The United States has one of the highest poverty rates in the industrialized world, especially among its children and the working poor. The underclass is comprised of a group of 2.5 million chronically poor people who live in inner-city communities where crime, drug abuse, teenage childbearing, dropping out of school, and welfare dependency are commonplace. Poor children should receive priority attention for the following reasons: (1) they are far less likely than other children to become healthy, productive adults; (2) their numbers are growing; (3) a disproportionate number are minorities; (4) they are not responsible for their circumstances; (5) future workers must be well-educated and well-trained; (6) many cost-effective programs already exist; and (7) the social consequences of neglect are large. The working poor should receive priority attention because inability to support a family makes a life of welfare or crime more attractive and erodes the work ethic, and recent welfare reforms have enabled people to obtain jobs but not to move out of poverty. The following options are suggested: (1) expand effective federal programs; (2) support state-local-private efforts; (3) build knowledge on how to help the disadvantaged; (4) remove bureaucratic impediments to effective efforts; (5) provide federal development grants; (6) increase the minimum wage; (7) increase the Earned Income Tax Credit; (8) provide health insurance and child care; and (9) increase remedial and job training. A copy of the table of contents of "American Agenda, Report to the Forty-First President of the United States" is included. (FMW)