression model to “calculate the predicted level of polarization over time in a state that limited party fundraising … and spending to on where those limits were removed.” But if states that removed limits became less polarized following the removal of those limits, why not tell us what those states were, and report the actual polarization trends in the states? Put another way: Why rely on model predictions when there are real world data? Grounding this debate in the trajectories of actual states would lend some realism to the claims. Then we could debate examples.

For example, as Thomas Mann and E.J. Dionne note in a recent Brookings paper, two of the states with no limits are Texas and North Carolina. As Mann and Dionne write, “The behavior of their legislatures in recent years cannot, on any plausible definition, be described as 'moderate.'” However, neither Texas nor North Carolina shows up as excessively polarized when polarization is merely a measure of voting patterns. Moreover, if parties are so pragmatic, why did the North Carolina Republican Party (which could raise and spend unlimited sums of money) fail to stop a takeover by multi-millionaire right-wing extremist Art Pope?

This takes us to questions of how party leaders actually behave. LaRaja and Shaffner show evidence in their response that parties give more money to moderate incumbents than to extreme incumbents. This should not be surprising. Presumably, moderate incumbents are more likely to be in competitive races, since moderates are more likely to represent competitive districts.

The more relevant question is what types of candidates parties recruit. Thankfully, we have answers to this courtesy of excellent work by David Broockman, Nicholas Carnes, Melody Crowder-Meyer, and Christopher Skovron, who surveyed 6,000 county-level political party leaders. They found that, “party leaders…use their influence to discourage moderates from seeking office: they strongly prefer candidates at least as ideologically polarized as their median party member. Republican party leaders show this preference especially.”

Their findings also reinforce something that should be apparent to students of polarization—that polarization is asymmetric. Republicans have moved far to the right. Democrats have mostly stayed in place. Let me quote Broockman et al.’s paper at further length, because the findings are extremely relevant to this debate:

“Republicans are much more likely to, unprompted, mention ideology as an important factor for candidates. Our evidence suggests that not only do Republicans care more about ideology, it is also readily accessible when they think of candidate recruitment. It seems likely, then, that Republicans are much more active in recruiting ideologically polarized candidates than Democrats are.”

“Democratic chairs are most inclined to support candidates who are middle-of-the-road or slightly left with respect to the party, while Republicans prefer candidates who espouse an ideology matching or more conservative than their party. In fact, while Democratic chairs are less likely to support very liberal candidates than those nearer to their party average, Republican chairs seem to give very conservative primary candidates the same boost that Democrats give to moderates.”

This does suggest that perhaps giving parties more money and therefore more control over candidates would produce moderation in blue states, but exacerbate polarization in red states. Unfortunately, there is nothing in LaRaja and Schaffner’s analysis that addresses this possibility.

The importance of recruitment also suggests that what we really want to know is who controls the actual recruitment mechanisms in the first place. It’s possible that states with limits might have strong party recruitment mechanisms. If what we really care about is the strength of party machines, why not try to measure that more directly?

LaRaja and Schaffner seem to envision parties being run by hard-headed pragmatists who can determine outcomes with money alone. They seem to assume that if parties can get billionaires to fund them, this will enable party leaders to support more moderate candidates. They seem to ignore that the billionaires may have a few ideas of their own about how they think government should be run (see, e.g. North Carolina).

This gets to a final point, about whether we ought to care if parties rely on small or large donors. LaRaja and Schaffner dismiss the case for small donors, noting that: “the endless romanticizing of small donors as being emblematic of American voters has no empirical grounding.” They go on to note that the ideological distribution of small donors and the ideological distribution of large donors “are nearly identical,” and therefore, “[p]utting more emphasis on ideological small donors may even make our politics worse as politicians streamline their messages to cater to this minority of individuals with more extreme views.”

Let’s grant that large and small donors have the same ideological distribution. If there is no difference, then there’s no reason to think that relying more on small donors would make politics any more extreme. However, since there are many more small donors than there are large donors, a small-donor matching system would allow less extreme candidates the ability to seek out less extreme donors from a larger population of potential donors. We know large donors are polarized, so relying more heavily on them doesn’t give parties much room to moderate. Of course, this presumes that large donors want to shape party positions. But that seems a safe bet.

There are also good (small-d) democratic reasons to support small-donor programs: they bring more participants into the political process; they orient politicians to think differently about whom they represent, and they probably make politics an attractive profession for a broader set of potential candidates. I’d even trade off some polarization for a small donor system. Fortunately, based on their data, it doesn’t appear that I’d even have to.

