Can a CCT Program be Applied in the US?

In his post, Evan Haines raised very good points and questions. Evan asked if policymakers could implement Bolsa Familia (BF)-like programs in other countries and if there were potential challenges surrounding BF programs that he missed. I asked myself if a conditional-cash transfer (CCT) program could be implemented to alleviate poverty in the United States. New York City implemented a program similar to Brazil’s Bolsa Familia, but decided to discontinue it because the program only had “modest effects on [the] lives and economic situation” of poor residents in NYC. I will discuss other challenges and issues that create obstacles for CCTs to work in a country like the U.S.

As Tina Rosenberg points out in her article “To Beat Back Poverty, Pay the Poor,” Brazil’s Bolsa Familia program, which gives payments to poor families if they meet certain requirements (e.g. keeping their children in school) succeeded in reducing poverty. Mexico implemented a similar program called Oportunidades and succeeded in reducing poverty as well. Poverty fell from 22 percent to 7 percent in Brazil from 2003 to 2009 and this is attributed to the CCT program. The conditional cash transfer program seems like the perfect solution to drastically reduce poverty, but is it?

In 2007, New York City Mayor Michael Bloomberg began a CCT program in his city only to discontinue the program three years later. As Julie Bosman points out in her article “City Will Stop Paying the Poor for Good Behavior,” the program only had moderate effects. The program only has significant results increasing the attendance of high school students who met school proficiency standards before entering high school. Those students who didn’t meet proficiency standards as well as elementary and middle school students had “no educational or attendance gains.”  Julie says the report on the NYC’s program was “in line with early results from similar conditional cash transfer programs in Latin America.” It is not known for sure why the program was discontinued, but it could be because it was difficult to fund the program using public funds. Private funds paid for the program and public funds would later be used if the program succeeded. But there are drastic differences between the poor residing in places like New York City and favelas in Brazil.

The problems that poor people face in an urban setting are not the same as those in a rural community. The article in The Economist “Give The Poor Money” does point out that CCTs are less effective in urban areas than rural ones. As the article points out, “the problems of poverty are compounded by violence, drugs, family breakdown and child labor.” These are problems that may not exist in rural communities or that are less of an issue. In New York City, 80 percent of the families that received money through the CCT program were single parent families (Bosman). This might not have been the case in countries like Brazil or Mexico. Family breakdown can make a psychological and economical difference.

The environment and infrastructure where poor people live matters with this type of program. Many Brazilians in poverty reside in favelas and as Evan pointed out, favelas are independent communities with their own infrastructure. If a poor Brazilian family in a favela receives money, the family is more likely to spend the money in local businesses. As I observed during my travel in South America this past summer, communities in South America have several small businesses. Money given to poor families in these communities will more likely be reinvested into the community by supporting these local businesses. In contrast, it is easy to find large corporations or businesses (e.g. Walmart as Evan pointed out) in poor communities in the U.S. The money invested in these large businesses will be less likely to be reinvested back into the community as the funds will transfer out of the community and into the hands of the large business owners.

Public officials also need to consider that while CCT programs succeeded in improving school attendance that doesn't mean students' school performance will necessary improve. Educational problems vary from country to country. A school might not have good teachers and getting more students in school might not result in better academic achievement. There is also the problem that if CCT program are very succesful at increasing school attendance and visits to clinics, that governments will have to meet demands. Public officials need to be able to address effects that could arise from such programs. 

Public administrators and policymakers should also consider the political feasibility of a CCT. In a place like the U.S. where there are already strong public opinions towards welfare, it seems less likely that a nation-wide program like BF can be supported. I would expect a backlash towards a nationwide CCT program in the U.S.  considering the current political environment. Too many skeptics believe that the money given to these poor families would only be used for drug purposes and other bad habits. These skeptics usually have the perception that the families’ bad decisions led them to poverty.  Public attitude as well as legislators’ attitude would need to change for a CCT program to be approved.

How could we adapt a conditional cash transfer program to be more effective and politically feasible in a country like the U.S.?