America’s Failed War on Poverty
In his first State of the Union speech in 1965, President Lyndon B. Johnson declared a “War on Poverty.”
In 1988, President Ronald Reagan delivered a State of the Union address in which he declared that the War on Poverty had failed. Now, with the poverty rate in America expected to reach its highest rate since 1965, it looks like Reagan may have been right.
One half of all jobs in the U.S. today now pay less than $35,000 a year. Adjusted for inflation, that’s one of the lowest rates for American workers in five decades.
There’s a common perception that somebody who’s poor or living below the poverty level is lazy or simply living off government handouts. The actual average poor person is actually working.
Since the Great Society era of Lyndon Johnson, the country has poured hundreds of billions of dollars into poor urban neighborhoods. The violence and crime generated in these neighborhoods costs hundreds of billions more. And after all this time, all this money and all this energy, the inner city populations are worse off than ever before. There is more drug addiction and more social and family breakdown among this population than when the Great Society was launched. Incarceration rates have risen to levels that shock the world (though they make for safer streets); the inner city abortion rate has reached levels that must surely appall even the most resolute pro-choicers not on the Planned Parenthood payroll. Forty percent of all pregnancies in New York end in abortion, with higher rates among Blacks; nationally, the rate among Blacks is three times the rate among white women. Put it all together and you have a holocaust of youth and hope on a scale hard to match.
This is not a lot to show for almost fifty years of fighting poverty — not a lot of bang for the buck.
“Fifteen trillion dollars: That’s how much American taxpayers have forked over in the name of helping the poor since 1964,” reported The New American. “And what do we have to show for it? A poverty rate that has barely budged, an entrenched bureaucracy, and a population — like that of Greece and Portugal, two welfare-state basket cases — increasingly dependent on government handouts.”
The New American cited a recent Cato Institute report by Michael Tanner, which advances the claim that despite all the efforts and spending, the current war on poverty is ultimately failing.
The poverty rate has risen to 15.1 percent of Americans, despite the mass amount of government funding and attention.
“This year the federal government will spend more than $668 billion on at least 126 different programs to fight poverty,” according to the Cato report. “And that does not even begin to count welfare spending by state and local governments, which adds $284 billion to that figure. In total, the United States spends nearly $1 trillion every year to fight poverty.”
Since the mid 60′s we as a country have spent $16 Trillion on means tested government income re-distribution programs (welfare). We are now $14 Trillion in debt and have 44 million people on food stamps, over 40 million kids getting free school lunches, 9 million more on WIC, about 8 million in subsidized housing, 5 million on TANF, 8 million on SSI (including 1.2 million kids), about 49 million on Medicaid and 71 million households not paying federal income taxes because of EITC and the Child Tax Credit. Does anybody really think more debt or taxes to pay for more income re-distribution programs is really going to help anything? How can a tax system be called “fair” when 47% of households are getting a free ride on the backs of the 53% who are paying income tax and carrying their own weight in society? What part of that is sustainable? What part of that is fair? The cost of all the wars this country has ever fought doesn’t come close to this massive shift of wealth from the people who earn it – to the people who do not earn it. And no – I am not
wealthy, just sick and tired of paying other people’s bills while the poor folks “benefits” just keep growing and getting passed from generation to generation.
“The poor, in other words, are getting poorer — or more precisely, poverty in America is becoming an increasingly extreme and unequal phenomenon.”
15 Shocking Poverty Statistics.
#1 Approximately 45 million Americans were living in poverty in 2009.
#2 According to the Associated Press, experts believe that 2009 saw the largest single year increase in the U.S. poverty rate since the U.S. government began calculating poverty figures back in 1959.
#3 The U.S. poverty rate is now the third worst among the developed nations tracked by the Organization for Economic Cooperation and Development.
#4 According to the U.S. Department of Agriculture, on a year-over-year basis, household participation in the food stamp program has increased 20.28%.
#5 The number of Americans on food stamps surpassed 41 million for the first time ever in June.
#6 As of June, the number of Americans on food stamps had set a new all-time record for 19 consecutive months.