Finally, and perhaps most importantly, polarization is a function of many, many things, and it’s hard to imagine how changing limits on what parties can raise and spend would have much of an influence given the many other factors. Consider this thoughtful systems map developed by the Hewlett Foundation to analyze American politics as a system: it describes multiple factors that might influence levels of polarization. Systems thinking warns us to be careful of putting too much focus on a single point of leverage without thinking about the larger systems dynamics. This is why many reform skeptics are cautious about unintended consequences—thinking about a single variable in the absence of a larger context usually has unexpected results.

Moreover, as Mann and Dionne explain, we need to be cautious of applying lessons from the states to Washington:

"The gridlock in Washington is a consequence of the ideological polarization of the parties buttressed by vast party networks, their strategic opposition to one another throughout the legislative process fueled by the intense competition for control of the White House and Congress, the prevalence of divided party government, and the asymmetry between the parties that leads Republicans to eschew negotiation and compromise."

"The situation in the states is dramatically different. Most now have unified party governments, and gridlock is the exception, not the rule. There is little evidence of moderation in the Republican- controlled states, whatever their campaign finance laws."

I’m sure we will continue this debate for many months to come, especially after the publication of Campaign Finance and Political Polarization: When Purists Prevail this fall. I’m glad that LaRaja and Schaffner are bringing valuable data to this important question. It’s certainly far from settled.

Editor’s Note: This post was originally published by the Institute of Governmental Studies. Thomas Mann is also Resident Scholar at IGS.

Donald Trump and the Amen chorus of Republican presidential aspirants may have appeared to monopolize the capacity to make fantastical claims about what’s wrong with America and how to fix it. But a rival has appeared on the scene, outlining a very different fantasy plan to run for president on the Democratic side of the aisle.

Harvard law professor Lawrence Lessig looks meek—a dead ringer for Mr. Peepers—yet is anything but. Lessig built an impressive career in legal scholarship on the regulation of cyberspace, and the mild-mannered, soft-spoken academic became a cult hero among libertarians fearful of increasing legal restrictions on copyright, trademark and the electromagnetic spectrum. But Lessig’s transformation into a political activist was spurred by his personal revelation that money in politics is the root of all our governing problems. Eliminate the dependence of elected officials on private donors and the formidable obstacles to constructive policymaking will crumble. Simple but searing truth, or a caricature of a complex governing system shaped by institutions, ideas/ideologies, and interests?

Lessig became a whirlwind of energy and organization to promote his new values and beliefs, leading efforts to “Change Congress,” convene a second constitutional convention, raise awareness of corruption in politics through the “New Hampshire Rebellion,” and start the “Mayday PAC,” a super PAC designed to end all super PACs. He wrote the bestselling book Republic, Lost: How Money Corrupts Congress—and A Plan to Stop It, delivered a series of popular TED talks, and tirelessly traveled the country with his PowerPoint.

With none of these enterprises yet bearing fruit, Lessig has decided to raise the stakes. He has announced that if he receives $1 million from small donors by September, he will seek the Democratic presidential nomination, running as a “referendum candidate.” His single-issue platform, built around the concept of “Citizen Equality,” consists of “true” campaign finance reform supplemented by electoral reform (to weaken the influence of gerrymandering) and voting rights. His goal is to use the election to build a mandate for political reform that will cure our democratic ills. Lessig will apparently have nothing to say about anything other than political reform, insisting that his issue should be and can be the number one priority of voters in the 2016 elections. If nominated and elected, President Lessig will serve in office only long enough to enact the Citizen Equality Act and then resign, turning over the powers and responsibilities of the office to the vice president. Recently he generously informed the Vice President that he would happily enable a third Joe Biden term by selecting him as his running mate.

The hubris of the Harvard Professor is breathtaking. In virtually every respect, his strategy is absurd. Lessig’s political reform agenda is stymied by Republicans, not Democrats. Why not direct his energies where the opposition resides? All of the current Democratic presidential candidates support the thrust of these reforms. But saying that this is their highest priority is likely to harm, not boost, their candidacies. Why would even the most ardent supporter of the three pillars of Lessig’s reform agenda cast a ballot solely on this basis? Big and important issues divide the two parties today and the stakes of public action or inaction are huge. We don’t have the luxury of using the election to try to build a mandate for a set of political reforms that would have no chance of passing in the face of GOP opposition and would be of only incremental utility if they did.

Campaign finance does play a corrosive role in our democracy and I have invested much of my career grappling with it. There is no doubt that money in elections facilitates the transfer of economic inequality into political inequality, and the spectacle of several hundred plutocrats dominating the finance of our elections should be a target of serious reform efforts in the courts and the Congress. At the same time it is foolish to imagine that campaign finance is the only route for private wealth to influence public policy or that its reform will dramatically transform the policy process. Money did not prevent the major legislative enactments of 2009-2010—including the stimulus, student loans, the Affordable Care Act, and financial services reform. Nor is it likely to be the critical factor on climate change, immigration, infrastructure or jobs and wages; which party wins the White House and whether control with Congress is unified or divided is key. If anything, the Lessig campaign is likely to weaken the forces for political reform by demonstrating just how small the relative priority for this action is.

