Matthew Desmond (on poverty)

Welcome, welcome, welcome to Armchair Expert, Experts on Expert. I'm Dan Rather and I'm joined by a modest mouse.

Hi.

You're not really a modest mouse, but that is a great band, Modest Mouse.

It is a great band. Yeah.

I don't think I'm a- Immodest.

Immodest.

Well, not in your style.

Not in my style. Yeah, yeah.

Me either. I'm in a beautiful, beautiful gray Burberry sweater that my friend bought me. My friend.

Oh, your friend has great taste.

She has incredible taste. And I am so grateful for her immodesty in this department.

It's such a nice sweater.

It is. I love it. It looks great on you. It couldn't be softer. Okay, today's guest, kind of an ironic setup.

We might have to cut all that.

No, we gotta keep it, it's funny. Matthew Desmond. Matthew Desmond is a Pulitzer Prize winning author and sociologist. His books include Evicted, Poverty and Profit in the American City, The Racial Order, Race in America, and his newest book, that's out now that we are here to talk about today is Poverty by America. Great fucking book.

Yeah.

And he is a sweet, wonderful person. I loved getting to spend a few hours with him.

Yeah, and I wasn't here for this.

Same sitch.

Same day as Paul Giamatti. Yeah. But it was really nice to listen and learn.

Please enjoy Matthew Desmond. He's an objects man.

He's an objects man.

He's an objects man.

Cream top. It's just coffee, it's espresso.

It's pretty damn delicious, Matt. You might wanna give it a shot. There's a liner on the block.

I feel like I gotta go in there.

And are you wearing a Shinola watch?

I am.

Look at this, we're bound together.

You have to have one.

From Detroit? That's right. Yeah, yeah. And aesthetically, I would get one anyways, I think, for probably the same reasons you did.

Oh, that's creamy.

It's an indulgence, for sure.

I've got a Shinola watch wallet.

Is there anything functionally different about it that makes it?

Just a good standup wallet.

Okay, nice leather.

Brown leather wallet. Had it for years.

Oh, wow, okay, so it's standing the test of time. And you're originally from standing on a corner in Winslow, Arizona?

Winslow, Arizona, I was born in San Jose, California, but really grew up in Winslow, railroad town. You ever seen the show Cars, the cartoon? Yes. So that was modeled off of our high school rival. Oh, really?

Hence the Eagles song.

Standing on the corner.

Winslow, Arizona.

I think he was actually in Flagstaff.

Because Route 66?.

But I think Winslow is better pentameter in the song. So I think the actual corner wasn't there. But we've made use of it.

I'm telling you sincerely, Matt, I'm delighted to actually meet someone from Winslow, Arizona, simply because of the song. I've traveled this planet for 48 years and yet to meet someone from Winslow.

Here it is.

Flagstaff's not a metropolis, so I can only imagine Winslow's even less of a metropolis.

Small town, one high school, right on the southern edge of the Navajo Reservation. You know, big industries. there are railroad and the prison. I think it was 10,000, 13,000 folks if you counted the prison population. My high school was, like majority Native American.

And dad was a pastor?

Yep. It was the first Christian church in Winslow, Arizona, which is basically a Baptist church. Small congregation, and then he lost that job.

Was there impropriety?

There was no impropriety.

When you lose your job as a pastor, it does beg the question.

I'm still kind of confused about what happened. Well, that was tough times for our family.

How old were you when that happened?

I was in junior high when that happened.

Okay, already a dicey time period, junior high. Some guys are 5'11", like I was. Other guys are 4'9".

You were like the back row, kid.

Every parent felt bad for my mom. Like, oh, this poor woman's kid has flunked like three or four times.

But this is the guy with the mustache back there.

Yeah, this is the guy who rode up on a Harley, smoking cigarettes. So then you experienced for the first time some major economic insecurity. We did. And you bounced around from where to where. You lost the family house because of this?

Yeah, before it was all the rage. Family declared bankruptcy. And then the bank foreclosed our home. My childhood home was $60,000.. We just couldn't make payments.

This is a societal thing.

There's a bigger game afoot.

Right, there's a system in place that's producing this outcome. And so then questioning the system that results in that. Right. Despite all that, you found your way to college. To ASU, Sun Devil?

ASU Sun Devil, my dad had a phrase. Whenever we saw someone digging a ditch or doing some really hard labor, he'd turn to us kids and say, you want to do that for the rest of your life? Oh yeah, yeah, yeah. And then we'd be like, no. And he'd be like, go to college.

You arrived, though, after they had shut down Flaky Jake's, right?

Flaky Jake's.

Do you know Flaky Jake's?

I don't know Flaky Jake's. I know Gus's. I know Gus's, which is the best pizza in Tempe.

Yes, but Flaky Jake's was like the original Fuddruckers. I'm obsessed with it. I'd go to Arizona as a kid, because my stepdad was an engineer and he worked at the proving grounds. And the big trip was to go to Flaky Jake's and build your own hamburger. I have the warmest feelings for that, but it was directly across the street from the campus.

I missed out.

Oh man, yeah. I had a hunch, because I think I'm three years older than you.

You know Philly B's? You know Filiberto's? No. The place you'd end up at two in the morning? Oh.

Okay, in Santa Barbara, we had T.O. Oberto's. Yeah, and I know what the two pound burrito's all about. Yeah, so no one to really model this, but my mom did the exact same thing. So there was a very wealthy area of Oakland County where we grew up, and we would take pilgrimages out to Bloomfield Hills, and we'd pull into driveways and look at huge houses, and my mom would go, these people went to college.

That's interesting. You just knew you had to do it, but you didn't know how kind of thing?

No, she was really supportive. When I graduated, I was like, I'm not going to college. I read on the road. I'm gonna live in a car and write. I don't understand why we would need to go to college.

The only ones for me are the mad ones, yeah. Yeah, yeah. Gotta love it.

