Does the War on Poverty Fight Destitution or Subsidize It?

The Census Bureau will be releasing new poverty-rate numbers on Thursday and the numbers are expected to show a big move in the wrong direction. Much of the coverage will be on how much the poverty rate increases, with 15 percent being a likely amount according to some estimate. There also will be lots of discussion about the political implications, as this Associated Press story illustrates.

The number of people in the U.S. who are in poverty is on track for a record increase on President Barack Obama's watch, with the ranks of working-age poor approaching 1960s levels that led to the national war on poverty. Census figures for 2009 — the recession-ravaged first year of the Democrat's presidency — are to be released in the coming week, and demographers expect grim findings. It's unfortunate timing for Obama and his party just seven weeks before important elections when control of Congress is at stake. The anticipated poverty rate increase — from 13.2 percent to about 15 percent — would be another blow to Democrats struggling to persuade voters to keep them in power.

But the real story should be the degree to which the federal government's War on Poverty has been a complete failure. Taxpayers have poured trillions of dollars into means-tested programs, yet the data show no positive results. Indeed, it's quite likely that the programs have backfired. As shown in the chart, Census Bureau data reveal that the poverty rate was steadily falling in the 1950s and early 1960s, but then stagnated once the War on Poverty began. It's possible that there are alternative and/or additional explanations for this shocking development, but government intervention may be encouraging poverty by making indolence more attractive than work.

Obama Administration Trying to Rig Government Statistics for Ideological Purposes

The government's so-called War on Poverty has been a dismal failure, largely because giving people money as a condition of being poor is a very good way of ensuring that some of them will choose to remain poor. But now the White House wants to make a bad situation even worse by concocting a new definition of poverty completely divorced from reality. As Robert Samuelson explains in his Washington Post column, this rigged system means that the poverty rate would remain the same even if every person in America suddenly had twice as much income:

...the poor's material well-being has improved. The official poverty measure obscures this by counting only pre-tax cash income and ignoring other sources of support. These include the earned-income tax credit (a rebate to low-income workers), food stamps, health insurance (Medicaid), and housing and energy subsidies. Spending by poor households from all sources may be double their reported income, reports a study by Nicholas Eberstadt of the American Enterprise Institute. Although many poor live hand-to-mouth, they've participated in rising living standards. In 2005, 91 percent had microwaves, 79 percent air conditioning and 48 percent cellphones. ...the administration's...new poverty number would compound public confusion. It also raises questions about whether the statistic is tailored to favor a political agenda. The "supplemental measure" ties the poverty threshold to what the poorest third of Americans spend on food, housing, clothes and utilities. The actual threshold -- not yet calculated -- will almost certainly be higher than today's poverty line. Moreover, the new definition has strange consequences. Suppose that all Americans doubled their incomes tomorrow, and suppose that their spending on food, clothing, housing and utilities also doubled. That would seem to signify less poverty -- but not by the new poverty measure. It wouldn't decline, because the poverty threshold would go up as spending went up. Many Americans would find this weird: People get richer but "poverty" stays stuck. ...The new indicator is a "propaganda device" to promote income redistribution by showing that poverty is stubborn or increasing, says the Heritage Foundation's Robert Rector. He has a point. The Census Bureau has estimated statistics similar to the administration's proposal. In 2008, the traditional poverty rate was 13.2 percent; estimates of the new statistic range up to 17 percent. The new poverty statistic exceeds the old, and the gap grows larger over time. To paraphrase the late Sen. Daniel Patrick Moynihan: The administration is defining poverty up. It's legitimate to debate how much we should aid the poor or try to reduce economic inequality. But the debate should not be skewed by misleading statistics that not one American in 100,000 could possibly understand. Government statistics should strive for political neutrality. This one fails.

The Obama Administration's Dangerous Re-Definition of Poverty

A former colleague from my days at the Heritage Foundation, Robert Rector, has a very disturbing article at National Review Online. Robert explains that the Obama Administration is putting together a new - and rigged - definition of poverty that has nothing to do with material deprivation. This new system instead will be a measure of income distribution, thus creating a public policy bias supporting spread-the-wealth type policies:

...the Obama administration announced it will create a new poverty-measurement system that will eventually displace the current poverty measure. This new measure, which has little or nothing to do with actual poverty, will serve as the propaganda tool in Obama’s endless quest to “spread the wealth.” ...The current poverty measure counts absolute purchasing power — how much steak and potatoes you can buy. The new measure will count comparative purchasing power — how much steak and potatoes you can buy relative to other people. ...In other words, Obama will employ a statistical trick to ensure that “the poor will always be with you,” no matter how much better off they get in absolute terms. ...The weird new poverty measure will produce very odd results. For example, if the real income of every single American were to magically triple over night, the new poverty measure would show there had been no drop in “poverty,” because the poverty income threshold would also triple. ...Another paradox of the new poverty measure is that countries such as Bangladesh and Albania will have lower poverty rates than the United States, even though the actual living conditions in those countries are extremely bad. ...For most Americans, the word “poverty” suggests destitution: an inability to provide a family with nutritious food, clothing, and reasonable shelter. But only a small number of the 40 million per­sons classified as poor under the government’s current poverty definition fit that description. Most of America’s poor live in material conditions that would have been judged comfortable, or even well-off, two generations ago. ...Clearly, “poverty” as currently defined by the government has little connection with “poverty” as the average American understands it. The new Obama poverty measure will stretch this semantic gap, artificially swelling the number of “poor” Americans, and severing any link between the government’s concept of poverty and even modest deprivation. In honest English, the new system will measure income inequality, not poverty. Why not just call it an “inequality” index? Answer: because the American voter is unwilling to support massive welfare increases, soaring deficits, and tax increases to equalize incomes. However, if the goal of income leveling is camouflaged as a desperate struggle against poverty, hunger, and dire deprivation, then the political prospects improve. The new measure is a public-relations Trojan horse, smuggling in a “spread the wealth” agenda under the ruse of fighting real material privation... In effect, the Obama poverty measure sets a new national goal of class warfare and income redistribution.