Trump offers the country his outsider status, success in building his personal wealth, an outsized personality, a brashness in asserting how easily he can solve the country’s problems, and a hearty appetite for and skill in stoking the anger and fears of a segment of the country. He feeds the notion that a strong, fearless, wily leader, inexperienced and mostly uninformed in politics and governing, can be the man on a white horse saving a great country losing its exceptional status. His claim that all politicians are bought by private interests—a claim Lessig eagerly embraces—fits well with his grandiose claims that he alone can fix what ails the country. A significant segment of Republican voters, presumably not well versed in the American constitutional system are attracted to him, at least enough for him to be a factor in this election campaign.

Lessig is a far less commanding presence but his ambition burns no less than that of Trump. The notoriety, celebrity, and adoring audiences are heady stuff, even if on a much smaller scale. Lessig told Bloomberg that Trump’s candidacy is evidence that his reform message is taking hold. Lessig said, Trump “strikes people as credible when he says all these people (politicians) are bought—I used to buy them …Trump is saying the truth.” Lessig will be a minor figure in this election and the causes for which he fights are unlikely to advance from it. Both Lessig and Trump, despite their differences in visibility and importance in the election, will have contributed to the dumbing down of American politics, a reality that will bring tears to the eyes of civics teachers and political science professors across the country.

Event Information

As the sixth anniversary of Citizens United v. FEC approaches on January 21, both experts and ordinary citizens believe the United States is confronting a campaign finance crisis. Citizens United and related court cases have unleashed a flood of dark money that many believe could drown our democracy. It is estimated that over $5 billion will be spent on the 2016 presidential race—more than 3 times the amount spent in 2008 (already the most expensive election cycle in history). A comprehensive poll conducted by the New York Times and CBS News in the spring of 2015 showed that 84 percent of adults—including 90 percent of Democrats and 80 percent of Republicans—believe that money has too much influence in American political campaigns. Even the richest Americans agreed: 85 percent of adults making $100,000 or more share that same belief.

There has been much handwringing about this state of affairs. But there has been too little public attention paid to finding solutions. On the sixth anniversary of Citizens United, the Governance Studies program at Brookings hosted current and former government officials, lobbyists, donors, advocates, and other experts to discuss how to resolve the campaign finance crisis. They focused on innovative reform efforts at the federal, state, and local levels which offer the hope of addressing the problem of big money in politics.

Panelists will included:

Cheri Beasley, Associate Justice, North Carolina Supreme Court
Daniel Berger, Partner, Berger & Montague, P.C.
John Bonifaz, Co-Founder and President, Free Speech for People
Norman L. Eisen, U.S. Ambassador to the Czech Republic (2011-2014); Special Assistant and Special Counsel to the President (2009-2011); Visiting Fellow, The Brookings Institution
Bruce Freed, Founder and President, Center for Political Accountability
Steve Israel, Member, U.S. House of Representatives (D-NY)
Roger Katz, Chair, Government Oversight Committee, Maine State Senate (R)
Allen Loughry, Justice, Supreme Court of Appeals of West Virginia
Chuck Merin, Executive Vice President, Prime Policy Group; Lobbyist
Connie Morella, Ambassador to OECD (2003-2007); Member, U.S. House of Representatives (R-Md., 1987-2003)
Jeffrey Peck, Principal, Peck Madigan Jones; Lobbyist
Nick Penniman, Executive Director, Issue One
Trevor Potter, Commissioner, Federal Election Commission (1991-1995; Chairman,1994)
John Pudner, Executive Director, Take Back Our Republic
Ann Ravel, Commissioner, Federal Election Commission (Chairwoman, 2015)
Timothy Roemer, Ambassador to India (2009-2011); Member, U.S. House of Representatives (D-Ind., 1991-2003); member 9/11 Commission; Senior Strategic Advisor to Issue One
John Sarbanes, Member, U.S. House of Representatives (D-Md.)
Claudine Schneider, Member, U.S. House of Representatives (R-R.I.,1981-1991)
Peter Schweizer, President, Government Accountability Institute
Zephyr Teachout, CEO, Mayday PAC
Lucas Welch, Executive Director, The Pluribus Project
Fred Wertheimer, Founder and President, Democracy 21
Tim Wirth, Member, U.S. Senate (D-Colo.,1987-1993); Member, U.S. House of Representatives (D-Colo.,1975-1987)
Dan Wolf, Chair, Committee on Steering and Policy, Massachusetts State Senate (D)

Click here for a full agenda.

