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August 21, 2014, 2:01 pm

Getting rich off of poverty

It’s time for us to figure this all out. A giant scourge is in our pockets draining us of our precious money. Our federal income tax revenue amounts to trillions of dollars. Yet, there is an evil system out there that “sucks” at a trillion of those dollars from us in various ways. You hear about the Military Industrial Complex that reaps its federal dollars from the Departments of Defense, Energy, NASA and others. But few realize the activities of the Poverty Industrial Complex. Some critics refer to these activities as “poverty pimping” but do not look at its origins or what makes it exist and, in fact, continually grow.

Poverty is real big business. The more people we have living in poverty, the more money is made for the benefactors of other people’s misery. The federal agencies that oversee these activities include the Departments of Housing and Urban Development (HUD), Health and Human Services, Labor, Justice and Agriculture. Silent and equally important partners are the drug industry and illegal immigration which creates despair, violence and poverty in many communities and also feed our prison systems and jails with 20 percent of all the incarcerated people in the world. These prisoners create a high demand for tax-paid law enforcement and judicial employees. They also leave behind families who will be dependent on tax-funded welfare entities just to live and be housed. Contrary to what they tell you, no one in the Poverty Industrial Complex wants to decrease poverty or even stabilize it. They want it increased and out of control. That means more money. People in poverty are indeed “cash cows.”

Let me go through just one example of how this Poverty Industrial Complex works. The U.S. Department of Housing and Urban Development gets about $50 billion a year of your federal tax dollars. Most of this money is distributed to communities through Community Development Block Grants and housing money known as HOME and HOPE VI to assist residents of public housing. Section 8 certificates and low cost housing programs are also at play. All of this money is subject to Section 3 of the HUD Act (24CFR Part 135). Section 3 says that 30 percent of all new jobs coming from HUD funding should be given to people living in public housing or below the poverty line. Ten percent of all contracts coming from HUD should go to Section 3 businesses (firms that hire Section 3 residents). In essence, millions of new jobs for people living in poverty and billions of dollars in contracts going to the businesses that hire them every year. Sounds beautiful right? There is one big problem — it is not enforced. No recipient of HUD money enforces this poverty eliminator. Thus, the poverty grows.

Section 3 was created in 1968 at the urging of HUD Secretary George Romney (Mitt Romney’s father) as an answer to street violence in Black neighborhoods such as the 1965 Watts riot. It was strengthened in 1992 by HUD Secretary Jack Kemp after the Rodney King incident in Los Angeles. That is 44 years of missed opportunities. Administrations after administrations have come and gone without even chipping away at poverty via Section 3 of the HUD Act.

The Chicago Housing Authority is a typical example of noncompliance of Section 3. I have just received a copy of an audit done by HUD of this housing authority, dated Jan. 5, 2012 (Oh, I know they are upset that I have this). In the audit it was determined that CHA for the fiscal years of 2008, 2009 and 2010 had received $1.3 billion in HUD funding and had not delivered one contract to a Section 3 business nor hired one Section 3 resident. That is a rip-off of $130 million (10 percent) and more than 13,000 new jobs for the residents of CHA. Oh, what this money and job growth could have done for the housing residents and local businesses. It would be a game changer and the fact that it is the law and not enforced is the biggest tragedy of all. Poverty would decrease and the quality of life in our neighborhoods would be increasing. However, the Poverty Industrial Complex forbids this and will not let it happen.

HUD will write up noncompliance reports on these entities but nothing happens beyond that. They won’t enforce the law nor cease funding noncompliant entities, which is just about all of them. Case in point: The city of Jacksonville, Fla., was found noncompliant in 1993. It is now 2012, and they still are noncompliant and HUD just looks at them and keeps providing annual funding. Poverty lives!


Harry Alford is the co-founder, president/CEO of the National Black Chamber of Commerce®. Website: Email: This email address is being protected from spambots. You need JavaScript enabled to view it. .