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Help from the government is a zero-sum affair. The biggest government subsidies are not directed at families trying to climb out of poverty but instead go to ensure that well-off families stay well-off. This leaves fewer resources for the poor. If this is our design, our social contract, then we should at least own up to it. We should at least stand up and profess, Yes, this is the kind of nation we want. What we cannot do is look the American poor in the face and say, We’d love to help you, but we just can’t afford to, because that is a lie.

— Poverty, by America by Matthew Desmond

This is a case where the packaging is just as important as the gift, and I don’t doubt that the way benefits are delivered and taxes are collected affects how we see them. Paying taxes does hurt, and perceiving a tax break as fundamentally different from government aid is easy to do. But it’s a bit of magical thinking. Both welfare checks and tax breaks boost a household’s income; both contribute to the deficit; and both are designed to incentivize behavior, like seeing a doctor (Medicaid) or saving for college (529 plans). We could flip the delivery system to achieve the same ends, extending welfare to the poor by cutting payroll taxes for low-income workers (as France has) while replacing the mortgage income deduction with a check mailed out to homeowners each month. The federal budget is a giant circle of money, a whirl of funds flowing to the state from taxpayers and back to taxpayers from the state. You can benefit a family by lowering its tax burden or by increasing its benefits, same difference.

— Poverty, by America by Matthew Desmond

Those who benefit most from government largesse—generally white families with accountants—harbor the strongest antigovernment sentiments. And those people vote at higher rates than their fellow citizens who appreciate the role of government in their lives. They lend their support to politicians who promise to cut government spending, knowing full well that it won’t be their benefits that get the ax. Overwhelmingly, voters who claim the mortgage interest deduction are the very ones who oppose deeper investments in affordable housing, just as those who received employer-sponsored health insurance were the ones pushing to repeal the Affordable Care Act. It’s one of the more maddening paradoxes of political life.

— Poverty, by America by Matthew Desmond

Today, the biggest beneficiaries of federal aid are affluent families. To benefit from employer-sponsored health insurance, you need a good job, usually one that requires a college degree. To benefit from the mortgage interest deduction, you need to be able to afford a home, and those who can afford the biggest mortgages reap the biggest deductions. To benefit from a 529 plan, you need to be able to squirrel away cash for your children’s college costs, and the more you save, the bigger your tax break, which is why this subsidy is almost exclusively used by the well-off.

— Poverty, by America by Matthew Desmond

For most Americans under the age of sixty-five, health insurance appears to come from their jobs, but supporting this arrangement is one of the single largest tax breaks issued by the federal government, one that exempts the cost of employer-sponsored health insurance from taxable incomes. In 2022, this benefit is estimated to have cost the government $316 billion for those under sixty-five. By 2032, its price tag is projected to exceed $600 billion. Almost half of all Americans receive government-subsidized health benefits through their employers, and over a third are enrolled in government-subsidized retirement benefits. These participation rates, driven primarily by rich and middle-class Americans, far exceed those of even the largest programs directed at low-income families, such as food stamps (14 percent of Americans) and the Earned Income Tax Credit (19 percent).

— Poverty, by America by Matthew Desmond

In 2020 the federal government spent more than $193 billion on homeowner subsidies, a figure that far exceeded the amount spent on direct housing assistance for low-income families ($53 billion). Most families who enjoy those subsidies have six-figure incomes and are white. Poor families lucky enough to live in government-owned apartments often have to deal with mold and even lead paint, while rich families are claiming the mortgage interest deduction on first and second homes. The lifetime limit for cash welfare to poor parents is five years, but families claiming the mortgage interest deduction may do so for the length of the mortgage, typically thirty years. A fifteen-story public housing tower and a mortgaged suburban home are both government subsidized, but only one looks (and feels) that way.

— Poverty, by America by Matthew Desmond

There is not one banking sector. There are two—one for the poor and one for the rest of us—just as there are two housing markets and two labor markets. The duality of American life can make it difficult for some of us who benefit from the current arrangement to remember that the poor are exploited laborers, exploited consumers, and exploited borrowers, precisely because we are not. Many features of our society are not broken, just bifurcated. For some, a home creates wealth; for others, a home drains it. For some, access to credit extends financial power; for others, it destroys it. It is quite understandable, then, that well-fed Americans can be perplexed by the poor, even disappointed in them, believing that they accept stupidly bad deals on impulse or because they don’t know any better. But what if those deals are the only ones on offer? What good is financial literacy training for people forced to choose the best bad option?

— Poverty, by America by Matthew Desmond

“Predatory inclusion” is what historian Keeanga-Yamahtta Taylor calls it in her book Race for Profit, describing the long-standing American tradition of incorporating marginalized people into housing and financial schemes through bad deals when they are denied good ones. The exclusion of poor people from traditional banking and credit systems has forced them to find alternative ways to cash checks and secure loans, which has led to a normalization of their exploitation.

— Poverty, by America by Matthew Desmond

Many property owners start investing in real estate because they don’t have enough saved for retirement or have little interest in holding down a “normal” job that comes with a boss and regular hours. When people in these situations become landlords, they transform an investment traditionally intended as a side hustle, a source of “passive income,” into their main hustle, “active income” that they believe should pay the bills and support them in their silver years. This overworks the asset and pressures landlords to make as much as they can, which would be far less problematic if the asset didn’t happen to be someone’s home and if raising the rent didn’t result in tenants becoming poorer.

— Poverty, by America by Matthew Desmond