So when you're there, you're originally, you major in communications.

Yeah, and justice studies.

That's a triggering study for me. Yeah, yeah.

It was kind of a pre-law degree. Oh, okay. But it was interesting, because if you wanted to be a sheriff or go into law enforcement, go into FBI, you took those classes too. The students in those classes were really politically diverse. You had folks that were very pro-law enforcement, and you had folks that were much more kind of pro-social justice.

I bet. I would even guess that ASU is a little bit more politically diverse, just as a baseline.

Yep, totally.

There's way more right people there. I think I just read a statistic that only 20% of current students are conservative, but I would imagine at ASU, it was more like 40-60 or 50-50..

When I was there, there was a lot of folks all across the political spectrum, and we would just have it out in class, and I valued those conversations. I took a class on critical race theory, the much-heated, debated critical race theory hot button, and it was taught by a law professor. He's a law professor now. His name is Donald Tibbs, and he started the class, it was just about tort law. Boring.

you know, stayed in that class. Yeah, yeah, yeah. He had them over a barrel.

That was an important class to me. That was one of the many classes I took where I was like, really? This is how it is? And so we grew up where money was tight, but we always had the story of what America was like. Story I got at my church, at my Boy Scout troop, it was the American dream story, and I was one of those kids that went to college.

Some fun jobs, by the way.

Yeah, some un-fun jobs.

Barista, firefighter.

Telemarketer.

I, too, was one of those.

Did you make a sale?

Yeah, well, I had two versions of it. One is, my father invented subleasing in Michigan, so it was right at the birth of leasing cars, and people were getting these six-year leases, and they wanted out of them, but there was no way, so we would call people who were selling a car in the newspaper for 16 grand. I would look at the Kelley Blue Book value. I'd know they owed 18,000, and I'd say, would you like us to take over the payments? And I was 14, and I would be convincing these people to transfer ownership over to my father.

The thing that blew me away about telemarketing is it works, and I'd get folks on the phone, and I remember my first sale, and I was like, really?

But you're probably discovering something that now later comes into this book, which is you're probably noticing who says yes, and it's heartbreaking.

Yeah, a lot of lonely folks say yes.

A lot of lonely folks, a lot of not-worldly folks, a lot of confrontation-adverse folks. I think even me immediately was like, ugh. You know, I don't love how I feel about the people that are saying yes.

That's right, it did make me feel good. But my truck broke down, and I needed to fix it.

That's right. Those old F-150s, they're troublesome. Okay, so what turns you on to sociology? Why go get a PhD in?

I don't have a really clear answer. Law felt a little constricting to me. Didn't feel like I fit there. And I was super confused about inequality. And I did have this growing hatred toward poverty and confusion.

This is very peculiar and deserves a dig. You would acknowledge that's a very abnormal thing for a college student to do.

Yeah, I think there was part of me that was like, go to the street for your answer. And I think that instinct has served me pretty okay.

But I can even relate to you a tiny bit right at this moment, and we chose different paths, which is, I had to do an ethnography on the homeless as part of my anthropology degree. So I went down to Skid Row, as we would affectionately call it. I know there's 13 shelters there, and there's just thousands of people. And I milled around, and I talked to people, and I went in shelters. And my conclusion was, mind you, I'm an addict.

I guess maybe. Have you read Homelessness as a Housing Problem?

No, I have not read that.

You know, he does these analyses where he's like, is it drugs? Is it mental illness? And what you find is that there's a lot of folks struggling with addiction all across the country, a lot of folks that are suffering from mental illness, but that doesn't manifest as homelessness. It does in a place like LA, because what it is, it's just rents. That's what the thing is, it's abject rents.

So, another shocking statistics that's come out about the LA homeless is that 40% are from the foster care system.

Yeah, what you said earlier too, is these kind of failing systems. There's a system of addiction that we're failing at, there's a system of mental health treatment that we're failing at. And you know, for these young folks that are aging out of foster care, that are given 500 bucks and a pat on the back.

No, it's devastating. That's my issue. It's like, oh, you wanna say 35 years later when we failed all these people, we're gonna give them an apartment and that's gonna work out. To me, it seems a little naive and a little unrealistic and not totally honest. And so for me, I donate the whole war chest to upriver solutions.

The downriver. solutions are tougher, because you know, for every day you're spending outside, your problems get a lot worse.

And the likelihood that you'll stay outside increases.

Yeah, so the new study out of California that shows a lot of folks start taking drugs after they become homeless, because it's scary, they wanna stay up, they start juicing. So then their problem is accentuated and doubled.

Can I add one thing I think is also. the problem, is we're using one word to describe what is 55,000 people in LA. I don't know what the number is, but it's something like that. And you have such specific groups within that. You have a lot of people, which your book addresses, people who are like two checks away from being evicted.

Yeah, right policies for the right people. Some folks, they just need a pretty shallow intervention, and that really matters.

Some rent forgiveness for six months.

Some legal aid. Some folks need a much deeper intervention.

Yeah, and it's hard, because the policy is supposed to address everyone.

In California specifically, a massive attack on the high level of rents would really make a difference. It seems like the evidence is there.

Okay, but can I just push back a little bit? Yeah. The world's on your side, so I'll be the one that looks like an asshole throughout this. But I also have a little bit of an issue in this national debate, which is it ignores the market.

The housing market?

Adam Smith's invisible hand. Does everyone have a right to be housed in Beverly Hills? I think we would all on the surface, go, no, that's kind of crazy. You don't have a right to live in Beverly Hills. Similarly, I think it's interesting that we have picked the most expensive places in the world to deal with this problem.

Tokyo is different. Tokyo is a pretty affordable city for the size and desirability it is. Our expensive cities don't have to be like this. And if you go to other countries, you see very desirable, very awesome cities without this level of homelessness.

Okay. It's already getting fun. Yeah.

