Free Markets, Free People

War on Poverty


No progress in the War on Poverty and none expected

A new study from CATO has found that despite trillions in spending, the poverty rate hasn’t moved much:

“[S]ince President Obama took office [in January 2009], federal welfare spending has increased by 41 percent, more than $193 billion per year,” the study says.

Federal welfare spending in fiscal year 2011 totaled $668 billion, spread out over 126 programs, while the poverty rate that remains high at 15.1 percent, roughly where it was in 1965, when President Johnson declared a federal War on Poverty.

In 1966, the first year after Johnson declared war on poverty, the national poverty rate was 14.7 percent, according to Census Bureau figures. Over time, the poverty rate has fluctuated in a narrow range between 11 and 15 percent, only falling into the 11 percent range for a few years in the late 1970’s.

The federal poverty rate is the percentage of the population below the federal poverty threshold, which varies based on family size.

A point that needs to be raised here is the poverty rate isn’t going to change no matter how much we spend because revisions to the threshold will always be such that about 15% of the population will be considered poor.

And, in a relative terms, they are indeed “poorer” than the other 85%.

The question is, are they really “poor” in real terms?

It depends on how you measure poverty, doesn’t it?  You can’t spend taxpayer money on poverty unless “poverty” exists, right?  But how many of our “poor” are truly poor?

Well, I’m not sure and neither is anyone else.  That’s because of the way poverty is measured in the US.  Essentially it is based solely on income.

The official poverty measure counts only monetary income. It considers antipoverty programs such as food stamps, housing assistance, the Earned Income Tax Credit, Medicaid and school lunches, among others, “in-kind benefits” — and hence not income. So, despite everything these programs do to relieve poverty, they aren’t counted as income when Washington measures the poverty rate.

So guess what remains the same?  The poverty rate.  If “in-kind benefits” were included in income calculations for those receiving them, a lot fewer of them would be considered “poor”.   And since it’s only based on income, many elderly who receive retirement incomes below the “poverty” threshold are considered to be poor despite the fact that they own paid off assets like houses and cars and live comfortably on that retirement income.  But they pad the stats and help to continue to justify the programs and expenditures.

Do any of us have a problem with giving those who are down a hand up? 

I don’t.  But, I want a fair and reasonable determination of who really needs it before I extend that hand.

That’s something we’ve never, ever gotten since the beginning of the War on Poverty.

Are there real poor in this country.  Yes, there probably are – but not 15%.

I know CATO’s study emphasized a lack of progress.  It has nothing to do with “progress” against poverty – as noted, there will never be any progress made given the constant upward revision of the poverty level and the absurd way poverty is calculated in this country. 

As with most programs the government runs, this is one in dire need of a complete and total overhaul.

And CATO’s study is useful in pointing that out – again.

Not that anything is likely to actually happen to address the problem or anything.

~McQ

Twitter: @McQandO

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