5 March, 2001

It may seem unfair to write yet another critical chapter of the United States for Social Watch, when the country has experienced continued economic expansion over the last five years. Absolute poverty rates are down (marginally) and unemployment remains low (at about 4%). Nonetheless, five years after Beijing and Copenhagen, the United States has little to boast about. What has it done with its wealth? Has it indeed "integrated goals and targets for combating poverty into overall economic and social policies and planning...?"¹

The answer has to be no. The 2000 Presidential election did stimulate some serious discussion of social policies, including provision for older people (Social Security), education, taxation, and, to some extent, health care. However, the Bush administration now in power has shown that it is not interested in combating poverty. The budget recently put forward by the President, for example, proposes to increase the military budget by US$14.2 billion, to US$310.5 billion. Most recently, the Census Bureau has come out in favor of the Republican contention that only the census returns should be used to count the population. This is despite the proven under-count, particularly of poor and minority Americans, that results from this approach, and despite the existence of well-established statistical methods that generate more accurate numbers. The result will be an under-funding of federal programs that provide a social safety net for ten more years, as well as political disenfranchisement through misallocated electoral districts.

On March 1, 2001, the US House Ways and Means Committee approved the core part of Bush's tax cut plan.² The committee chose to approve the legislation with no public testimony and ahead of approval of the overall national budget. The tax plan under discussion marks a clear departure from recent tax reform proposals, which have had support from both political parties, that tried to reduce the burden of tax on lower and middle-income earners. Instead, Bush's plan focuses almost all the benefit of the tax cut on the richest one percent of the population.

The last such radical tax cut, under the Reagan Administration in 1981, resulted in the huge government budgets deficits of the late 1980s and early 1990s. The Clinton Administration reduced this deficit with the help of $56 billion in cuts to food and cash assistance to the poorest U.S. citizens, under the so-called "welfare reform" Congressional bill of 1996.

President Bush's proposal focuses on income tax reduction, but people living in poverty pay more payroll than income taxes. Payroll taxes include Social Security (for retirement) and unemployment insurance. The plan does nothing to relieve this tax burden on low-income earners. The Center on Budget and Policy Priorities calculates that a single mother with two children working full-time and earning US$22,000 a year would receive no tax relief at all under the plan.³ Eliminating her income tax makes no difference, as she is already effectively exempt from paying it.

The highest marginal tax rates are found at the bottom end of the income scale - for incomes between US$13,000 and US$20,000 a year. Many low-income families are trapped in poverty by a system that penalizes them for any increase in income with higher taxes and decreased benefits (such as child-care allowances), which are awarded on a sliding scale. There are many tax reform proposals that address this inequity, but President Bush has chosen to ignore them. It remains to be seen whether the Senate, split 50/50 between Republicans and Democrats, is able to rescue the country from this blatant favoring of the rich over the poor.

According to government numbers, "American households experienced another year of strong, broadly shared income growth in 1999, and poverty fell sharply, ... But income inequality remains historically high, annual earnings of full-time workers grew more slowly than in recent years and family hours of work continue to expand."⁴

Poverty rates fell from 12.7% in 1998 to 11.8% in 1999 and the income gap between middle and lower income earners closed to some extent.⁵ However, income at the top level grew more rapidly than at the bottom, ensuring that income inequality persisted. At the same time, middle income households are working longer hours to maintain their income level. Middle-income, married couple families with children, headed by someone between the ages of 25 and 54, worked an average of 33 more hours per week in 1999 as compared to 1998.⁶ The negative effects this increasing workload has on health, childcare and social relations may be difficult to trace precisely but may be presumed to be considerable.

The poverty rate for African-Americans in 1999 remained about 3 times greater than for non-Hispanic Whites, at 23.6%. African-Americans, together with American Indians, the Inuit of Alaska and Hispanics continue to suffer poverty at a much higher rate than non-Hispanic Whites and other minorities. Over 80% of the net decline in the number of poor occurred in urban areas yet only 41% of people living in poverty are in cities.⁷ Use of public food assistance programs has dropped dramatically while privately run food banks have seen an enormous increase in demand for their services.

Although unemployment is low, wages remain low as well. Finding a job that earns enough money to stay above the poverty line is still difficult. Despite the proven benefits of increasing the minimum wage for those living in poverty, particularly for working women who are disproportionately represented at the low end of the income scale, Congress remains unwilling to pass legislation to raise (the very low) minimum wage. In a joint analysis of the results of the 2000 Population Census, the Economic Policy Institute and the Center on Budget and Policy Priorities found that the incomes of the highest paid 20% of workers had increased significantly over the past 20 years, while those of the poorest fifth of the population had declined in many states.⁸

Proposals to address this problem include raising the minimum wage, strengthening unemployment insurance and reforming regressive tax systems. Unfortunately, the aforementioned Bush tax proposals promise to create new deficits that will eliminate the budgets for carrying out U.S. commitments to the Social Summit, except, perhaps, in the area of education.

The U.S. government presence at the Special Sessions on Implementation of the WSSD and the World Conference on Women was marked by political indifference. The statement given by Donna Shalala, Secretary for Health and Human Services and leader of the U.S. delegation to the WSSD Review Conference in Geneva, gives no indication of the scope and ambition of the governments’ commitments in Copenhagen against poverty and for equity.⁹ The U.S. government never created a mechanism to follow-up the commitments it made in Copenhagen. For much of the past five years, there has not even had a dedicated focal point in government to monitor implementation. No effort was made before the Geneva meeting to assess with civil society the implementation of the commitments to date.