What makes the difference is in places like New York, LA, San Francisco, people have just been completely priced out of their own communities. And that's the thing. So we used to think, okay, people are coming to San Francisco to be homeless. They're coming to Portland to be homeless. That's not true.

That would imply there's a nefarious overlord that's making that decision. It's just literally, what is the price of a house there?

There are zoning laws. There are laws in most residential land that says it's illegal to build anything.

To build a skyscraper in the middle of Rodeo.

Yeah, or to build decent multi-family housing.

Yeah, that's true.

And so a lot of times, these debates kind of ignore the fact that on most residential land, you literally can't build affordable housing. That's something that we have to confront too. if we're gonna get serious about this. And this is where California is like, are we in a progressive state here?

Well, but look, I live here and you don't, right? And it's really relevant. I hear people be critical. And if I didn't live here, I would be too. I drop my kids off at school, literally dozens of times.

Yeah, I don't know what happened.

Yeah, yeah, yeah. I don't know what happened. So anecdotal, I acknowledge that.

I do know what happened in cities like Houston that have massively reduced homelessness. The Houston reduction in homelessness is a real thing. And it seems to have been driven by this massive coordination effort across social services industries in Houston and the fact that Houston has no zoning laws. It's the fourth biggest city in the country and it's way less expensive than other large cities in America. And so they're able to get folks housing quickly and efficiently.

So another big pushback you'll hear from conservatives here is that we have tons of unfilled beds because people won't piss clean. Like, if you got a piss clean to be somewhere, you can't be there. And we have a ton of empty places because of that. But I understand what you're saying. Like, well, let's just start here.

That's not the Housing First, right? Right. That's the Get Clean First. Yes, yes. And so it's kind of like, all right, that's an issue we wanna address.

I thank you for placating me. You've won a Pulitzer writing about eviction and the housing crisis. I just wanna acknowledge that. I appreciate you.

I wanna acknowledge this part, though, that you talked about, about living in California. Because I think this is something that does get to the heart of it. And it's also about this kind of recognition that poverty, it drags us all down. Yeah.

I mean, I feel bad for the police. I feel bad for the city workers. I feel bad for them. It's heartbreaking. It puts you in this very bizarre position as a parent, which is you can't take it on.

It diminishes us all. Yes. For me, this is really important, because a lot of times, when we talk about ending poverty, we kind of say, hey, it's the right thing to do. It's also like, don't? we want a safer, more vibrant, healthier country?

Yeah, yeah. My little girls will walk to the store and they'll cross the street three times because there's someone fighting a bird scooter. Shit's popping at all times. But I agree with you. It's maddening to me that people won't acknowledge the downriver costs of not dealing with it, which is like, you think you can just go, we're not dealing with it, but you are, unless you're gonna change the policy at the hospital, that we don't take people without insurance, which is never gonna happen.

The outcome would be lovely. Yeah. And so this is where I'm writing about public poverty and private opulence. A lot of rich people living alongside a lot of poor people. that creates this momentum where the rich kind of withdraw from the public sector.

Yeah, build bigger walls.

You know, build bigger walls, buy our own schools, buy our own parks, buy our own pools. And suddenly the public becomes degraded, and that actually affects everyone, including those of us pretty secure in our money because our kids have to cross the street three times, or because we can't enjoy our public parks like we used to, or because we just feel implicated, right, and icky.

It's why I find there's this thing where people of privilege have this very patronizing tone, with waitstaff and service workers, where they're overly nice and, oh, and how was your day and how was your weekend, Gail? They don't do that to their doctor because they know they're paying their doctor. They're like, we'll pay you. I don't have to fucking placate you. I witness it all the time.

That's right. I think a lot of us don't want that. I really do. Yeah, yeah. I think a lot of Americans want this conversation, in part because they feel complicit and embroiled in these morally compromising relations and they don't know what to do about it.

Yeah, and then, if I'm being my most selfish person, I go like, well, I'm giving half my money away. I'm happy to do that, but also there's a frustration where it's like, well, I'm giving half my money. What could fix it? It doesn't appear that money could, but we'll get there.

Okay.

All right, I think first we should define poverty, because that's what the new book is. Greatest title ever, Poverty by America. So Poverty by America. I think first we should know what we're calling poverty. And there's an interesting background with the government employee.

So, technically, poverty is an income level. And so Johnson launches the war on poverty. We have no idea how many poor people are in America. Suddenly it's like, well, how do we know if we're winning the war? And so social security administrator named Molly Orshansky, she's like, all right, poverty is you can't afford basic things.

Yeah, you said, if our poor were a country, they would be more numerous than Australia or Venezuela.

That's right. But also like notice how low the poverty line is. You know, $29,000 in LA, you can double that and you're still facing pretty significant hardship.

Absolutely. You couldn't do it realistically. But for what you're talking about and what you wanna tackle, what will we add to that? Are we gonna use that?

No, we shouldn't. That's just the start. It's like what the poet, Laila Long Soldier said, it's the oil on the surface. Poverty is like tooth rot. It's like your cousin getting roughed up by the police.

And just to put it in perspective, I think the really reasonable question you're asking is, okay, so we have 38 million people living below the poverty line. Yet if you take our GDP, it is bigger than two. through seven combined. Japan, Germany, England, India, all of them combined, we are bigger than. So.

Compared to other rich democracies. So that's the thing that makes America in a disgrace class all of its own. Like our child poverty rate, the share of our kids living in poverty, it's not just higher than other countries, it's double.

One in nine Americans is, and then one in eight children are. I was shocked to read that a million school children right now are homeless. And that two million don't have running water or functioning toilets.

Two million households.

So yeah, times, however many people live in there. Those are staggering than when you look at the opposite of our wealth.

Yeah, totally. Economists have estimated that you need $4 a day to afford the very basic, bare minimum necessities in America. Five million of us get by on that. There's a lot of abject poverty in America. Just real, truly horrendous poverty in this nation of dollars.