Video

• The campaign finance crisis in America and how to fix it - Part 1
• The campaign finance crisis in America and how to fix it - Part 2
• The campaign finance crisis in America and how to fix it - Part 3
• The campaign finance crisis in America and how to fix it - Part 4

Audio

• The campaign finance crisis in America and how to fix it: A solutions summit (Part 1)
• The campaign finance crisis in America and how to fix it: A solutions summit (Part 2)
• The campaign finance crisis in America and how to fix it: A solutions summit (Part 3)
• The campaign finance crisis in America and how to fix it: A solutions summit (Part 4)

Transcript

• Uncorrected Transcript (.pdf)

Event Materials

• Solution Summits Agenda120
• 20160121_campaign_finance_summit_transcript

Campaign finance is a key issue for the quality of democracy. As we noted in a recently-published book of which we are co-authors, and which we had the honor to present in the Hall of Former Presidents of the Legislative Assembly last February 11 (El costo de la Democracia: Ensayos sobre el financiamiento político en América Latina, UNAM, Mexico City, 2015), it is important because of an inescapable fact: While democracy has no price, it does have an operating cost. The use of economic resources is an essential element for democratic competition. More than a pathology of democracy, political financing, when well-regulated, is a normal part of democratic life.

Yet it is undeniable that money is capable of introducing distortions in the democratic process. Its unequal distribution impacts, first, on the real possibilities enjoyed by the parties and the candidates to take their message to the voters. Second, having money gives individuals and social groups a differentiated possibility of participating in elections and exercizing their influence over the candidates through their contributions. This is vital for democracy. When political power is simply a reflection of economic power, the principle of “one person, one vote” loses meaning. Third, fundraising efforts offer obvious opportunities for the articulation of exchanges between donors and those who make decisions on public affairs, or at least for the continual appearance of conflicts of interest. This can be very problematic in the case of Latin America, where there is a risk of money from organized crime penetrating the campaigns.

And so it is not surprising that the issue is on the political agenda in many countries of the region, just as it has been for a long time in Costa Rica. Costa Rica introduced public financing for political parties in 1956, making it the second country in the world to do so, after Uruguay. Nonetheless, the generosity of the government contribution did not avoid a long succession of scandals associated with the issue, a history that includes figures ranging from Robert Vesco and Manuel Antonio Noriega to Carlos Hank González and the illegal donations from the government of Taiwan. 

The wounds left by each of these episodes gave way to worthy yet incomplete regulatory efforts. Most important has been the reform of the Electoral Code approved in 2009, which among many necessary changes prohibited corporate contributions to the political parties. And not only legislative action has made a difference. The Constitutional Chamber of the Supreme Court has also made a difference by lifting bank secrecy on financing, a very important decision that has been pointed to internationally.

Each of these steps has been moving the country in the right direction. This is worth underscoring: At a time when it is so easy to revile the Costa Rican political system, it should be recognized that in terms of political financing the country is, in general, better situated than it was 20 or 30 years ago. All the evidence we have indicates that private contributions today are less important in our campaigns than one generation ago. We can state with great certainty that our parties are financing more than 80% of the cost of their campaigns with the state contribution. That is good news.

However, the current regulatory framework presents problems such as:

a) It continues to be a regulatory system that is somehow upside down: It meticulously keeps tabs on the use of the state contribution by the parties, which does not give rise to conflicts of interest, while it is much less effective when it comes to verifying the truth of the information the parties provide about their private sources of financing, which do have the potential to compromise the autonomy of the political system. Correcting this imbalance, getting the Supreme Electoral Tribunal to prioritize monitoring private financing and to devote more resources to it, would not only be a way to straighten out its priorities, but frankly, all the parties would also breathe a sigh of relief.

b) The system of advances on the state contribution continues to be very limited (only 15% of the subsidy is disbursed before the presidential election and nothing in the case of municipal elections). It is time to admit that eliminating the system whereby the contributions were distributed in advance payments, which existed from 1971 to 1991 (when 50% was disbursed in advances), caused grave prejudice to the political system. The weakness of the advanced disbursement has ended up leaving the parties at the mercy of banks and lenders during the campaigns. Worse still, today the possibility of a party receiving loans during the campaign against its electoral expectations depends entirely on the fickle behavior of the opinion polls. This is unfair and risky, as the OAS electoral observation missions have noted.

c) The legal framework does little to limit parties’ spending on advertising, one of the most effective ways to reduce outlays during campaigns and to bring about fairness in electoral competition, which is one of the most important objectives in improving the current system. One must evaluate the advisability of adopting a system of advertising slots (provided free of charge by those holding concessions for the radio spectrum or purchased by the Supreme Electoral Tribunal and then made available to the parties) as has been done, with a positive outcome, by other democracies in the region such as Argentina, Brazil, Chile, Ecuador, and Mexico.

