In his address to Congress, President Bush offered two pictures of America, the optimistic one pointing to big budget surpluses, and the pessimistic one of “failing schools, poverty, the stubborn vestiges of racism.” He challenged Congress to work with him to “use the resources of one picture to repaint the other—to direct the advantages of our time to solve the problems of our people.”

Given the mounting friction in Washington, can the two parties work together to repaint the picture of poverty and inequality the president outlined? If certain pitfalls are avoided, I believe they can. But the concrete proposals in Bush’s budget plan are not entirely encouraging.

Many millions of hard-working people were devastated by the economic troubles of the 1970s and 1980s and then left behind during the billionaire-producing boom of the 1990s. Today some 11.8% of Americans, about 32 million people— including nearly one-fifth of all our children—still live in households with cash incomes below the meager official poverty line of about $17,000 for a family of four. Remarkably, the top 5% of households now receive, on the average, more than 24 times as much cash income as the average household in the bottom fifth. By most measures, the United States has higher levels of poverty and inequality than virtually any other advanced industrial country.

Much of this lies beyond individuals’ control, but it can be affected—for better or for worse—by a variety of government policies. The projected budget surpluses have provided an exceptional opportunity to craft bipartisan policies that will reduce poverty and inequality in economically efficient ways.

Unfortunately, some of Bush’s proposals may make things worse. To abolish the estate tax, for example, which is paid on only the very largest accumulations of wealth, would give a big windfall to those who profited most from the recent boom. It would reduce government revenues that could otherwise help the less fortunate. It also would undermine equal opportunity, reduce charitable contributions, and fail to stimulate the economy as much as a cut for low-income taxpayers.

Similarly, large, across-the-board cuts in the personal income tax would reduce the role of our most progressive tax, give up revenue that could be used for egalitarian purposes (such as keeping guaranteed Social Security benefits up during the impending demographic squeeze), and do less for the economy than a temporary tax cut for low- and middle-income people.

Again, the most prominent Social Security privatization and school voucher plans would tend to increase, rather than decrease, income inequality. True, it is possible to design strongly pro-poor voucher or privatization plans, but this is difficult and their political viability is questionable. Most current proposals would cut the retirement incomes of many vulnerable citizens and undermine public schools.

On a more positive note, education is clearly a promising area for bipartisan action. President Bush, Secretary of Education Rod Paige, and many congressional Democrats and Republicans have expressed strong commitments to enhancing Head Start and improving the public schools that serve disadvantaged students. Such investments would help disadvantaged people earn more over their whole lifetimes, while also increasing their contributions to the economy. I hope we can go well beyond the 11% spending increase proposed in the Bush budget, which is only about one-third as big as the last Clinton spending increase.

If we are really determined to “leave no child behind,” however, we need to do more than provide high-quality pre-schooling and elementary education. Improvements in the health and nutrition of pregnant women, infants, and children are even more cost-effective for enhancing lifetime productivity.

The experience of other countries has shown that more equal access to health care for all citizens can be provided at considerably less cost than our current system incurs. Prescription drug coverage for all the elderly cannot be expected to provide much economic payoff but is indicated for reasons of justice and should be politically feasible.

Even efforts to ensure good health and education for all Americans are not likely to reduce poverty or inequality very much unless jobs at good wages are available for everyone able to work. Many government policies affect jobs and wages.

Wage subsidies for low-income people like the Earned Income Tax Credit (EITC) are highly efficient because they encourage work and do not distort labor markets, while reducing inequality. The EITC has won bipartisan support and could be expanded, particularly for childless workers. Welfare-to-work measures that assist with training, placement, transportation, and day care (mostly at the state level, but likely needing more federal help as the economy slows) can help many of our poorest citizens improve their lot.

Improving military salaries tends to raise the wages of low-income workers. So does stimulatory economic policy with low interest rates. On the other hand, unspent budget surpluses tend to slow the economy and hurt these workers.

In the current political climate, neither fervent egalitarians nor members of any other ideological faction are likely to get exactly what they want. But there is room for serious bipartisan action to reduce our high levels of poverty and inequality.

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Benjamin I. Page, the Fulcher Professor of Decision Making at Northwestern University and IPR faculty associate, is co-author with James R. Simmons of What Government Can Do: Dealing with Poverty and Inequality (University of Chicago Press, 2000).