#7 One out of every six Americans is now being served by at least one government anti-poverty program.
#8 More than 50 million Americans are now on Medicaid, the U.S. government health care program designed principally to help the poor.
#9 One out of every seven mortgages in the United States was either delinquent or in foreclosure during the first quarter of 2010.
#10 Nearly 10 million Americans now receive unemployment insurance, which is almost four times as many as were receiving it in 2007.
#11 The number of Americans receiving long-term unemployment benefits has risen over 60 percent in just the past year.
#12 According to one recent survey, 28% of all U.S. households have at least one member that is looking for a full-time job.
#13 Nationwide, bankruptcy filings rose 20 percent in the 12 month period ending June 30th.
#14 More than 25 percent of all Americans now have a credit score below 599.
#15 One out of every five children in the United States is now living in poverty.
How’s this WAR working out for America?
Brief History and Background:
War on Poverty, International Encyclopedia of the Social Sciences | 2008
The war on poverty of the John F. Kennedy (1917–1963) and Lyndon B. Johnson (1908–1973) administrations grew out of the civil rights movement of the 1950s and continued from 1964 to 1981. It had antecedents, beginning with the 1941 state of the union address of President Franklin Delano Roosevelt (1882–1945), in which he enunciated “freedom from want” as one of four fundamental human rights. This pronouncement was taken as a program by Governor W. Averill Harriman (1891–1986) in New York state from 1954 to 1958.
A more direct antecedent had developed in New York City in 1946 at the Lafargue Psychiatric Clinic at the Saint Philip’s Episcopal Church in Harlem, where Shelton Hale Bishop (1889–1962) served as rector. The clinic was named for Paul Lafargue (1842–1911), a medical doctor and the son-in-law of Karl Marx (1818–1883). Its director was psychiatrist Frederic Wertham (1895–1981). Thurgood Marshall (1908–1993) and Kenneth B. Clark (1914–2005) were members of this church. Wertham, Marshall, and Clark collaborated to help the NAACP win the 1954 U.S. Supreme Court case, Brown v. Board of Education of Topeka, which outlawed segregation in public schools.
MOBILIZATION FOR YOUTH
Three years later, an organization called Mobilization for Youth was incorporated on the Lower East Side of New York City by the Henry Street Settlement House with the collaboration of the Columbia University School of Social Work. In 1959 the National Institute of Mental Health (NIMH), which had just received increased allocations from Congress, provided a two-year planning grant, and Columbia sociologists Richard A. Cloward (1926–2001) and Lloyd Ohlin were retained as consultants. Cloward and Ohlin had developed an extension of Durkheim-Merton alienation/anomie opportunity theory in
sociology, and in 1960 they published Delinquency and Opportunity, in which they argued that delinquents behaved in unapproved ways precisely because they had accepted approved social goals but found no socially approved means by which they could attain those goals, and so resorted to unapproved means. To motivate delinquents to adopt not only the goals but the approved means, opportunity must be provided. In support of this idea, Leonard S. Cottrell Jr. (1899–1985) of the Russell Sage Foundation testified on March 10, 1960, before a subcommittee of the House Appropriations Committee that delinquency was not so much a matter of curing sick individuals but of curing sick communities.
lowest prices viagra Thus, advise the consumption of such products. Do not consume this drug if you are allergic to tadalafil, the active ingredient of viagra sample online, then also you are not allowed to take any impotence and erectile dysfunction medication, such as viagra, as they known to increase blood flow. Excessive nightfall is harmful for health, because it weakens the nerves which connect the reproductive organs cheap viagra to rejuvenate and boost your love life. How Tadalista 5 improves erectile function? Tadalista, the active ingredient, manages to inhibit an enzyme called phosphodiesterase type 5.The dose should be taken at least 2 hours before intended intercourse, and it may produce an erection in response to sexual stimulation. buy viagra online
Mobilization for Youth’s final planning report, “A Proposal for the Prevention and Control of Delinquency by Expanding Opportunity,” was presented December 9, 1961, and was submitted to the NIMH for funding. The NIMH, the President’s Committee on Juvenile Delinquency and Youth Crime (PCJDYC), the U.S. Department of Labor and other federal agencies, the New York City government, and the Ford Foundation subsequently funded Mobilization for Youth for $12.5 million for three more years. In April 1962 Mobilization for Youth submitted “Youth in the Ghetto: A Study of the Consequences of Powerlessness and a Blueprint for Change” to the PCJDYC review committee, headed by Cottrell. This committee recommended that one million dollars be granted to the program. The city of New York, under Mayor Robert Wagner (1910–1991), then allocated $3.5 million from its antipoverty funds. The Department of Labor under the Manpower Development and Training Act granted another half million dollars for job training aspects of the program. The initial directors were Cloward and George A. Brager (d. 2003).