d) The current regulatory framework has serious vulnerabilities at the local level. Requiring the parties to file a single financial report with the contribution they receive nationwide (the same system that exists for the presidential election) is insufficient when in practice there are 81 local elections in which each candidate raises and spends money autonomously. Let’s be clear: Relatively little is known about who finances the campaigns at the local level in Costa Rica. This would not matter much except that the experience of other countries – from Mexico to Colombia – shows that local campaigns are the preferred point of entry for organized crime to penetrate the electoral structures. Reinforcing the financial controls on municipal elections is one of the country’s most urgent tasks in relation to campaign finance.

Costa Rica has made major strides in regulating political financing. Yet there is an urgent need to address the weaknesses in the current regulatory framework. There are bills in the legislative pipeline, such as No. 18,739, introduced by the Supreme Electoral Tribunal in April 2013, that incorporate almost all the reforms suggested here and that provide an excellent basis for moving this inevitable discussion forward. 

We will have to address the problems in the current regulatory framework sooner or later. The question is whether we will do so before or after the next scandal. Let’s hope that, for once, we act on time.

This piece was originally published by International IDEA. 

Ryan’s EITC is pro-mobility… but funding it may not be

Paul Ryan seems to be thinking seriously about the issues of poverty and social mobility. He is a reformer as well as an authentic conservative.

While his willingness to embrace EITC expansion is welcome, his proposed funding methods raise serious questions. Paying for anti-poverty programs by cutting anti-poverty programs runs the risk of being self-defeating. No doubt some of them are not working as intended. But reform is the answer, rather than abolition. Many of these programs help those in the deepest poverty - who in many cases are those least likely to benefit from welfare-to-work policies such as the EITC, according to recent research from the Center for Budget and Policy Priorities and from the National Poverty Center. 

Ryan's package is worthy of serious attention, not least from the perspective of social mobility. It is important, however, not to consider the impact of the EITC expansion alone, but also how - and by whom- it will be paid for. 

When California passed its 2016 budget late last month, it joined a growing list of states that have recently adopted or expanded state versions of the federal Earned Income Tax Credit (EITC). First enacted in 1975, the EITC has become one of the country’s most effective antipoverty programs. We estimate that the federal EITC keeps millions of individuals and children out of poverty each year, reducing the national poverty rate by several percentage points. Others have shown how the EITC creates a strong incentive to work and works as a powerful tool for reducing income inequality.

For an unmarried worker with one child in 2015, the federal EITC works like this: Up to her first $9,880 earned, the worker receives a tax credit equal to 34 cents on the dollar, for a maximum credit value of $3,359. The credit is reduced by 16 cents for each dollar earned beginning at $18,110, eventually phasing out at $39,100 in earnings. Phase-in and phase-out rates and ranges depend on a worker’s filing status and number of dependents claimed. Importantly, the EITC is refundable; a filer can still claim any credit in excess of her tax liability, contributing to refunds that can represent double-digit shares of annual income for lower-paid workers.

Of the 26 states and the District of Columbia with their own EITCs, most have structured their programs to mirror the federal EITC, by simply matching some percentage of the federal credit in a given tax year (see map). This year, Massachusetts, New Jersey, and Rhode Island all increased their state EITCs’ matching percentages. In three states, the EITC is non-refundable, making it a less effective incentive for very low-income workers (Maine this year made its credit refundable). California’s EITC joins a couple of others that, while still refundable, vary in the degree to which they mirror the federal credit based on filing status and income.

Through our work maintaining Brookings’ EITC Interactive, we hear regularly from stakeholders around the country engaged in efforts to expand the EITC and increase local participation to strengthen low-income families and communities. Although it is difficult to determine uptake rates locally, there are several factors associated with participation. Self-employed workers are less likely to claim the credit, as are workers with low English proficiency, and those who do not claim any dependents. The availability of tax preparation assistance tends to increase participation rates. For groups who hope to expand access to the EITC in their communities, these considerations are a good place to start.

To be sure, the EITC is not a silver bullet. Because it is explicitly tied to work effort, the credit does not support low-income families who can’t find work. And because states must balance their budgets, many have had difficulty sustaining their EITCs during periods of economic downturn. (Several of the recent state EITC expansions actually represent the restoration of benefits following drastic cuts during the Great Recession.) Additionally, the federal EITC and its state analogues provide only modest support to workers who do not claim any dependents on their tax return. As such, policy makers should consider state EITCs strong complements to other interventions, such as the growing number of increases in the minimum wage occurring in states and cities.

