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"The War on Poverty is not a struggle simply to support people, to make them dependent on the generosity of others. It is a struggle to give people a chance. It is an effort to allow them to develop and use their capabilities as we have all been allowed to develop and use ours, so that they can share, as others share, in the promise of this nation."
-- President Lyndon Johnson in his 1964 address to Congress
Since its initiation, almost 60 years and three generations have passed.
How have we fared in this "war?"
Using the Census Bureau's unadjusted statistics, it has been an abject failure.
The poverty rate, as defined by the bureau, declined from 32.1% in 1947 to 14.7% in 1965.
The post-World War II economic boom created millions of jobs which facilitated the escape of millions of Americans from poverty.
Subsequent to 1965, the Poverty Rate fluctuated between 11.1% and 15.2% depending on the business cycle and stood at 12.7% in 2017.
So, after 60 years, a plethora of programs, and trillions of dollars, the poverty rate barely budged.
What is wrong with this picture?
The error is taking the Census Bureau's data at face value. The bureau takes its own income distribution data, which counts only cash income, and calculates the poverty rate.
The Bureau does not count the value of in-kind services as income to households. There are over 101 federal programs (with budgets in excess of $100 million) that provide in-kind services including: Medicare, Medicaid, food stamps (SNAP) and 16 other supplemental nutrition programs, earned income and additional child tax credits (refundable portion), children's health insurance (CHIP), national school lunches, school breakfasts, Section 8 and public housing, among others.
These programs, on average, provide low-income households with $45,377 of additional in-kind income.
By adding this in-kind income, the adjusted Poverty Rate falls to 2.5%.
We won the War on Poverty in Johnson's sense of "simply to support people."
Let's congratulate ourselves.
This social safety net developed over time through many congressional actions.
Although well intended, the mishmash of programs and their implementation increase the incentive to disengage from the work force.
Most programs are "means tested," meaning a household loses benefits gradually as it earns more income.
This reduces a household's incentive to work. In 1967, before this social safety net was built, 68% of all prime age (18-65) low-income household members worked.
The addition of an average of $45,377 of in-kind income is a powerful incentive to not seek employment,
In fact, in 2017, only 36% of prime age (18-65) low-income household members worked. That's a decline of almost one-half.
This occurs because the social safety net is so large and is structured to fade away quickly as income increases.
So, in the sense of Johnson's "develop and use their capabilities," the "War" failed miserably.
(Editor's note: Some of the reported data comes from "The Myth of American Income Inequality by Phillip Gramm.")