In his first race for the office of New York City mayor in 1977, Edward Koch coined the terms poverty pimp and povertician to refer to Raymon Velez of the South Bronx. Velez, born in Puerto Rico in 1930, had developed beginning in 1968 a network of organizations in the South Bronx funded by the Office of Economic Opportunity (OEO). He had earned a BA in history and political science from Inter-American University of Puerto Rico, after which he became a school teacher. Immigrating to New York, Velez became a social worker. On the basis of his antipoverty network, which provided needed social services and jobs to residents of Puerto Rican neighborhoods, he gained popularity and turned this social and economic success toward politics. Velez became the “boss” of South Bronx politics, securing the election of many Puerto Ricans to city, state, and federal office. In the 1980s he was elected to the New York City Council, a step downward in his estimation, and served only briefly. This evidently was a slap at Democratic primary opponent, Herman Badillo, whom Velez supported. The rise of Puerto Rican political power in the South Bronx was attained at the expense of Jewish politicians who previously had controlled the area. Changing demographics accounted for the transition.
THE FEDERAL ANTI-POVERTY PROGRAM OF THE KENNEDY JOHNSON ADMINISTRATIONS
In the presidential election campaign of 1960, John F. Kennedy promised a “war against poverty and degradation” and “an economic drive on poverty” to address the high and persistent unemployment of the 1957–1958 and 1959–1960 recessions. His thought on this issue was based largely on John Kenneth Galbraith’s (1908–2006) The Affluent Society (1958), especially chapter 23, “The New Position on Poverty.” Upon Kennedy’s election, the president’s Council of Economic Advisors and the Budget Bureau immediately advocated a tax cut, accompanied by an increase in spending as a Keynesian economic remedy for the recession. The result would be a deliberate increase in the federal deficit. This was an attempt to establish Keynesian economic theory as a viable basis for government economic policy. The president accepted this advice.
The particular cabinet departments and programs involved in the spending increases and tax cuts were determined in other ways. In March 1961 Kennedy called a President’s Conference on Juvenile Delinquency, chaired by his brother Robert F. Kennedy (1925–1968), the new attorney general. Based upon the recommendations of the March conference, the PCJDYC was established on May 11, 1961. The PCJDYC was to finance projects seeking a solution to juvenile delinquency. Robert Kennedy selected his friend David Hackett as executive director.
In September 1961 Congress passed the Juvenile Delinquency and Youth Offenses Act, which authorized demonstration and training programs in finding “the most effective ways of using total resources to combat juvenile delinquency in local communities.” It authorized an expenditure of $10 million over three years for the program. In 1962 the committee gave planning grants to agencies in sixteen cities. The act also funded Mobilization for Youth in late 1961 to develop a plan of action to curb juvenile delinquency on New York’s Lower East Side. Cloward then lent his principal assistant, sociologist James A. Jones (1932–1992), to Kenneth Clark to design a similar program for Harlem.
Clark and Jones in 1962 established Harlem Youth Unlimited Inc. (HARYOU), of which Jones became research director. Harlem Congressman Reverend Adam Clayton Powell Jr. (1908–1972), the new chairman of the House Education and Labor Committee, formed a rival Harlem organization, Associated Community Teams (ACT). He then insisted that HARYOU be merged with ACT, and when this was accomplished, Clark resigned. He was replaced by ACT executive director Livingston Wingate (1916–1995), Powell’s assistant.
