Ryan is right on the War on Poverty

In Sunday's Journal Sentinel, Joe Volk, a self-described Democrat and man of the left, expresses tentative support for at least some of Paul Ryan's anti-poverty proposals. Good for him. Although I'm not sure I'd describe Rep. Ryan's proposals as a policy epiphany - it's pretty much what he's always done, Mr. Volk is willing to engage in a serious conversation about something important. That's all too rare.

But there was one part of Mr. Volk's column that struck me as jarringly off-key and fairly important to that conversation. So in the spirit in which he started it, let me raise a few questions.

It response to Rep. Ryan's claim that the War on Poverty, begun in the mid-sixties, has largely failed, here is the story that Mr. Volk wants to tell. Anti-poverty programs dramatically reduced poverty until they were "dismantled" by the Reagan administration. Maybe he has access to numbers that I don't, but his story seems almost entirely wrong.

You can see movement in the poverty rate here. Poverty was falling at a dizzying rate during the years preceding enactment of the Great Society social problems. It continued to fall sharply until the early seventies and then fell no further. It has been relatively stable since then. It was not, as Mr. Volk says, at 11% in 1980.  Then the rate  started to turn up again after a run between 11 and 12% in that late seventies, hitting 13% in 1980 and 14% in 1981. You can't blame President Reagan for that.

Mr. Volk is right in that per capita anti-poverty spending was reduced in the early 80s (although it hardly represented a "dismantling' of the programs) and, for a time, the increase in the poverty rate that had begun at the end of the Carter administration continued. But  then it started to fall and then rise, fluctuating between 11 and 15% over the past thirty years. You can track the poverty rate against anti-poverty spending here. If you see a relationship between increased spending and reduction in the poverty rate over the past 40 years, I'd love to hear about it.

Per capita spending on poverty programs has continued to increase steadily without much discernible connection to the rate of poverty.  This is true even if one backs out Medicare spending on the grounds that much of its increase is due to health care costs rising above the rate of inflation rather than an increase in the nature of the support afforded poor persons. Again, so much for the "dismantling" of these programs.

So Paul Ryan's critique - that the War on Poverty has not been effective - seems spot on. But it does require a qualification.

While anti-poverty programs have not reduced poverty without regard to government transfers, it probably ameliorated it. The official poverty rate does not include non-cash transfers (e.g., food stamp, housing subsidies) or tax credits such as the Earned Income Credit (much beloved by Republicans).  If you take these things into account, the reduction in the poverty rate is more significant. In other words, the War on Poverty may have made people who are poor better off than they would have been in its absence.

It's necessary to say that this ameliorative effect "may" be the case because the apparent stagnation of the decline in the poverty rate roughly coincident with the beginning of the War on Poverty might be related. It is possible that the dramatic and continuing increase in anti-poverty spending has contributed to dependency. (This could be true even if poor persons "want" to be self reliant.)

Of course, it's also possible that the poverty remaining when the War on Poverty began is more intractable.

So the truth is more complicated that we fought on a war on poverty and poverty won. We've spent a lot of money - almost a trillion each year by some estimates - and made poor people better off. Whether it has done so efficiently is another matter. We may very well have been able to get the same ameliorative impact with less money or more improvement in the lives of poor people for the same money.

How you see this depends on what you think the War on Poverty was for. If it was just to get people some money, it is (perhaps) an inefficient success. If it was intended to make people self-sufficient (and it was), then it is time for a reassessment.

We have not dismantled the War on Poverty and the War on Poverty has been markedly ineffective in making poor people self-reliant.

Cross posted at Purple Wisconsin.