Nevertheless, the EITC remains one of the best tools we have to fight poverty. Despite bipartisan support for the federal EITC, it is unlikely to be expanded anytime soon. In that light, recent state EITC expansions may be helping to create a more responsive, sub-national safety net that better reflects a large and diverse nation where local priorities and needs differ markedly.

This originally appeared in “Insight,” a publication of Grantmakers for Children, Youth, and Families.

For many in the United States, American poverty conjures images of urban blight or remote Appalachian hardship that motivated the War on Poverty in the 1960s. But the geography of poverty in the U.S. has shifted well beyond its historical confines (Kneebone and Berube, 2013). During the first decade of the 2000s, the poor population living in suburbs of the nation’s largest metropolitan areas for the first time outstripped the poor population living in central cities, and poverty continues to grow faster today in the suburbs.¹ This trend has been even more pronounced for those living below twice the federal poverty line—equivalent to $48,500 for a family of four in 2015—which roughly mirrors the population eligible to receive the federal Earned Income Tax Credit (EITC).

Although it was not originally billed as an antipoverty program, in its 40 years, the EITC has become one of the nation’s most effective tools for lifting low-income workers and their families above the poverty line. In 2013 alone, Brookings estimates that the EITC lifted 6.2 million people, including 3.1 million children, out of poverty (Kneebone and Holmes, 2014). What follows is a discussion of the EITC’s growing importance to recipients in light of the new geography of poverty, its role in boosting local economies, and how expanding participation in the program and paying the credit differently could enhance its effectiveness as a local economic stabilizer.

The shifting geography of poverty challenges traditional approaches to combat poverty through investments in place.

When President Johnson declared a War on Poverty in 1964, poverty in the U.S. was primarily urban or rural. This was also the case in 1975 when the EITC was created: Nearly a million more low-income individuals at that time lived in rural areas or big cities than in the suburbs of major metropolitan areas.² Place-based antipoverty interventions dating to the War on Poverty were thus designed with these two geographies—especially cities—in mind. Brookings estimates that today, the federal government spends about $82 billion per year across more than 80 place-focused antipoverty programs, spread across 10 agencies (Kneebone and Berube, 2013). Many are not well-suited to suburban contexts, for several reasons.

First, suburban poverty is more geographically diffuse than urban poverty. Suburban communities tend to be less densely populated than cities and larger in size, and cover more total area. Whereas centralized services might be appropriate in an urban context because they are easily accessible to many in need, it is more difficult to achieve those economies of scale in the suburbs, where residents live farther apart and have limited access to transit. Many competitive federal grant programs allocate points based on population served and population density, implicitly favoring large central cities.

Second, suburban municipalities may lack the experience and administrative capacity needed to sustain services for low-income families and communities. Cities have dealt with poverty longer, and have had more time to develop strategies and structures to support their poor populations. Some of this capacity stemmed explicitly from Community Action Agencies, one of the original War on Poverty programs, which was intended to spur local innovation. Small suburban communities by and large did not have this same experience. Because of their relatively small size, suburban governments may not be able to achieve the administrative scale needed to deliver effective safety-net programs.

Third, many suburban communities lack the economic scale and fiscal structure needed to fund services for low-income residents. Because many small municipalities are limited in how they are permitted to raise revenues—typically through a combination of property and sales taxes—they are especially prone to financial instability caused by the very economic conditions that also generate greater need for services. As poverty suburbanizes, small suburban communities simultaneously face rising demand and falling tax revenues to support those services. Moreover, tax “competition” among many small suburbs within a metro area can further erode the fiscal capacity and political will for these jurisdictions to support people in need.

The new geography of poverty makes direct investments in low-income individuals and families—like the EITC—even more important.

The mismatch between existing place-based antipoverty strategies and the places where poverty is growing fastest heightens the importance of investing directly and effectively in low-income individuals and families through programs such as the EITC. Following its expansion in the mid-1990s, the EITC became the most significant cash transfer program available to low-income working families. The Internal Revenue Service (IRS, 2014) estimates that approximately 79 percent of EITC-eligible taxpayers nationally claim the credit each year—a remarkably strong participation rate among federal safety-net programs.

The high program participation rate and growth over time in EITC expenditures reflects both increases in the credit’s generosity and growing need. In 2000, according to our analysis of IRS Stakeholder Partnerships, Education and Communities (IRS-SPEC) data, total EITC expenditures topped $42 billion (in 2013 dollars). In 2013, they approached $65 billion, equivalent to approximately 80 percent of the amount spent by the federal government on place-based poverty interventions.³

Analysis of IRS-SPEC data further suggests that the EITC’s geographic incidence closely tracks the shifting geography of need. From 2000 to 2013, the number of suburban filers claiming the EITC rose by 62 percent, compared to 33 percent in cities. Changes in the distribution of EITC claims mirrored changes in the location of poor and near-poor populations, particularly growth in the suburbs.⁴ And because lower-income suburban communities (where at least 40 percent of residents are poor or near-poor) are becoming more diverse, too—60 percent of their residents are non-white or Hispanic—the EITC also effectively reduces growing race-based income gaps in suburbs.⁵

EITC dollars support local economies.