For Beijing + 5, the effort was a little better. A series of meetings was organized around the country and, in answering the UN questionnaire on implementation of the Beijing Platform for Action, the United States was able to point to some important initiatives and new spending priorities that reflect a stronger concern for women's issues.¹⁰ The Clinton administration appointed more women than ever to top-level Cabinet, executive and judicial positions.

However, as an NGO report on U.S. implementation of the Beijing Platform stated, a lot of challenges remain. This report, published by the Women's Environment and Development Organization (WEDO) shows that, while more women are working than ever before, they work in jobs that do not pay enough to support their families.¹¹ This situation has worsened over the last five years. Women in the United States still only earn 76% of what men earn, on average. At this rate (it was 59% in 1963), it will take more than 50 years to reach parity! According to the Economic Policy Institute, the gender wage gap widened by 1% in 1999 over 1998.

The United States remains the least generous ODA donor as a percentage of its GNP.¹² In 1999, it gave 0.10%, constant with 1998 levels. As before, the largest part of spending on overseas projects has been for military expenditures. In 2000, the U.S. Congress allocated US$435 million for debt relief - some US$200 million short of the goal set by Clinton in his statement to the G8 meeting in Cologne. The US spent only 0.5% of its bilateral ODA on basic education and 1.6% on basic health in 1998.

In May 2000, the United States passed the "Africa Growth and Opportunity Act" into law. This Act, celebrated by its proponents as a great victory, was met with little enthusiasm by the NGO community, whether in the United States or in African countries.

The legislation was presented as a move away from aid to trade, and as a way to 'bring Africa into the world economy'. However, even if one accepts the paradigm that assumes development will follow enhanced international trade and investment, the Act falls short. Products of vital interest to some African countries but sensitive to political pressure in the United States, such as sugar, were excluded. The measures to remove tariffs on textile exports to the United States require that the raw materials originate in the United States, undermining efforts to build an integrated textile industry in Africa and ignoring the benefits that new markets for cotton and other materials grown on the continent could bring.

The Act also builds in considerable conditionalities, many of them in areas that are heavily contested by African governments in other arenas, including the World Trade Organization.¹³ For example, countries that enter into trade agreements with the U.S. under this Act will have to eliminate barriers to U.S. trade and investment, including granting U.S. firms equal treatment with African firms. Barriers to imports from the U.S. have to be removed.¹⁴ As the experience of implementing the Uruguay Round Agreements has shown, there is every danger that such liberalization, without consideration of development needs in Africa, will only increase imports to the sub-continent, further jeopardizing the livelihoods and productive capacities of some of the poorest people in the world.

Until the United States sees a political shift towards greater internationalism, and a renewal of the spirit that marked the important anti-poverty and civil rights initiatives seen in the 1960s, it is difficult to see how the U.S. will move towards fulfilling even the spirit of the commitments it took in Copenhagen and Beijing. The struggle continues.

1 World Summit for Social Development Programme of Action, paragraph 27. 1995.

2 "House Committee Approves Core of Bush's Tax Cuts," David E. Rosenbaum, New York Times, 2 March 2001.

3 Taking down the toll booth to the middle class? Myth and reality governing the Bush tax plan and lower-income working families, Robert Greenstein and Isaac Shapiro, Center on Budget and Policy Priorities, 6 February 2001.

4 Income Picture, Economic Policy Institute, 26 September 2000. On-line at http://www.epinet.org/webfeatures/econindicators

5 Poverty: 1999 Highlights, U.S. Census Bureau, 20 September 2000. On-line at http://www.census.gov/hhes/poverty

6 Income Picture, Economic Policy Institute, 26 September 2000. On-line at http://www.epinet.org/webfeatures/econindicators

7 Poverty: 1999 Highlights, U.S. Census Bureau, 20 September 2000. On-line at http://www.census.gov/hhes/poverty

8 Pulling Apart: A State-by-State Analysis of Income Trends, Economic Policy Institute and the Center on Budget and Policy Priorities, USA: January 2000.

9 Donna E. Shalala, Secretary of Heath and Human Services, "Nourishing Human Potential Around The World," statement made at the Special Session on the World Summit for Social Development, Geneva, June 2000. On-line at http://www.hhs.gov/news/speeches/000626.html

10 U.S. response to UN questionnaire on the Implementation of the Beijing Platform for Action, U.S. State Department. On-line at http://secretary.state.gov/www/picw/beijing/questionnaire.html

11 Women's Equality, an Unfinished Agenda, WEDO et al, USA: 2000.

12 This section draws from The Reality of Aid, 2000 and, in particular, the chapter on the United States, by Emira Woods and John Zarafonetis at InterAction.

13 "Africa: Growth and Opportunity Act a Danger," Third World Network, African Regional Secretariat, October 2000, http://www.corpwatch.org/trac/headlines/2000/353.html

14 Grace Buhera, "Significance of Africa Growth and Opportunity Act for the SADC Region," the Black World Today, 20 December 2000, http://www.tbwt.com/views/feat/feat6014.asp