Do you think it's something that's accelerating in that, as we get more segregated, we get less and less aware of it? Like I would imagine, these will be shocking numbers, as they were. for me. And by the way, I'm from a lower class area of Michigan. Half my childhood was hanging out in trailer parks and dirt roads.

I think the increasing economic segregation does blind us a lot to other people's poverty. And it's like what happened when Michael Harrington published The Other America 60 years ago, where it was really this way of revealing how many poor folks really were in America. And it shocked the American middle class and upper class. And I think that we should be shocked still today. You know, America, for a chunk of the country, works great.

I, of course, am in that boat. I have achieved the American dream, probably times 10.. You have. You're a professor at Princeton and we're at Harvard. So you two have done it.

It's a coin flip today, basically. Whether your kids are gonna do better than you. It wasn't like that in the 50s, 60s, 70s. But today social mobility has declined. There's like more American dream outside of America in some countries than inside of it.

So you write this great book, Evicted. You win the poll, sir. You've been studying forever. You've been interacting with folks in poverty since you were in college. And A, you had no explanation for what was going on.

Yeah. No, you're right. I was spending all of my time researching poverty. I was talking about it. I was teaching classes on it.

Now first, actually, I would love for you to do the analogy of the people jumping out of the burning building.

Right. So this comes from Tommy Orange, California writer. And he has a novel, They're There. And there's this line in the novel where he says these kids are jumping out of the windows of burning buildings, falling to their deaths. And we think the problem is that they're jumping.

Right.

And when I read that line, I was like that's the poverty debate. And it's just jumper after jumper after jumper. That's book after book after book, debate after debate. And we should have been focusing on the fire, who lit it, who's warming their hands by it. So this is a book about the fire.

Easier to have a 70 inch TV as well.

Yeah, you can get a 70 inch TV and a cell phone pretty cheap, but do you have a dentist?

Right, it even screws with me growing up in the 80s, which is only rich, people had this 27 inch Zenith color TV. Some people didn't have a phone line. So when I look around, I'm like, well, people have everything now. It's kind of misleading.

But you just can't eat a cell phone, right? You can't trade that TV in for a living wage. You can't trade those sneakers in for affordable housing. And so I think that social progress, technological progress, gives us the impression that, gee, when I was a kid, no one had a cell phone. No one had a computer.

Stay tuned for more Armchair Expert, if you dare.

Okay, this is a big question. So forgive me if I go into professor mode, okay?

No, I love it. This is my free continued education.

So if you look at the official poverty measure, what the government uses, that measure has basically stayed the same over the last 50 years. But that measure's flawed. It doesn't account for government spending, like on food stamps or housing assistance, and it doesn't account for cost of living differences. So $27,000 in LA and $27,000 in rural Mississippi are counted the same. That didn't make a lot of sense.

That's crazy, yeah.

So in 2011,, the government put out another measure. It's called the Supplemental Poverty Measure. And it says, we're gonna account for living expenses, and we're gonna account for healthcare expenses, and we're gonna account for government aid and transfers. So those food stamps, that housing assistance, if you get it, we're gonna count that as part of your income. When they released those numbers, America officially gained 3 million more poor people.

Oh, that had to be counterintuitive.

It was counterintuitive. And it was because the rising cost of healthcare and housing costs outpaced what the government was doing. And if you use that measure, the Supplemental Poverty Measure, you still see pretty flat line over the last 50 years. Now, this scares people, because government spending on poverty has increased.

37% from 98 to 2017?.

237%. Oh! And what we're talking about, just to be specific, these are means-tested programs, per capita spending, and they're inflation-adjusted. So these are things like Medicaid, food stamps, housing assistance, between Reagan and Trump. You get an over 200% increase in spending.

Explain that a little bit.

So, if you think about when the War on Poverty and Great Society were launched in 1964, they made huge reductions in poverty. They basically cut the poverty rate in half. They did so by expanding food assistance, expanding Social Security massively, Medicaid and Medicaid were founded, Job Corps. These were deep investments in the poorest. people.

The middle class was thriving much more.

Wages were climbing. Even folks at the bottom of the market were getting pay raises consistently. every year. We experienced the most economically equitable time in our country. But as our jobs got a lot worse, as unions lost power, the job market has turned anti-poverty programs into something like dialysis.

We also have a ton of government-funded industry, the WPA and all these different programs.

But since then, we've kind of turned to programs that aren't really intervening in these markets. We're just helping. Now, I want to be super clear. These programs are essential. They do really work.

It's rare that you say a lifesaver, and it's not a metaphor, but this is a literal lifesaver.

So I think this is the paradox that we actually have to lean into and take into account. This all started because you asked me how to measure poverty. And there's also measures that show poverty is going down. And we can talk about why they technically show that or not. But for me, let's look at actual hardship measures.

Let's look at what the book focuses on, which is the other half and how we profit from this, which I think would shock some people. Let's talk about 2008 really quick. You have a line, poverty was positioned as a cause of it instead of a consequence of it. And that's not ringing a bell, because I probably didn't get the quote perfect.

I'm reaching, I'm reaching.

But anyways, this happens to be one of my, for whatever reason, a thing I got obsessed with in 08, during the collapse. And I started in a place that was probably like a lot of Americans, which is like, oh, these assholes went and fucking got these subprime mortgages and bought houses they can't afford. And now they're defaulting on the debt. Then I learned that there was some deregulation. And then I learned that the bank lenders were actively pursuing a class of borrower, full sales forces deployed to convince these people to take on these loans because of a regulation going away, and come to find out all those people that sold that paper didn't even keep that paper.

See, that's making a personal problem a political one. Yes. I feel like you should get your honorary sociology degree.

I came out of it at the end going like, oh, none of the people at the bottom who are getting blamed for this have anything to do with the massive meltdown that's happening. It's not the toxic mortgages, and even those, the people who borrowed the money, weren't truly at fault. So I have great empathy for everyone that suffered through that, and that was very eye-opening to me. It's actually one of the many things that pulled me out of being a libertarian. I'm like, oh, no, no, we need a shitload of oversight on this financial sector, because you should not be able to insure stock shares you don't own.

