The Economy Hub
8:00 AM EST, January 12, 2014
Fifty years ago Wednesday, President Lyndon B. Johnson delivered what may have been the last genuinely uplifting State of the Union speech we've had.
"This administration, here and now, declares unconditional war on poverty in America," he said. "We shall not rest until that war is won. The richest nation on Earth can afford to win it. We cannot afford to lose it."
Since LBJ's launch of the War on Poverty, the effort has become a whipping boy on the right and even the left. President Reagan's judgment from 1986 seems to have won the battle for the most repeated crack: "In 1964 the famous War on Poverty was declared and a funny thing happened … I guess you could say, poverty won the war."
Reagan's quote remains part of the conservative rap on the War on Poverty today, during its 50th anniversary. Here's Robert Rector of the Heritage Foundation, writing in the Wall Street Journal: "The country has invested $20.7 trillion in 2011 dollars over the past 50 years. What does America have to show for its investment? Apparently, almost nothing: The official poverty rate persists with little improvement."
But like so many of Reagan's apercus, his remark about the War on Poverty was beside the point in its implications, and wrong on the facts. The truth is that the nation's anti-poverty programs, which include LBJ-era initiatives as well as earlier programs like Social Security, have brought the poverty rate down sharply. The measure cited by Rector doesn't show a significant fall in the overall rate because it doesn't count income from anti-poverty programs as real income.
There's some sleight-of-hand here: Rector isn't shy about listing all the things that Americans living near or below the poverty line have today that they wouldn't have had in 1964: "a house or apartment that is in good repair," a car and TV, freedom from hunger and malnutrition. But much of that is bought with the help of food stamps, earned income tax credits, and other benefits that he doesn't cite as income.
The truth is that the nation's investment in the War on Poverty has yielded huge and lasting gains. That's partially because LBJ's program was not just a plan for financial handouts. It also encompassed a broad approach encompassing "better schools, and better health, and better homes, and better training, and better job opportunities," as he put it in his address on Jan. 8, 1964. LBJ's campaign brought us Head Start (in 1965) as well as Medicare and Medicaid. He understood that political and social empowerment were indispensable factors in economic betterment, so he pushed for the Civil Rights Act of 1964 and the Voting Rights Act of 1965.
The successful results can be seen from a poverty statistic called the Supplemental Poverty Measure, which the Census Bureau introduced in 2010, and which researchers at Columbia University used to recalculate the poverty rate going back to the 1960s. The measure incorporates expenses that aren't included in the standard poverty stat, as well as income and benefits from government programs.
Instead of showing a poverty rate mired within a range of about 12% to 15% of all households over the last 50 years, the supplemental measure shows that the poverty rate has actually fallen from more than 25% in 1967 to about 16% today. Without poverty-fighting tax breaks and other transfers, the poverty rate would be close to 30% today.
The effect of the War on Poverty is especially pronounced on children and the elderly. The child poverty rate has fallen from nearly 30% to less than 20%, the Columbia researchers found. For the elderly, it has come down from more than 45% to 15%. The biggest factor in the latter figure, of course, is Social Security; the degree to which Social Security keeps millions of seniors out of poverty should be a reproach to legislators on both sides of the aisle who think these crucial benefits should be cut to preserve tax breaks for the rich.
One disquieting trend does emerge from these figures, however: after falling fairly consistently for some four decades, the poverty rate began to creep up after 2008. It's not surprising that the crash and recession that year drove poverty up, but what's disturbing is that it has kept going up.
The reason plainly is that the nation's anti-poverty and anti-recession programs haven't been fully up to the task of combating the effects of long-term unemployment or the systematic redirection of income from the working class to the shareholding class — income inequality. That's what's overlooked by Republicans like Sen. Marco Rubio of Florida, who last week tried to seize the anti-poverty high ground for his party with a speech proposing a host of new measures.
"Our modern-day economy has wiped out many of the low-skill jobs that once provided millions with a middle-class living," Rubio said. "Those that have not been outsourced or replaced by technology pay wages that fail to keep pace with the cost of living."
Rubio's diagnosis is incomplete. He left out all the still-existing jobs that once paid a middle-class wage and offered middle-class benefits, but don't do so any longer. He left out the effect of corporate policies like that of Boeing, which just squeezed its unionized rank-and-file manufacturing workers with big cuts in pension and healthcare benefits — and came this close to hammering them on wages too — while showering its shareholders with an enormous increase in dividends and some $17 billion in stock buybacks, and awarding its chief executive a 20% raise. While talking up the economic virtues of marriage, Rubio forgot to mention the role of a fair distribution of the profits of productivity in fostering economic mobility.
What's dangerous about the claim that anti-poverty spending has been a waste is that it morphs easily into an excuse for doing less of it, or refashioning successful programs so they're cheaper and less effective. Among Rubio's big ideas is to turn federal anti-poverty programs over to the states "so they can design and fund creative initiatives that address the factors behind inequality of opportunity."
This idea of the states as laboratories of innovative government is one of the most treasured notions of politicians, but the few states where the reputation is deserved (including California) are outnumbered by those where state control of federal dollars will perpetuate inequality, inefficiency and stupidity.
One need look no further than the failure of 25 states to take up the government's offer of free Medicaid expansion to give their citizens access to health insurance. This dereliction has left some 5 million Americans uncovered — and it's hardly a coincidence that several of those states already rank at the bottom of the heap in public health programs. If they're laboratories, they're being run by mad scientists. These are some of the same states, by the way, that are systematically cutting back on voting rights.
Rubio proposes making these block grants to the states "revenue neutral," which sounds like delivering assistance to some recipients means taking it away from others. Economist Jared Bernstein also warns that it means those programs couldn't expand in times of need, like recessions. He points out that of three major safety net programs — food stamps, unemployment insurance and Temporary Assistance for Needy Families (TANF) — the only one that didn't grow to meet the challenge of the recession was the last, which is the only one block-granted to the states.
People trying to be fair-minded about Rubio's platform have given him credit for at least taking a stab at showing empathy for the poor. But he's outgunned by members of his own party who think the answer to grinding poverty is for the poor to notch in their belts in the name of government austerity. They include people like our favorite hypocrite, Rep. Doug LaMalfa (R-Richvale), who instructed people on food stamps that they should accept a "modest" retraction of $20 billion in the program, though his own family collected more than $5 million in crop subsidies since 1995.
The worst flaw in any diagnosis of anti-poverty policy that focuses on the amount of money spent is that it treats poverty as a phase rather than as a condition. Enhancements to income are essential parts of any relief program, but as LBJ perceived, social mobility is the key. Poverty may yet win the war, proving Reagan right; but if that happens it's because American society has handed over victory by default.
Programs addressing that factor have really taken it in the gut during this last recession. The sequester, which still remains in effect, has hollowed out Head Start programs across the country and deprived thousands of families of adequate public housing. Turning control of anti-poverty programs to the states may satisfy some fantasy of grass-roots political resourcefulness, but when the states face budget crunches they invariably hack away at public education, public housing, public health.
Michael Hiltzik's column appears Sundays and Wednesdays. Read his new blog, the Economy Hub, at latimes.com/business/hiltzik, reach him at firstname.lastname@example.org, check out facebook.com/hiltzik and follow @hiltzikm on Twitter.
Copyright © 2014, Los Angeles Times