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Monday, Dec 18, 2017
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War on Poverty spurs political, academic battles

TAMPA ­­— Florida Sen. Marco Rubio, who’s been working to mend fences with his conservative base, has now jumped into the issue of poverty and federal anti-poverty programs, proposing drastic changes in the way the government seeks to help the poor.

But Rubio’s proposals, timed to coincide with the 50th anniversary of the start of the War on Poverty, are based on debatable assertions about the cost and success of that war.

“Fifty years ago, President Lyndon Johnson declared a big government war on poverty,” Rubio said in a YouTube news release this week.

“Well, since then American taxpayers have spent about $20 trillion on welfare and other government programs that claim to lift people out of poverty.”

Still, he said, there are millions of Americans classified as living in poverty, and “in my home state, nearly 1 in 5 Floridians live in poverty. … Isn’t it time to declare big government’s war on poverty a failure?”

Experts on both sides of the ideological divide say the claim of $20 trillion in spending is overstated — and many academic researchers are saying that the positive effects of the war on poverty have been understated.

“The official poverty measure fails to show or correctly identify that true poverty has fallen noticeably in the U.S. over the past five decades,” said economist James X. Sullivan of Notre Dame University, author of a recent study on how to measure poverty rates.

“If you correct for well-known flaws in the official measure, it shows poverty has fallen noticeably. ... Done correctly, it suggests we’re winning the war on poverty.”

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Rubio’s criticism of the War on Poverty, a series of federal programs aimed at improving the economic prospects of the nation’s poor, has been raised by Republicans for decades.

“In 1964 the famous War on Poverty was declared, and a funny thing happened. Poverty, as measured by dependency, stopped shrinking,” said President Ronald Reagan in a 1986 radio address. “I guess you could say poverty won the war.”

In 1995, powerful Texas Rep. Bill Archer said the United States “has spent $5.3 trillion on welfare since the War on Poverty began, ... and the Census Bureau tells us we have lost the war.”

In July, Wisconsin Rep. Paul Ryan, the GOP budget guru, told his committee that since LBJ declared war on poverty, “we’ve spent over $15 trillion in that war. So what do we have to show for it? Well, today 46 million people live in poverty. ... For too many families, the American dream is out of reach.”

Ryan’s $15 trillion figure came from a study by Michael Tanner of the conservative Cato Institute, who added up expenditures in 126 federal programs he identified as aimed at combating poverty and converted the totals into inflation-adjusted dollars.

“How We Spend Nearly $1 Trillion a Year Fighting Poverty — and Fail,” is its title.

Tanner was asked about arguments that the official statistics overstate poverty and thus understate the success of the war against it.

“My argument,” he replied, “is more that you have 126 separate programs that spend this money run by nine Cabinet departments and six independent agencies. That’s a huge incentive for inefficiency.”

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Tanner’s figure includes $3 trillion of state spending and $12 trillion in federal spending. He notes that the state spending is mostly money that matches federal contributions, including Medicaid, which must be spent according to federal rules.

According to an analysis by The Washington Post, if Tanner’s figure of $12 trillion is correct, the anti-poverty spending amounts to slightly less than 12 percent of federal expenditures during the period.

Tanner acknowledged his figure includes some spending that doesn’t go just to the poor, even though it’s intended to boost individuals’ economic prospects, including Pell grants for college tuition.

A Rubio spokesman said he thought Rubio’s $20 trillion figure came from a Heritage Foundation study. His staff declined to answer other questions about the video and about a speech he made last week outlining his proposals for revamping federal anti-poverty efforts.

These proposals include converting anti-poverty programs into grants to the states and replacing the Earned Income Tax Credit with a wage enhancement program in which the government would subsidize the pay of low-wage workers.

In fact, $20 trillion is the figure used in a recent study by Robert Rector of the Heritage Foundation, known among conservatives as “the godfather of welfare reform.”

“While the material living conditions of the poor have improved in that time, dependence on public assistance has only grown,” Rector wrote.

Rector’s figure, however, includes some big expenditures Tanner omitted, including Medicaid spending for long-term and nursing home care — about 30 percent of Medicaid’s $415 billion in 2012.

Poor people benefit from this Medicaid program, but so can anyone who lives in a nursing home long enough to become destitute or uses what Tanner calls “accounting tricks,” shifting assets to meet Medicaid’s requirements.

That can include keeping a home worth up to $800,000, a car, jewelry, life insurance and retirement accounts, plus assets owned by a spouse, Mark Warshawsky of the American Enterprise Institute wrote recently in the Wall Street Journal.

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Tanner said he omitted Medicaid long-term care from his figure because “technically the beneficiaries are below the poverty line, ... but it’s not intended as a program for the poor. It’s intended for the elderly.”

The hottest argument, however, is over whether government spending has reduced poverty.

According to the official poverty rate, the change hasn’t been great — a drop of 4.4 percentage points, from 19.5 percent to 15.1 percent, from 1960 to 2010, according to the study by Sullivan of Notre Dame.

But because it counts only income, the official rate doesn’t include the effect of some of the most important anti-poverty programs, Sullivan and other researchers have said. Those include the Earned Income Tax Credit, other kinds of tax credits and in-kind assistance, including food stamps.

Further, use of the Consumer Price Index to set the official poverty line yearly overstates the number of poor because the CPI overstates inflation, most economists now say.

Allowing for those flaws, Sullivan said, the result is a 26 percentage point drop in poverty during the 1960-2010 period, not 4.4 points.

The U.S. Census Bureau is publishing an alternative measure of poverty that corrects some of the errors, said sociologist Christopher Wimer of Columbia University’s Population Research Center. He and colleagues found a 40 percent drop in poverty since just before the beginning of the War on Poverty, but also found that during the Great Recession and previous recessions, War on Poverty programs prevented millions of people from dropping into “deep poverty” — less than 50 percent of the poverty level.

Without those programs, Wimer said, the deep poverty level would have been nearly 20 percent of the population in some recession years, instead of remaining flat at about 5 percent since just after the War on Poverty started.

 

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