Jack Kelly: A new war on poverty

Income should be adjusted by adding welfare benefits, subtracting taxes, health care spending and work-related expenses

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Fifty years ago this month, President Lyndon Baines Johnson declared war on poverty. We’ve spent nearly three times as much to fight it as on all of America’s real wars combined.

The poverty rate was 17.3 percent in 1965. It’s 15 percent now.

The federal government spends on “means-tested” programs more than $19,000 for each man, woman and child classified as “poor,” according to a study by the conservative Heritage Foundation.

If a poor single mother with two children actually got all the money purportedly spent on her behalf, she’d have at least $6,000 more than the median income. She gets nowhere near that much. This fact, coupled with their sheer number (83, according to the Congressional Research Service) suggests poverty programs benefit chiefly the bureaucrats who run them.

“With astonishing consistency, middle-class professionals, when asked to devise ways to improve the condition of lower-class groups, would come up with schemes of which the first effect would be to improve the condition of the middle-class professionals,” wrote war-on-poverty architect Daniel Patrick Moynihan.

Could this be why so many federal programs encourage behaviors which keep people poor?

“Our research shows that if you want to avoid poverty … you need to complete high school, work full time and marry before you have children,” said Ron Haskins and Isabel Sawhill of the venerable liberal think tank, the Brookings Institution. “If you do all three, your chances of being poor fall from 12 percent to 2 percent.”

In 2012, 7.5 percent of families headed by two married parents lived in poverty. In households headed by a single mother, the poverty rate was 33.9 percent.

Just 7 percent of births in 1964 were out of wedlock. In 2012, 28.6 percent of white, 52.5 percent of Hispanic and 72.3 percent of black children were born out of wedlock, according to a Heritage analysis.

William Galston, an adviser to President Bill Clinton, said disincentives to marriage in federal welfare programs caused up to 20 percent of family disintegration. More like 50 percent, said Charles Murray of the American Enterprise Institute.

“The black family, which had survived centuries of slavery and discrimination, began rapidly disintegrating in the liberal welfare state that subsidized unwed pregnancy and changed welfare from an emergency rescue to a way of life,” wrote economist Thomas Sowell, who is black.

The poverty rate among blacks is 16.1 percent, up from 12 percent in 2008. The unemployment rate for December was 6.4 percent for whites, 13.7 percent for blacks. In black households, median income has fallen three times more than in white households.

If the war on poverty is ever to be won, there must be major reforms — beginning with a better definition of what constitutes “poverty.”

There wasn’t one in 1964, so LBJ asked Mollie Orshansky of the Social Security Administration to devise a formula for calculating where to draw the poverty line. To set the federal poverty threshold for a family of four, she took the U.S. Department of Agriculture’s estimate of the cost for a basic diet, and tripled it. The Census Bureau still calculates the poverty rate in essentially the same way.

The Orshansky formula doesn’t take into consideration noncash aid. Nor does it take into account technological improvements which raise living standards.

Income should be adjusted by adding welfare benefits, subtracting taxes, health care spending and work-related expenses, said the National Academy of Sciences.

Sen. Marco Rubio, R-Fla., wants to replace essentially all 83 overlapping federal programs with a Flex Fund administered by the states. The less spent on duplicative bureaucracies, the more for the poor. Freed from micromanagement from Washington, states could spend it in more innovative ways.

Policies that have encouraged destructive behaviors must be reversed. “Aid should not be given unconditionally,” said Mr. Haskins and Ms. Sawhill. “New research in economics and psychology has shown that individuals frequently behave in ways that undermine their long-term welfare and can benefit from a government nudge in the right direction.”

To make work more attractive than the dole, Sen. Rubio would replace the Earned Income Tax Credit with a broader wage subsidy paid to workers through their paychecks.

One can quibble about details, but how they respond to the thrust of Sen. Rubio’s reforms will separate those who care about the poor from those who just pretend to.


Jack Kelly is a columnist for the Post-Gazette (jkelly@post-gazette.com, 412-263-1476).

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