The EITC benefits not only low-income families, but also the wider communities in which they live. Although it is widely regarded today as one of the country’s most successful antipoverty programs, the EITC was originally designed to be a temporary economic stimulus measure, in the Tax Reduction Act of 1975 (Nichols and Rothstein, 2015). During the 2000s, more local and state governments made a concerted push to expand participation in the EITC among eligible filers, in part to inject more federal dollars into their local economies (Berube, 2006a).

There are several mechanisms through which the EITC could benefit local economies. California State University researchers categorize the local economic impact of EITC refunds as the sum of direct effects (EITC recipients spending their refunds), indirect effects (business spending in response to EITC recipient spending), and induced effects (changes in household income and spending patterns caused by direct and indirect effects). Together, these effects represent the local “multiplier” effect (Avalos and Alley, 2010). Their estimates for California counties suggest that, in many cases, the credit creates local economic impacts equivalent to at least twice the amount of EITC dollars received.

Direct economic effects result from EITC recipients spending a portion of their refund locally, supporting local businesses and jobs. Consumer surveys show that low-income families spend a relatively large share of their income on groceries and other necessities, which tend to be purchased locally. Analysis of those surveys links tax refund season to increased likelihood of consumer activity as well as larger purchases (Adams, Einav, and Levin, 2009). People spend more, and more frequently, during tax refund season.

The EITC also supports local communities in less obvious ways. The concept of “tax incidence” reflects that the party being taxed, or receiving a tax credit, may not bear its full costs (or reap its benefits) because others shift their behavior in response to the tax. Along these lines, Jesse Rothstein estimates that as much as 36 cents of every dollar of EITC received flows to employers, because by enabling workers to better make ends meet on low wages, the credit effectively lowers the cost of labor. Those lower labor costs may, in turn, allow local employers to hire more local workers (Nichols and Rothstein, 2015).

Finally, emerging evidence suggests that progressive tax expenditures like the EITC can enhance intergenerational income mobility for local children, possibly by counteracting credit constraints that many low-income families face (Chetty, Hendren, Kline, and Saez, 2015). In areas with larger state EITCs, low-income children are more likely to move up the income ladder over time.

The local impact of the EITC depends on how, and how many, eligible filers claim the credit.

The local impact of the EITC also depends on whether eligible workers and families file tax returns and claim the credit. As noted above, the IRS estimates that 79 percent of those eligible to receive the EITC nationally claim it. Given local variation in characteristics associated with uptake, there is likely also considerable local variation in EITC participation (Berube, 2005). Efforts to increase participation locally can thus increase the level of investment communities receive from the program.

Research has identified several factors associated with EITC participation rates among the eligible population. Eligible filers less likely to claim the credit include those who live in rural areas, are self-employed, do not have qualifying children, do not speak English well, are grandparents, or recently changed their filing status (IRS, 2015). One study suggests that communities with moderately sized immigrant populations may exhibit lower EITC participation rates, due perhaps to less robust social networks or more dispersed/heterogeneous populations that may limit awareness of the credit (Berube, 2006b).

Recent research also suggests that EITC participation is higher in areas with more tax preparers, who may promote greater local awareness of the credit (Chetty, Friedman, and Saez, 2012). While individuals who enlist the help of tax preparers are more likely to receive the EITC, they may face significant fees that blunt the credit’s overall impact (Berube, 2006a). Expanding access to volunteer tax preparation services or simple, free online filing could help preserve more of the credit’s value for low-income families and their communities.

To maximize the EITC’s role as a local economic stabilizer, we should consider periodic payment options.

 The EITC already functions as an important antipoverty tool for low-income workers and families, and a boon to local economic stability. Communities should nonetheless be interested in efforts to connect taxpayers to a portion of their EITC throughout the year, rather than only as a lump-sum refund at tax time.

Debt features significantly on the balance sheets of EITC recipients. Recent research finds that about 95 percent of EITC recipients have debt of some kind, and that large shares of refunds are dedicated to debt payments or deferred expenses (such as car repair). Recipients do not use the majority of EITC refunds to pay for monthly expenses, despite the fact that their wages typically cover only two-thirds of those expenses (Halpern-Meekin, Edin, Tach, and Sykes, 2015).