In December 1962 President Kennedy asked his Council of Economic Advisors chairman, Walter W. Heller (1915–1987), to pull together all available information on the poverty issue. Heller assigned this task to council member Robert J. Lampman (1920–1997). He and Heller suggested that Kennedy read socialist Michael Harrington’s (1928–1989) The Other America: Poverty in the United States (1962), along with Leon Keyserling’s (1908–1987) Poverty and Depression in the United States (1962). Harrington was considered a “responsible radical,” because he was a follower of former Trotskist Max Schactman, whose tactic was to “bore from within.” This meant that instead of running Socialist Party candidates for elective office, the party would support Democratic Party candidates. Harrington, thus, had been a wellknown worker for left and liberal organizations and journals throughout the 1950s. In July 1959, he wrote an article on poverty for Commentary Magazine, and it was from this article that the book The Other America grew. In an approving commentary of Galbraith’s book The Affluent Society (1958), he noted the existence of 50 million impoverished people in the United States, about one quarter of the total population. Poverty persisted from generation to generation, helped by what Oscar Lewis called a “culture of poverty,” a non-Marxist idea. It was precisely this idea that recommended him to the Kennedy administration, because it undercut left leadership of the anti-poverty struggle. Harrington’s entire body of work thus led to an eager anticipation of the book, and accounted for the wide extent of its positive reception. That he had worked for Catholic organizations did not hurt his acceptance by the president, even though he had lapsed from the faith by then. After Lampman reported that the U.S. poverty rate was increasing, Kennedy directed Heller to include a “war on poverty” in the 1964 White House legislative package for Congress.
On the day after Kennedy’s November 22, 1963, assassination in Dallas, Heller met with President Johnson and suggested to him that a war against poverty might be a good way to begin his presidency. Johnson agreed. In his 1964 state of the union address, titled “The War on Poverty,” he called on Congress to enact a package of measures embodying programs that would eliminate poverty “in our lifetimes.” On February 1, 1964, Johnson appointed Kennedy’s brother-in-law and Peace Corps director Sargent Shriver to head a Task Force on Poverty.
THE EQUAL OPPORTUNITY ACT
David Hackett and Richard Boone of PCJDYC suggested that their community action model should be the vehicle for this war on poverty. Other departments proposed programs over which they had jurisdiction. At this point, the Budget Bureau, headed by economists Kermit Gordon (1916–1976) and Charles L. Schultze, became involved. Budget Bureau staff member William B. Cannon wrote a memorandum suggesting that the community action program begin with ten demonstration areas across the country, and that a development corporation be established in each. Schultze suggested similarly that poverty funds be allocated to “pockets of poverty,” rather than uniformly across the country. He also suggested using the term action program, from Cannon’s memo, rather than development corporation. Someone added community to action program, and the community action title of the proposed legislation was born. The task force developed the plans for an organization to conduct the “war on poverty,” and submitted them to the president on March 15, 1964; he then disbanded the group. The next day, on the basis of the task force report, Johnson delivered a message to Congress calling upon it to enact legislation creating such an agency. He stated that the program would not consist of top-down planning from Washington, but would involve the talents of people from all over the country, at every level of society. He also called for the establishment of an office of equal opportunity. In testimony before Congress in 1964, Shriver listed 137 people who had participated in writing the legislation. On August 29, 1964, Congress passed, and Johnson signed into law, the Equal Opportunity Act of 1964. The act created the OEO, and on August 30, 1964, Congress gave the OEO $947.7 million for ten programs.
The OEO was initially lodged in the Office of the President, but subsequently became an independent agency. Shriver was named director of the OEO and served until 1968. Economist and AFL-CIO lobbyist Hyman H. Bookbinder, a member of Shriver’s 1964 task force, became associate director.