That's right. So we're talking about overdraft fees from banks, payday lending fees, and check cashing fees. So this is just fines and fees that are allowing low-income folks to access their money or credit. So $61 million every single day. So, like when James Baldwin wrote how expensive it is to be poor in America, I don't think he could have fathomed these receipts.

Yeah. When people are predatory against low-income people, it is, to me, the final ring of hell. It is so gnarly. I can't believe anyone can sleep at night. I don't really care if someone swindles a rich guy out of some money, but the many industries that are on the back, what about bail bondsmen, the prison, industrial complex?

And I think that folks that are not poor, that are living quite secure, they often kind of see these decisions. They say, well, don't make stupid decisions. You know, why are you taking that payday loan? The data show that most folks are taking out a payday loan for a normal expense, to pay their rent, to keep the lights on. It's not like a big emergency hits their life and they have to turn to this.

They're not buying the iPhone 14 in most cases.

Their whole life is an emergency. They're turning to these lines of credit because those are the ones available to them. It doesn't mean there's nothing we can do about that. There's studies that show when we regulate payday lending by showing clearly what people will probably pay. You know, like when you go to McDonald's and you see that big calorie count next to the burger,

you're like, okay, all right. I won't get the triple.

When we do that with payday lending, folks take out the loans less, but the problem is they're there for a reason. So when we close down one line of credit, folks go to pawn shops, folks go to auto loan. And so we need to find ways to open up, not close down, these lines of credit.

What are some other ways people are profiting?

One way to kind of tell that story is to talk about Julio Péaz, who I talk about in the book. He's a young man I met in Emeryville, California, a few years ago. Julio clocked in at 10 p.m. at night, worked the overnight shift at McDonald's, got off at 6 a.m., had two hours, and he clocked in again at Aerotech, going anywhere. the temp service sent him between 8 a.m.

Yeah. You know, Warren Buffett shined a good light on the difference between the capital gains tax and the income taxes. his secretary was paying. Famously, right? He said, it's pretty crazy that I'm paying half the rate, or maybe even less.

Yeah, I think we got to think really hard about taxes. For me, that's the thing. Everyone left, right, and center, we kind of talk about it in the same way, which is like, shit, I got to pay my taxes.

Well, sure, sure. It's never fun to give away half what you make.

Reagan famously said, taxes should be hard, and they are hard in America. They're often painful. But look, you know, if we get a tax deduction that costs the government money, and that puts money in our pocket, we got to count that as part of what the government does for us. The government sends $1.8 trillion on tax deductions every year, which is like double what we spend on the military. It's an enormous part of the welfare state.

Great, yes. Define the welfare state, because I think we have a traditional way of thinking of the welfare state, but I want you to include everything that's actually in the welfare state.

I think everything the government does for us is the welfare state. So part of that is means-tested programs, food stamps, housing assistance, things we usually think about when we think about welfare. But we also should think about social insurance, like Social Security, which a lot of Americans will get or are getting today. And then we got to think about tax breaks. That's got to be part of the conversation about what the welfare state does.

So like $9,000 more.

It's almost a 40% difference.

And you're right, by the way, I'm guilty of this. So it's like, yeah, you can deduct your mortgage interest.

And it cost us a lot. By one estimate, it cost us $190 billion a year in homeowner tax subsidies, which is way more, like triple the amount.

And by the way, it's really funny. I'm sure many people are like, why should that person get free rent? Or why should that person get free food when I don't have to? But then they're never going like, well, wait, why do I get all this money back?

Why do I get to deduct the interest of the mortgage for my second home? Why does my nice house in a nice neighborhood need to be subsidized by the government? You know, a mortgage, suburban home and a 15 story public housing complex are government subsidized. And we should face that.

Can we make the argument, I'm trying to be generous. Do you think the reigning philosophy when that was enacted was, this will create more home ownership, which will fuel the economy and create more building and buying and everything. Do you think that was the premise behind allowing people to deduct their interest?

No, it was an accident. Oh, great. You actually know the history, I love it. It was like, you know, the mortgage interest deduction started to like spur small business owners. It got into the tax code in the early part of the 20th century.

Oh, it got bigger than they expected.

This is a thing now. And then a lobby forms around it. And that lobby is called the Realtors. And they're the second biggest lobby in the country, based on the number of dollars contributed. Their number one issue is protecting the mortgage interest deduction, because that makes your house and my house more expensive than it would have been if it was just market dynamics.

I know, it's hard to admit that's a straight up subsidy.

And if you look at the data, it's straight up to the upper class. It's not even a middle-class benefit.

It's interesting historically how some things get started, like even entitlements. I'm like, how did entitlements start? And there was a spending freeze, right? You couldn't offer more wages at Ford, I think. And they wanted better employees that would stay around longer.

I don't think it makes a lot of sense that I get the mortgage interest deduction when there's a million public school kids that are homeless today. I feel we gotta talk about that. And I feel like the next time tax season rolls around and your neighbor leans over the fence, or your kid's soccer game and someone's like, taxes, geez, my God. I think we have to start having a very awkward conversation. I think we have to be like, I know, I get the 529 college savings tax deduction, which is only for people that can squirrel away money for college.

Definitely sexist.

Sure, absolutely. Shifting that aperture, changing that common sense. But with these issues, it's still very sticky.

It is. Yeah, it's. the only thing that unifies everyone is they hate paying taxes.

A lot of times when we talk about taxes, we're talking about the tax brackets. We're talking about increasing taxes on the wealthy. We gotta talk about enforcement. Just literally collecting taxes. The IRS chairperson told Congress last year that we lose a trillion dollars a year, a trillion with a T, just on uncollected taxes because of corporate shenanigans and the kind of tax maneuvers by ultra wealthy families in the country.