Paying a portion of filers’ anticipated EITC periodically (and directly, rather than through employers like the defunct Advance EITC program) in smaller amounts over the course of a year could help them cope with these spending constraints and avoid taking on debt (Holt, 2008). By enabling families to better keep up with spending on regular items most often purchased locally—rent, food, vehicle maintenance—periodic payments could also support local economies. And by improving families’ liquidity, such payments could reduce reliance on high-cost financial products such as payday loans.

The EITC continues to gain importance as place-based strategies lag behind poverty’s suburbanization, and communities seek ways to maximize public investment in the face of budget constraints at all levels. The program lifts millions of working individuals and families out of poverty each year regardless of their location, and in doing so also supports community financial stability. An expanded EITC—at the federal, state, or local level—with options for periodic payment and better alternatives to high-cost tax preparation could provide even stronger support to low-income families and the places where they live.

References

Adams, W., Einav, L., and Levin, J. (2009). Liquidity constraints and imperfect information in subprime lending. American Economic Review. 99(1), 49–84. Retrieved from http://web.stanford.edu/~jdlevin/Papers/Liquidity.pdf

Avalos, A., and Alley, S. (2010). The economic impact of the Earned Income Tax Credit (EITC) in California. California Journal of Politics and Policy. 2(1). Retrieved from http://escholarship.org/uc/item/2jj0s1dn

Berube, A. (2005). Earned income credit participation—What we (don’t) know. Washington, DC: Brookings Institution. Retrieved from http://www.brookings.edu/metro/eitcparticipation.pdf

Berube, A. (2006a). Using the Earned Income Tax Credit to stimulate local economies. Washington, DC: Brookings Institution. Retrieved from http://www.brookings.edu/~/media/research/files/reports/2006/11/childrenfamilies-berube/berube20061101eitc.pdf

Berube, A. (2006b). ¿Tienes EITC? A study of the Earned Income Tax Credit in immigrant communities, Washington, DC: Brookings Institution. Retrieved from  http://www.brookings.edu/~/media/research/files/reports/2005/4/childrenfamilies-berube02/20050412_tieneseitc.pdf

Chetty, R., Friedman, J., and Saez, E. (2012). Using differences in knowledge across neighborhoods to uncover the impacts of the EITC on earnings (NBER Working Paper Series no. 18232). Retrieved from http://eml.berkeley.edu/~saez/chetty-friedman-saezNBER13EITC.pdf

Chetty, R., Hendren, N., Kline, P., and Saez, E. (2015). The economic impacts of tax expenditures: Evidence from spatial variation across the U.S. Retrieved from http://www.irs.gov/pub/irs-soi/14rptaxexpenditures.pdf

Halpern-Meekin, S., Edin, K., Tach, L., and Sykes, J. (2015). It’s not like I’m poor: How working families make ends meet in a post-welfare world, Oakland, CA: University of California Press.

Holt, S. D. (2008). Periodic payment of the Earned Income Tax Credit. Washington, DC: Brookings Institution. Retrieved from http://www.brookings.edu/research/papers/2008/06/0505-metroraise-supplement-holt

Internal Revenue Service. (2014). Statistics for tax returns with EITC. Retrieved from http://www.eitc.irs.gov/EITC-Central/eitcstats

Internal Revenue Service. (2015). About EITC. Retrieved from http://www.eitc.irs.gov/EITC-Central/abouteitc

Kneebone, E., and Berube, A. (2013). Confronting suburban poverty in America. Washington, DC: Brookings Institution Press.

Kneebone, E., and Holmes, N. Fighting poverty at tax time through the EITC. Retrieved from http://www.brookings.edu/blogs/the-avenue/posts/2014/12/16-poverty-tax-eitc-kneebone-holmes

Nichols, A., and Rothstein, J. (2015). The Earned Income Tax Credit (EITC) (NBER Working Paper Series no. 21211). Retrieved from http://www.nber.org/papers/w21211.pdf

The Earned Income Tax Credit (EITC) supports millions of single parents and their children each year. Although the majority of these are single moms, Father’s Day provides a good reminder that single dads are also a significant part of the equation.

Using Brookings’ MetroTax model, we estimate that roughly half (49 percent) of all EITC-eligible tax filers in 2014 filed as head of household—a group that includes many single custodial parents. Of these estimated 13.1 million filers, 8.9 million were women, and 4.2 million were men. These female-headed households included an estimated 14.7 million qualifying children, while their male counterparts included 6 million qualifying children.

Although women head of household filers were more likely to be EITC-eligible (69 percent), male heads of household were not far behind, with an estimated 61 percent eligible to receive the EITC in 2014.

To learn more about the EITC-eligible population, visit Brookings’ EITC data interactive.