The Equal Opportunity Act also created an OEO Advisory Committee of fourteen, which was appointed by President Johnson on January 29, 1965. Perhaps the most important arm of the OEO administrative structure, although it had no program responsibilities, was the Office of Research, Plans, Programs, and Evaluation, which might be called the “war room” of the war on poverty. Here were placed those economists who had actual experience in administering economic planning. The first director of this office was Joseph A. Kershaw (1913–1978), who served from 1964 to 1966. He was succeeded by Robert A. Levine (1966), Robinson G. Hollister (1966–1968), and Walter Williams (1968–1969). Levine attempted to establish a five-year plan to end poverty that proposed a national negative income tax program to replace Aid to Families with Dependent Children (AFDC). The OEO funded the New Jersey Negative Income Tax demonstration project to estimate the cost of the program.
The war on poverty required for its success a definition of poverty and a means of measuring it. In March 1965, Kershaw and the Office of Research, Plans, Programs, and Evaluation used the work of economist Mollie Orshansky of the Social Security Administration to establish such a definition. Two months later, the OEO officially adopted the Orshansky poverty thresholds as a working definition of poverty.
The unique feature of the Equal Opportunity Act was Title II: the Rural and Urban Community Action Program. The OEO divided the country into seven to ten regions, each with a regional director. Fieldworkers in the Washington headquarters traveled to regions to help establish and monitor the operation of community action agencies located in the major cities of each region. In addition, the OEO funded national organizations to facilitate theoretical and empirical research on the issue of poverty. Chief among these were the Harvard-MIT Joint Center for Urban Studies, the National Association for Community Economic Development, the Institute for Research on Poverty, the Urban Institute, the Center for Community Economic Development, and the National Rural Center.
THE INSTITUTE FOR RESEARCH ON POVERTY
The Institute for Research on Poverty was established at the University of Wisconsin by Lampman, who was considered the leading expert on the economics of poverty. Its first director was Harold W. Watts (1966–1971). By 1985, with the OEO no longer in existence, oversight of the Institute for Research on Poverty had shifted to the assistant secretary of Health and Human Services for Planning and Evaluation. By 1996 the institute was no longer the national poverty center, but only one among several area poverty centers. The Center for Community Economic Development in Cambridge, Massachusetts, was codirected in 1971 by Geoffrey P. Faux, who had been director of the OEO Economic Development Division from 1967 to 1970. The National Rural Center was established in 1975, with F. Ray Marshall as president and director. When President Jimmy Carter named Marshall his secretary of labor in 1977, John M. Cornman replaced him.
Half of the OEO’s community action program funds went to prepackaged national programs such as Head Start. The other half went to local initiative programs developed by the community action agencies themselves.
New York City, where the theory and operational model for the war on poverty had been developed, now received feedback from the federal government. In 1962 Mayor Wagner had created a Council on Poverty and an Anti-poverty Operations Board. Surgeon Arthur C. Logan (1909–1973) was the first chairman of the community action program under Wagner. Wagner was defeated in 1965 by former congressman John V. Lindsay (1921– 2000), who in 1966 established a Mayor’s Task Force on Poverty, headed by Mitchell Sviridoff (1918–2000). The task force recommended the establishment of a superagency comprised of all agencies having any responsibility for providing services to the poor. On September 15, 1966, Lindsay established the Human Resources Administration, which included the Community Development Agency and the Manpower and Career Development Agency, among other agencies. The Community Development Agency was designated the New York City community action agency under the OEO. Sviridoff served as head of the Human Resources Administration from 1966 to 1967.
New York’s Community Development Agency was headed by George Nicolau from 1966 to 1967. He was replaced by Major Owens in 1968, and Owens served until 1973. In 1968 the agency wrote a grant proposal to NIMH for a Brownsville Community Council economic advocacy planning project. The NIMH funded the proposal, its first grant to a community action agency to conduct economic advocacy planning, and the Brownsville Advocacy Planning Agency was born. The agency’s staff included graduate students in economics from Yale and Columbia universities.
