Mike Kueber's Blog

October 11, 2012

Dealing with poverty in America

Filed under: Economics,Issues,Law/justice,Politics — Mike Kueber @ 7:40 pm
Tags: ,

The presidential campaign is forcing Americans to think about how America deals with poverty.  Does America have a self-serving interest to create opportunity so that the poor can escape poverty?  Or are private and religious entities primarily responsible for charity? 

As American government and Americans become more secular, many believe that government, in addition to encouraging equal opportunity for the disadvantaged, will have an increased responsibility for providing a safety net that ensures that all citizens, except irresponsible bums, avoid poverty.

Is America wealthy enough to afford such a safety net?  A New York Times editorial, based on a Cato Institute analysis, responds with a resounding “yes.” 

LBJ started our war on poverty almost 50 year ago when almost 20% of Americans were living in poverty.  That rate dropped to as low as 10% before heading north again to its current rate of 15%.   The Cato Institute analysis describes the panoply of government programs costing almost $952 billion a year, of which $668 billion is by the feds and $284 by the states and locals.  These programs are intended to deal with poverty in America.  Although the article describes these overlapping programs as “The American Welfare State,” I think that term is misleading because of its close resemblance to the notorious European Welfare State. 

In the case of Europe, welfare state has come to mean any redistribution program, and would typically include Social Security, Medicare, and ObamaCare.  By contrast, the Cato study of American programs is limited to those that conform to the traditional definition of welfare – i.e., assistance for the poor.  Thus the $1 trillion of spending examined by Cato includes Medicaid, but not Medicare or Social Security.   

The New York Times editorial suggests that America spends so much money attempting to ameliorate poverty that the 46 million Americans currently in poverty could be immediately moved out of poverty if the money were issued as a direct payment to those in poverty.  Instead of considering that as a serious option, the editorial suggests that the lesson to be learned is that America’s anti-poverty spending is scandalously ineffective.  But the editorial is lacking in suggesting fixes.  Block grants, such as what Paul Ryan has proposed for Medicaid, is an option, along with a shift in mindset by measuring a program’s effectiveness by outcomes (number of self-sufficient individuals) instead of inputs (dollars thrown at a problem).

Getting back to the Cato study, the Top 13 are as follows:

  1. Medicaid; $228 billion in 2011; 48.9 million beneficiaries
  2. Food stamps (SNAP); $72 billion; 44.2 million beneficiaries
  3. Earned income tax credit; $55 billion; 27 million beneficiaries
  4. Child tax credit; 18.5 million beneficiaries
  5. Pell grants; $41 billion; 8.7 million beneficiaries
  6. Supplemental security income; $43.7 billion; 8.1 million beneficiaries
  7. State Children’s Health Insurance Program (SCHIP); $13.459 billion; 7.7 million beneficiaries
  8. Housing vouchers; $18.1 billion; 5.1 million beneficiaries
  9. Temporary Assistance to Needy Families (TANF); $21 billion; 4.5 million beneficiaries
  10. National School Lunch Program; $10.9 billion; 31 million beneficiaries
  11. Adjustable-rates mortgages; $10.6 billion; 43,687 units
  12. Special supplemental nutrition program (WIC); $7.17 billion; 9.18 million beneficiaries
  13. Head Start; $7.1 billion; 904,000 beneficiaries

The New York Times is correct in concluding that the problem is not that America doesn’t spend enough money to fight poverty.  The problem is that the spending is often ineffective.  The same can be said for education.  And a John Stossel is wont to say, the micro-management by government is more often the problem than the solution.

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3 Comments »

  1. mike, this goes back to motivation. while the system was not and is not equal for all people (how can it be – a strange concept) motivation is the X factor. imparting money, better facilities, ad campaigns, etc. cannot overcome a lack of motivation. further, from my not so limited experience it often demotivates. while i would not want to live in poverty, my mission trips to places like Amarillo, Uvalde, San Marcos, San Angelo and more have been enlightening.

    while reparing homes for people in poverty i note that they all have a car, most have 2 cars, they have TOO MUCH food, they have TV, cable, xbox, cell phones, clothing, and near free or free health care. obviously since i’m reparing homes it is clear that they have homes as well – crappy homes, but homes. i also have expereinced that around 90% of these homes have people living in them that could do the repairs i’m doing. they also have a life of leisure – not glamor or pomp – leisure. they get up when they want, sit around, eat, bbq, watch tv, play xbox, go to the park, go to the library, go to walmart all at their leisure. not to worry about being late, office politics, due dates for projects, etc.

    for many people there is no reason to push, learn, work, compete. it is just too easy to have a life of leisure… if you are willing tolerate a crappy house…

    q

    Comment by Q — October 16, 2012 @ 2:35 pm | Reply

  2. […] few days ago, I blogged about America’s safety net by listing the 13 most significant federal programs dealing with […]

    Pingback by SSI « Mike Kueber's Blog — October 22, 2012 @ 9:29 pm | Reply

  3. […] fund will be solvent until the 2030s.  There are 10.6 million Americans collecting SSDI.  A previous posting in my blog noted that SSI, the sixth most costly part of America’s safety net, costs $43.7 […]

    Pingback by Disability protection – SSI vs. SSDI « Mike Kueber's Blog — November 20, 2012 @ 8:56 pm | Reply


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