Yeah, I think the total budget of the government is something like $3 trillion. So you're talking about adding 33% more to the kitty?

Yeah, a study came out a few years ago that showed that if the top 1% of Americans just paid the federal income taxes they owed, that, it would raise $175 billion a year. $175 billion a year is almost enough to close the poverty gap. Really? So. for me, when I hear like, we can't afford to do more, or like in a world of scarce resources, I'm like, that's not our world.

Okay, what is TANF and how does it work?

TANF stands for Temporary Assistance to Needy Families. It's cash welfare. You remember Clinton reformed welfare in the 90s. It was kind of a deal with the Gingrich Republicans and he turned what was a cash entitlement, like a guaranteed cash program, into a block grant. And a block grant is just a wonky way of saying, okay, California, okay, Missouri, here's a chunk of cash.

That seems like a terrible idea. Yeah. So, prior to that, the federal government was in charge of physically distributing this?

Prior to that, you were guaranteed access to a basic level of cash assistance if you met certain requirements. Right. You are no longer guaranteed access to that.

Okay, now, so one out of every dollar given by the Fed, of that dollar, only 22 cents makes it to the person.

That's right. In terms of cash in their pocket, the thing they need the most.

Where's this other 78 cents?

You name it, abstinence only classes, Christian summer camps in Maine, child protective services, juvenile delinquency, a whole host of things that states spend the money on. They justify it in some way, but it has very little to do with poverty reduction or just easing family's hardship. We're talking about kids not having enough to eat because they're not getting that money. We're talking about kids getting evicted because they're not getting that money. So there are real costs to the decisions that states are making.

700 million.

700 million. But Hawaii, our blue estate, was sitting on so much unspent TANF funds, they could give every poor kid $10,000..

What was their explanation?

I didn't ask them. Okay.

Let's get them on the phone. Yeah, right. Has Tennessee issued any kind of explanation for that?

I didn't ask them either, no. There's just a lot of state discretion and states are doing a lot with that money that doesn't have anything to do with helping poor families.

And one of the misconceptions you point out is that a lot of us are afraid that poor families are taking advantage of the programs. And we think of welfare dependence, but that in point of fact, there's probably a bigger problem of welfare avoidance.

Yeah. Welfare avoidance is the idea that billions and billions of dollars in unused aid is left on the table every year because families that are eligible for programs do not take advantage of those programs. So about 7 million Americans who qualify for the Earned Income Tax Credit, which is this pay raise for our poorest paid workers, they pass on it.

How does that work? That's if you make below this amount of money, you get to take this huge deduction off. So virtually you pay no federal income tax. I remember when I made eight grand a year. for 10 years, I never paid any federal income tax.

Yeah, the Earned Income Tax are a little different, but you get a benefit around tax time. And it's kind of a windfall that comes, it's usually for working parents.

In the way of tax forgiveness or an actual check?

You get a check.

Okay, so there's, do you say how many people?

How many people pass on this incredible big benefit? Yeah. About 7 million people a year, which means they pass on about $17 billion in EITC funds. And if you add that up with the amount of money that goes unspent, because people who could receive food stamps don't apply for them, because people who could get government health insurance doesn't apply for it, could get supplemental security income, which is kind of a payment for folks that are below a certain income level, that have a disability or that are blind or old. If you add all that up, what you're talking about is over 140 billion, billion with a B, dollars in unused aid every single year.

Well, and let's be honest, there is fraud, but what's more likely to happen is, if there is some fraud perpetrated, it's gonna be on every single news channel. It might amount to $800 million, yet we're ignoring this $170 billion. that's not getting used. It's definitely more newsworthy when there's some kind of fraud.

I wish the fraud at the top got more news than the fraud at the bottom, right? I mean, that's like so much more consequential. Look at COVID. We roll out Paycheck Protection Program. We spend $800 billion on the Paycheck Protection Program.

You're looking at the pennies and not the dollars in that situation. And so what are the deterrents? Right off the bat, people would guess maybe it's some kind of pride that they wouldn't go and apply for it, but it's much deeper than that.

I think so. Have you ever been to a welfare office? No. I have, and it is a terrible experience. Take the GMV and multiply it.

And, as you point out earlier, poverty is this huge ball of things. So people in there, much higher per capita rate of chronic pain, addiction. Everyone in there is already suffering.

Yeah, taking a day off work means losing money.

They have kids with them, I'm sure.

Absolutely. So there is something about stigma. There's something about pride, but there's a deeper issue. And the deeper issue is the just red tape bureaucracy. So if you look at food stamps in Oregon, almost all the folks in Oregon who qualify for food stamps receive them.

Well, yeah, they're the best at it.

Why can't we do that for young moms that need formula?

Yes, and is it your opinion that it is calculated to prevent giving out the money? Or do you think, again, to be generous, they think it's an attempt to prevent fraud?

So there's a great new book called Recoding America. And the author makes a case that a lot of these programs are embroiled in this red tape, not out of any sort of nefarious intentionality, but because the reward structures in government agencies is about butt covering and not about delivering. And so you don't want to make a mistake. You want to kind of cross your T's, dot your I's. That's how you keep your job.

This is a bizarre analogy to bring in, but I just happened to be reading the Isaacson book about Elon Musk, and it's like, literally what he's been able to do with space travel is solely because he wasn't working for the government.

That's interesting, yeah.

That 90 plus percent of the costs that NASA was dealing with were the reams and reams of oversight and ass protecting, and this and that that were completely unnecessary. It can be pretty stark.

But we know how to get out of this. There's a study that's literally, if you change the font on a program announcement about the earning of tax credit, people sign up for it. more. There's a study that shows that if you just send a mailer to older Americans who qualify for food stamps, like, hey, you might qualify for this, call, this number. And when they do, a person with a pulse picks up the phone, spends a half an hour on the phone walking through, big take up rates.