A participant in the 1949 founding of the NIMH, and a member of its advisory board at the time of this grant, was Eli Ginzberg (1911–2002), director of the Conservation of Human Resources Project of Columbia Business School. His staff at Columbia in 1956 consisted of two economists and four psychologists and social psychologists. The grant to the Brownsville Community Council was a departure, as advocacy planning was developed largely by architects and city planners. Columbia’s School of Architecture, for example, was responsible for the creation of the Architect’s Renovation Committee of Harlem and the East Harlem Studio of the Real Great Society Uptown. In the 1950s the NIMH had established a unit to finance outside research. In response to Johnson’s war on poverty, the NIMH established centers for minority group and urban mental health problems. It was the conjuncture of these institutions and forces that enabled the grant to the Brownsville Community Council in 1968.
Robert Kennedy resigned as attorney general and was elected senator from New York in 1964. In 1966 he and Jacob Javits (1904–1986), the senior senator from New York, introduced the Kennedy-Javits Amendment to the Equal Opportunity Act, creating a new Title I-D, the special impact program (SIP). This title caused a shift in the OEO toward community-controlled business development through community development corporations. The community development corporations were designed as community holding companies or community trusts. To administer the new program, the OEO established the Economic Development Division, under which the Bedford-Stuyvesant Restoration Corporation in Brooklyn, New York, and the Hough Area Development Corporation in Cleveland, Ohio, were funded in 1966 as the first two community development corporations in the nation.
In 1967 the Edith Green Amendment placed a ceiling of 33 percent for representatives of the poor on a city’s community action agency. In the meantime, Kenneth Clark in 1967 founded the Metropolitan Applied Research Center and served as president until 1975. The Metropolitan Applied Research Center received a grant of $190,000 from the Field Foundation. In 1970 the center and Howard University, with an $860,000 Ford Foundation grant, established the Joint Center for Political Studies in Washington, D.C., with Howard law professor Frank D. Reeves (1916–1973) as director.
From 1968 to 1969, New York’s community action program guidelines made advocacy planning the highest project-funding priority, leading to the funding of the Pratt Institute’s Center for Community Development; Harlem Commonwealth Council’s (HCC) Commonwealth Holding Company, Inc., a subsidiary, with the Black Economic Research Center in Harlem as a major consultant; and the Brownsville Advocacy Planning Agency. These organizations were intended to provide economic expertise and advocacy for their respective communities in dealing with the City Planning Commission and other relevant city, state, and federal agencies in developing and locating commercial, industrial, and service enterprises.
The Ford Foundation, a major partner of the federal and city governments in the war on poverty, provided grants for advocacy planning to the Black Economic Research Center from 1968 through 1980. The center developed the theory that the major economic problem of black Americans was not labor market inequality but capital market inequality, which included access to the major stock and commodity exchanges, as well as to the Treasury Department, which represented capital interests, on a communal basis. Current capital reallocation was necessary, and the first stage of such a transfer was social capital, including infrastructure, and educational facilities with financing for operations.
Current income redistribution was also deemed necessary, along with future nondiscrimination in markets to maintain the gains achieved. These developments were a direct confrontation of the theory upon which the war on poverty was based—that a change of unmeasurable internal states of being could result in a measurable diminution of poverty in a finite and short period. It also confronted the theories of economists Gary S. Becker, Theodore Schultz (1902–1998), and Milton Friedman (1912–2006), which defined lifetime earnings as capital stock, human capital, and focused on future income distribution and not current income redistribution. This polemic was one of the sources for the development of the reparations argument in the black community. Reparations as a large lump sum would enable the purchase of capital assets by the residents of black communities, and avoid the necessity for politically impossible capital expropriation. This concept, which had been a tenet of black nationalist doctrine since the 1920s, began to gain academic and social respectability at the Black Economic Development Conference in Detroit in 1969.
DEVELOPMENTS UNDER NIXON AND LATER ADMINISTRATIONS
The election of Richard M. Nixon (1913–1994) as president in 1968 heralded the demise of the OEO and the war on poverty. In April 1969, Donald H. Rumsfeld was appointed OEO director with the charge to dismantle the agency. He selected Richard B. Cheney as his assistant. Howard Phillips was appointed as OEO director in 1973 to succeed Rumsfeld. However, court decisions forced the administration to expend the funds appropriated, because the Equal Opportunity Act had a ten-year life by law. In 1970 amendments to the Equal Opportunity Act created SIP Title VII. Title VII funds went to, among other entities, the Federation of Southern Cooperatives, which created surplus-earning entities in rural areas of southern states. OEO programs were transferred to the Department of Health, Education, and Welfare, and to the Department of Labor. By the time Nixon resigned on August 8, 1974, the war on poverty was essentially over.
