Tuesday, October 18, 2011

Despite trillions in welfare spending,
poverty increases in America

Commentary by James H. Shott

The U.S. Census Bureau’s annual poverty report states that 46.2 million persons, or roughly one of seven Americans, were poor in 2010. That’s a shocking statistic.

Currently, poverty earnings levels in the contiguous 48 states are $10,890 for individuals, $14,710 for couples and $22,350 for a family of four. The thresholds are higher for residents of Hawaii and Alaska.

Obviously, those annual earnings figures are pretty low, and people living at those income levels certainly face challenges. But understand that meeting a poverty threshold makes you eligible for federal and state assistance, like welfare, Medicaid, Aid to Dependent Children, food stamps, housing subsidies, student loans, etc., that help those who are classified as poor. In all, there are 71 federal means-tested welfare programs.

Unfortunately, poverty has political implications. For example, if you raise or lower those thresholds, you immediately change the number of poor in America. That is not to suggest that those thresholds are too low, only that you can create or eliminate a lot of poverty simply by changing the poverty thresholds. And there are political advantages to increased numbers of people in poverty.

When you look beneath the surface of the poverty issue it becomes quickly evident that some of those classified as poor – emphasis on “some” – aren’t as bad off as we might think.

Yes, some, perhaps many, Americans truly are poor, and they need help. But it is a piece of conventional wisdom that America’s poor are substantially better off than the poor of other countries, who frequently are homeless and starving. That conventional wisdom is borne out by what the Census Bureau tells us about Americans living in poverty:
• 80 percent of poor households have air conditioning
• Nearly three-fourths have a car or truck, and 31 percent have two or more cars or trucks
• Nearly two-thirds have cable or satellite television, one-third have a wide-screen plasma or LCD television, one-fourth have a digital video recorder system, and two-thirds have at least one DVD player
• Half have a personal computer, one in seven have two or more computers, and 43 percent have Internet access
• More than half of poor families with children have a video game system, such as an Xbox or PlayStation

You can make a persuasive argument that at least some of those classified as poor, those who fall into the categories listed above, aren’t really poor in the true sense of the word.

This is the state of poverty in America 47 years after President Lyndon Johnson declared war on it. In a message to Congress on March 16, 1964, Mr. Johnson declared: “Because it is right, because it is wise, and because, for the first time in our history, it is possible to conquer poverty, I submit, for the consideration of the Congress and the country, the Economic Opportunity Act of 1964.

“The Act does not merely expand old programs or improve what is already being done. It charts a new course. It strikes at the causes, not just the consequences of poverty. It can be a milestone in our one-hundred eighty year search for a better life for our people.”

No doubt President Johnson and those who supported the War on Poverty believed this action would eliminate poverty. But despite spending almost $16 trillion since declaring war on poverty – which is more than the National Debt that has accumulated throughout our 235 year history – welfare programs have failed to reduce poverty.

And spending for these programs is projected to cost taxpayers $10.3 trillion over the next decade. President Barack Obama’s FY 2011 budget request, for example, increased total welfare spending to $953 billion, a 42 percent increase over welfare spending in FY 2008.

Even if welfare programs were working, given the current budget and debt crises, this kind of spending cannot be sustained; it will drive the United States into bankruptcy if allowed to continue unreformed.

A lesson we never seem to learn is that throwing money at a problem rarely fixes it. Think stimulus 2009. President Obama’s advisers told us that if we passed the $767 billion stimulus bill, that ultimately cost taxpayers $862 billion, unemployment would not exceed 8 percent and the economy would get a big boost. Guess what?

Throwing $16 trillion at poverty has not ended poverty; in fact, poverty has grown. And evidence strongly suggests that efforts to end it have actually hurt many of the people it was intended to help. A recent report by the Heritage Foundation notes that “poverty in America is overwhelmingly linked to the absence of fathers and a lack of work, but welfare payments have had the destructive effects of eroding marriage and the work ethic in low-income communities. … When the War on Poverty began, 7 percent of children were born out of wedlock; today, the figure is over 40 percent.”

Poverty will never be completely eliminated, but we can reduce it substantially if we stop punishing marriage, foster job creation and stop rewarding people for not working. Continuing to throw money at it will not solve the problem.

Cross-posted from Observations

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