And again, that's not even asking for more money. That's just asking that we help get to the people who it's been designated to.

Let's deliver, that's right.

Where's all this money going that gets unspent and unclaimed?

I don't know. But it does mean like a dollar in the budget, doesn't mean a dollar in someone's hand.

That's very, very terrible, 22 cents. Now, so I heard you talking about COVID and I guess on some levels, this is a pretty dynamic experiment that was run for someone on your position, I would imagine. This was likely to never occur, and yet it did. And there's some amazing results. So what happened during COVID?

Most Americans were financially better off in COVID than before COVID, which is crazy.

It is crazy. And, I would imagine, too lopsided for the lower end of the spectrum of income.

Absolutely. So. we have three historic relief bills in COVID, two under Trump and one under Biden. One under Biden is called the American Rescue Plan. The American Rescue Plan is unquestionably the most important thing the government's done for low-income families since the Great Society and the war on poverty.

So that took it from one in eight to one in five-ish?

Five million more kids were pulled out of poverty because of that intervention. This is just one part of the rescue plan. We had something called Emergency Rental Assistance, which is like, okay, we have this eviction moratorium, but when it ends, what's gonna happen? So the federal government allocates about $46 billion to help tenants in arrears. that reaches 10 million families, and it drives evictions to the lowest they've ever been on record, ever.

They're ignoring real data.

They're ignoring reality.

Stay tuned for more Armchair Expert, if you dare.

Do it.

There's no question. it definitely had a huge impact. You'd be willfully ignorant if you denied the impact all those relief checks had.

However.

However, our interest right now is 7%. And it's 7%. because of that. We made money valueless. We caused inflation to go through the roof.

So there's a massive debate in economics right now about the source of inflation. Because everything happened all at once, right? Like Russia invaded the Ukraine. We had supply chain breakdowns. There is a lot of evidence about corporate markups.

I totally agree with you. As soon as supply chain's broken, now, your basic supply and demand dynamic is largely impacted by the supply side. So of course, demand and prices are gonna go up. But we also printed a ton of money. We just invented money and put it into the system.

$5 trillion in aid relief over the next 10 years. So not all of it went out already, but a lot of it did. But I don't think that inflation is a necessary or automatic result of these deeper interventions. Like we could keep some of the more effective programs that we saw during COVID and not have the inflationary pressure that we had.

Because we ran the grand experiment and we know now what works.

And we know it didn't work. And what was kind of wasteful, the Small Business Administration, who administered the Paycheck Protection Program, is estimating that $200 billion of that money was probably fraudulent, that didn't need to go out the door. So the Extended Child Tax Credit, that was about $100 billion program. And if you look at other countries that make deeper investments in poverty and just public services in general, it's not like they're all sacked with inflation regularly. So I don't think it's automatic.

Right, so now I'm gonna put my progressive hat back on and say that I don't think we can just invent money. I agree. And those programs are necessary. And I think you gotta get realistic about one in $3 collected going to the military. This is a thing that no one wants to talk about at all, especially in this moment where there are two wars raging and it's a very scary world we're confronting right now.

We spend a lot more on tax breaks in the military, though.

That's pretty bonkers.

Yeah.

Let's meet in the middle. Yeah. Let's cut the military in half, and then you can get half of your tax breaks.

So there's a part of me that's like, a lot of us wanna talk about the military because we're not in it and we're not affected by it, and our kids aren't in it and we don't think our kids will be in it.

But let's be honest, the personnel expense of the military is not the expense.

You get no argument from me on this. Like. I'm totally open. I feel like I'm a little over my skis on this. Like.

Yes, yes.

And be like, how am I benefiting from this unbalanced safety net? Not because I think that move is sufficient, but it matters. I think it matters for building the political will. I'm so tired of arguments about poverty that let me off the hook. I don't wanna be left off the hook anymore.

Yeah. I do wanna answer, because there'll be some right-wing people that'll go like, if you care so much, why don't you give all your money to it? And I just wanna answer, I see this as a pushback all the time. Like Warren Buffett, oh, if you don't like that, then why don't you give all your money? Because the goal is to correct the problem.

You'll notice there's no sentence in my book that asks the reader to give any money away. I'm asking the reader to often take less from the government.

Uh-huh. Less of your subsidized lifestyle.

I'm asking the reader to shop and invest in solidarity with the poor. I'm asking the reader who lives in a segregated community to show up at those zoning board meetings and be like, we should build this in my community. So that's what I'm asking.

Yeah. Can we sidebar for one second? It won't serve any purpose other than we're here. I wanna be fair to everyone. The shit is complicated as hell.

It's so complicated.

It's complicated. So, when you look at like corporate taxes, yes, obviously, it's preposterous unless you reverse engineer from the reality that these companies can exist in any country or in a global economy and that people will just relocate. So you can't be naive and think we can have a 30% business tax rate and that everyone won't go to England or they won't go to wherever. So you're trying to really balance this thing where we're keeping America a very appealing place for businesses to start and thrive because we're competing with the globe. It's even the AI debate is affected by this.

Totally. But there are, I mean, there's research on, like the millionaire tax. And it turns out, when you increase taxes on high earners, they don't suddenly flee the country. There's a lot of sunk costs about being in America and a lot of benefits.

I hear that term a lot, sunk costs. Will you explain that to me?

If you create a company here, it's just hard to pick up and move it to Bangladesh. Now you could overdo it, right? You could overreach and you can have these kind of externalities or capital flying away. that would hurt everyone. But I do think that that doesn't mean we have to settle for what we have now.

Yeah, we do do a lot to protect fortunes. We do. Now I've heard you talk about how race plays into this. And we kind of touched on it with the segregation. I think that deserves two seconds, but I also, I'm weirdly interested in what you think about women's reproductive rights and this cycle of poverty and what's happening in the notion that the Supreme Court's about to hear a case about the morning after pill.