The coup de grâce occurred from 1974 to 1976 during the Gerald R. Ford (1913–2006) administration. Funding for OEO programs could now be legally cut, and the OEO was actually abolished by the Headstart, Economic Opportunity, and Community Partnership Act of January 4, 1975, which created the Community Services Administration (CSA), the name suggesting a retreat from community action by citizens to government provision of services to citizens in communities. For the horizontal relationships among equal citizens uniting to achieve a commonly determined purpose at the neighborhood level was substituted the old vertically hierarchical relationship between the rulers and the ruled.
From 1977 to 1981 the Carter administration attempted to resurrect the war on poverty by increasing funding for the CSA and enacting legislation expanding the SIP emphasis. Chief among the new institutions established by Congress was the National Consumer Cooperative Bank, signed into law in 1978 and opened for business in 1980, and the Rural Development Loan Fund, established in 1981. Both had boards of directors consisting of representatives elected by residents of low-income communities. The National Consumer Cooperative Bank made federally subsidized below-market-rate loans to consumer and producer cooperatives in largely urban areas. From the Community Economic Development Act of 1981, the Rural Development Loan Fund was to consist of all remaining funds from Part A of Title III of the Equal Opportunity Act and the funds from Title VII community development credit unions. It was located in the CSA, and provided one-percent interest rate loans for rural business purposes.
The OEO, the Rockefeller Brothers Fund, and the Ford Foundation had earlier financed the development of the idea for these financial institutions. Edward K. Hamilton and Belden Hull were hired as consultants by the National Rural Center and the Opportunity Funding Corporation (established in 1970) to design the bank as an experiment in development finance. The Opportunity Funding Corporation was an OEO demonstration project in community capital development, led by John Gloster, a former Atlanta insurance executive. The National Rural Center invited experts from Europe, Canada, and the United States to a conference at the University of Wisconsin to provide ideas on a design. The final design drew upon the Treasury Department’s new Federal Financing Bank, established in 1973. This design was negotiated largely at the Treasury Department with an interagency task force appointed by President Carter.
With Carter’s defeat by Ronald Reagan (1911–2004) after one term, however, the fate of the war on poverty was sealed. The Equal Opportunity Act was repealed on October 1, 1981. The Community Development Block Grant was established in 1981, ensuring that federal funds would not go directly to neighborhoods but would be filtered through established political groups at the state and municipal levels. Then CSA was abolished, although the Rural Development Loan Fund was allowed to remain.
Despite these developments, the national advocacy groups for community development corporations continued the battle against poverty, financed as before the war on poverty by religious organizations, universities, private foundations, and unsystematically by federal, state, and local government. The war on poverty had degenerated from a massed frontal assault into a guerrilla war. In addition, the surpluses generated from the operation of community development corporations and cooperatives were plowed back into operations to help finance operations and expand capital equipment. And the national financial institutions still existed. As of 2005, at least 80 percent of counties in the United States still had community action agencies or community development corporations.
CONCLUSION
The war on poverty involved socially well-placed individuals using social science ideas to create new institutions in low-income communities, and at the national level to assist these local institutions. These individuals and institutions then engaged in actions that created historic events. The social science ideas reflected Keynesian economic theory, as well as opportunity theory in sociology and social psychology, and the political science theory of urban politics that maintained that urban neighborhood communities should be self-governing, independent political entities.
The new institutions created were, at the first level, community social service agencies in poor communities. The organizations responsible for these creations were private religious organizations, universities, and foundations. Using these community organizations as models, the federal, state, and local governments transformed their structures to replicate those of the private social service agencies for these functions, and wrote these changes into law. These practices thereby became obligatory for the nation as a whole and, importantly, became familiar to the large portion of the electorate who were neither poor nor involved in service to the poor.
