The War on Poverty: 50 Years Later
link to full report:
http://budget.house.gov/uploadedfiles/wa...overty.pdf
Fifty years ago, President Lyndon Johnson declared war on poverty. Today, in the aftermath of the Great Recession, we are once again debating the best way to help the least among us. On this important anniversary, we should take stock of the federal government’s anti-poverty programs—and figure out why we have yet to achieve the “total victory” Johnson predicted.
The War on Poverty at a Glance
Despite trillions of dollars in spending, poverty is widespread:
•In 1965, the poverty rate was 17.3 percent. In 2012, it was 15 percent.
•Over the past three years, “deep poverty” has reached its highest level on record.
•About 21.8 percent of children live below the poverty line.
Today, the federal government’s anti-poverty programs are duplicative and complex.
There are at least 92 federal programs designed to help lower-income Americans. For instance, there are dozens of education and job-training programs, 17 different food-aid programs, and over 20 housing programs. The federal government spent $799 billion on these programs in fiscal year 2012. And a significant challenge today is the decline in labor-force participation.
•The labor-force participation rate has fallen to a 36-year low of 62.8 percent.
•CBO projects the rate will fall to 60.8 percent over the next decade.
A number of factors are causing this decline—changing demographics, slow economic growth.
But federal policies are also discouraging work. For example, a rapid increase in disability caseloads has reduced the labor force. But a large problem is the “poverty trap.” There are so many anti-poverty programs—and there is so little coordination between them—that they often work at cross purposes and penalize families for getting ahead.
•CBO finds that some low-income households face implicit marginal tax rates of nearly 100 percent.
On the other hand, research finds that the best anti-poverty programs encourage work.
•Economists Bruce Meyer and James Sullivan find that lower tax rates and bigger tax credits helped low-income families the most.
•Programs like the Earned Income Tax Credit increase labor-force participation.
The Causes of Poverty
Family
Perhaps the single most important determinant of poverty is family structure. It has been the subject of fierce academic debate since the Moynihan Report—named after its author, then-assistant secretary of labor Daniel Patrick Moynihan—was released in 1965. The Moynihan Report identified the breakdown of the family as a key cause of poverty within the black community.
More recent research on Americans of all backgrounds has backed up Moynihan’s argument. According to the Census Bureau, single parenthood is a key correlate with poverty.
Single women head less than 20 percent of all households; but they head 34 percent of all poor households. The Brookings Institution’s Ron Haskins and Isabel Sawhill point out that if a person works full time, gets a high-school education, and waits until he or she is married to have children, the chances of being poor are just 2 percent.
And Hilary Hoynes finds, “If all else had been held constant over the past forty years, changes in family structure would have led to a rise in the poverty rate from 13% (in 1967) to 17% (in 2003).”
In conjunction with these observations, scholars behind the most comprehensive study of upward mobility to date find that family-structure-related variables were the strongest predictors of upward mobility across labor markets within the United States.
Although causality has not been definitively established, there’s much to be said for the changing nature of American families as it pertains to poverty and upward mobility.
Poverty is most concentrated among broken families. For all families, the poverty rate was 13.1 percent. But 34.2 percent of families headed by a single female were considered below poverty, and 22.8 percent of households composed of unrelated individuals were considered to be in poverty.