In the debate around Roe falling, people were talking about this more and more as an economic justice issue. But I admit that before that debate, I didn't think about it a lot as a poverty issue. And we weren't talking about it at our conferences, in our policy debates. It wasn't really on the table. I'm glad it's become on the table.

Generational, yeah. It's gonna perpetuate a cycle. I mean, a lot of people are walking in there because financially they cannot do it. They're barely supporting themselves.

Yeah, and that's plain to see for anyone who's been in those waiting rooms.

Yeah, I think of Crystal from your book. A, heartbreaking from beginning to end, and something I witnessed nonstop.

I think about Crystal a lot when I hear easy or glib solutions about poverty. When people say, well, why don't people just go get a job? So Crystal is born because her mom is stabbed.

11 times in the back.

Right, it induces labor. She's born into violence. That wasn't the first time her mom was stabbed. For as far back, as Crystal can remember, her dad beat her mom. Her mom was addicted to crack cocaine, so was her grandmother.

This list is impossible.

Bipolar disorder, affective detachment disorder. You know, just on and on it goes.

Some kind of borderline intelligence thing.

Yeah, so she ages out of foster care. She hits the private rental market. At the age of 18, she cannot get into public housing, not only because of the waiting list, but because of that assault charge. So she can't take advantage of this program. She rents a really crummy apartment at the bottom of the market, but it still takes over 70% of her income.

She's on disability for 700 bucks a month or something at this point.

Yeah, on and on it goes.

She goes off of disability.

She gets kicked off of disability.

Kicked off, rather, I should say.

She burns through her ties. She can't get back on. And she eventually ends up street homeless and turning to prostitution. This is a church-going woman. But that's what she did to survive.

Yeah, don't be 11 on the ACE scale.

Play by the rules. And I feel like those kind of statements are so far away from the reality. It's kind of like, have a different life, Crystal.

I know. It's hard to recognize just how many benefits we've all had, even when it was rough. There's still 20 more rungs down the ladder. Like, I'm reading Crystal's story and I'm like, yeah, I've had that abuse. I've had this.

Yeah, this reality of America scares a lot of us, that there's always a further you can fall. And I feel that that causes us to just clutch on to whatever advantage we can have. that leads to a discourse in America where there's a lot of people that are just blind to their own privilege and affluence.

And you get empathy fatigue. There's like these Paul Bloom studies, right? Or these other studies where it's like, you show one kid starving in a country and people will donate. You show two people and a little less people donate. You bring it up to like 15, 20 kids on the poster that are starving.

Right, so it can't be insurmountable. And so we have to push against this hopelessness that I think is gripping the country. It's even like a chic nihilism. It's somehow safer or even cooler to be kind of nihilistic. That makes me very nervous.

Well, it's a beautiful book and it's the last topic I wanted to talk about, but it's so good that I enjoyed everything I learned. And the reason I don't want to know about it is because I don't want to have to, I'm in that group where it's like, it feels overwhelming and I don't know. And yeah, and it's scary.

Yeah, I just feel that there's something amiss today in American life, though, that more and more of us are fed up with all this poverty and inequality. Most Americans think poverty is a result of unfair circumstances, not a moral failing, including most Republicans. Interesting. Most Americans think the rich aren't paying their fair share of taxes. Most Americans want a higher minimum wage.

Yes, because you're right. So many of these polls, you just scratch your head of like, how could policy be this if these polls are real and to be trusted? And yes, there's many of them right now. Where it's like, well, America feels this way. Well, take Roe v.

Yeah, I mean, Citizens United was a disaster on this score, right? And all the money flowing into politics and the lobby power is substantial, right? Just counting the lobby flex in terms of dollars of the top five corporations, is much more than all organized labor spends on lobbying. It's just outgunned, outmatched. But this is also where I feel we've got to step up.

Well, again, part of the apathy and turning your head is absolving your own responsibility in the process. And so you just tell yourself you don't have a role in it. It's easier.

Yeah, or you blame the other political party, or you blame your favorite group to blame. You point to government dysfunction and you have this kind of, I'm with you, but I don't know what to do.

Yeah, it's just confirmation bias. It's one more piece of data to prove you're correct about your opponent.

At the end of the day, does that help any more than just what your opponent is doing? What this book is trying to do is give everyone a clear roadmap about how they can get involved, in little ways and in big ways. Look at the holiday season. We bought a lot of stuff. Did we pay attention to where our money was flowing?

Yeah, I'm so embarrassed to ask you this, but how would I know?

You gotta do your homework.

Is there an easy-to-use website? There is. There is? What is it?

So you can go to B Corp. They evaluate businesses in terms of economic and environmental standards and they give them grades. And so you can reward companies that are doing right by their workers.

And that's effortless. You're gonna spend your money somewhere.

Just do a little homework. Take a little step. You can go to Union Plus, which curates lists of union-made products. You wanna buy some sneakers, you wanna buy some candy, you wanna drink a beer, this is union-made stuff right here. I wish companies bragged about this more.

Yes. Why do you think they don't?

Maybe it's polarizing.

I think it makes them left.

Yeah, that's woke snapple now.

Yes.

You walk down the streets of London and there's these stickers on doors and they're like, this shop pays a living wage. Our doors, we have a lot of stickers, but often we have no idea how much the workers are getting paid.

I gotta tell you, I feel great when I go to Costco because I shot a movie in a Costco. I got to know all these people that work there. I found out that they're all making very good money. in New Mexico. They have the lowest turnover.

Somehow, you can do it and it doesn't go under. Yes, it's self-affordable.

Yes. I'm not paying any premium to shop there.

Absolutely. So we could do that. And then we can talk about it. That matters. We saw this with environmentalism.

Yeah. Oh, well, Matthew, I enjoyed this so much. I'm so delighted you wrote Poverty by America. And I'm glad that, you know, unlike me, you didn't walk away from Skid Row and just go like, yeah, that's an addiction problem. I'm delighted.