Improving US Welfare Policy: A Shift to Trickle-Up Economics

For over 50 years, the United States has been a global leader in quality of life. This was achieved through the implementation of Trickle-Up Economics, a policy approach that uplifts the working class and ultimately benefits everyone. However, over the last few decades, this shift towards Trickle-Down Economics has led to a significant decline in the middle class and an increase in poverty, with only 45% of Americans now classified as middle class.

A Historical Context

Trickle-Up Economics, which was active from the 1930s to the 1990s, has a proven track record of success. It is estimated that 66% of Americans were middle class during this period, compared to just 45% today. This success can be attributed to policies that prioritize the working class, ensuring that the benefits of economic growth are distributed more equitably.

Practical Examples: Welfare Reform in 1996

To illustrate the positive impact of Trickle-Up Economics, let's look at the 1996 welfare reform. Following the end of the Aid to Families with Dependent Children (AFDC), a new program known as Temporary Assistance for Needy Families (TANF) was implemented. This program introduced work requirements and strict federal time limits. As a result, there are now fewer than 10% of the number of families receiving assistance compared to the peak in 1996. Notably, families have successfully completed counseling, job training, and job placement, and are now working in healthcare at wages well above the poverty line within 18 months of enrollment.

Addressing Housing Subsidies

Beyond welfare reform, another critical area for improvement is housing subsidies. The high cost of housing is a major expense for many working Americans. To address this, we propose subsidizing housing for those who earn less than 30% of the median income. The goal is to help those in the lowest 40% of earners, with limits of 40k or even 50k. A limit of 30k is currently an unrealistic aspiration.

Embracing Trickle-Up Economics

To grow the middle class and reduce poverty, we must again embrace Trickle-Up Economics. This approach has proven successful in other countries. For example, 20 countries that continued with this policy now have a higher quality of life rating compared to the U.S. today. By focusing on the working class, we can create a more stable and prosperous economy for everyone.

Conclusion: Shifting back to Trickle-Up Economics is not a pie-in-the-sky idea. It has a solid track record of success, and the evidence is clear. If we continue to support the working class and ensure economic benefits are distributed equitably, we can grow the middle class again and support a more prosperous future for all Americans.