Rethinking the War on Poverty | Citizens Against Government Waste

Rethinking the War on Poverty

The WasteWatcher

Last month, House Speaker Paul Ryan (R-Wisc.) and Sen. Tim Scott (R-S.C.) convened a summit of top conservative thinkers and presidential candidates to showcase free-market alternatives to fighting poverty in the United States.  The Kemp Forum on Expanding Opportunity was named in honor of Speaker Ryan’s political mentor, New York congressman, HUD secretary, and Vice-Presidential candidate, Jack Kemp.  Most of the media coverage marveled at how “wonky” and “low-octane” the event was, compared to the clamor of the 2016 race for the White House.  The underlying message throughout the long policy discussions was that addressing poverty deserves a new approach.

In his 1964 State of the Union address, President Lyndon Johnson declared “unconditional war on poverty in America.”  Three years after the “war” began, the poverty rate stood at 14 percent.  Since 1965, the U.S. has spent over $22 trillion fighting the war on poverty (not counting Medicare and Social Security) in the form of government programs and expanded federal power.  A half-century later, according to the latest statistics from the Census Bureau, the poverty rate in the United States stands at 14.8 percent, or 46.7 million people. 

The Heritage Foundation found that, “today, government spends 16 times more, adjusting for inflation, on means-tested welfare or anti-poverty programs than it did when the war on poverty started.”  Even worse, as the depth and breadth of anti-poverty programs increased, the poverty rate remained essentially unchanged, as shown on the following chart:

On March 3, 2014, the House Budget Committee released a wide-ranging analysis of the state of the war on poverty.  The primary conclusion was that the 92 federal programs devoted to the task of aiding low-income Americans makes it more difficult to solve any of the problems associated with poverty.

The fragmentation, overlap, and duplication in federal programs has been documented by the Government Accountability Office (GAO) in annual reports since 2011.  The 2015 report found that only 37 percent of GAO’s recommendations were “fully addressed.” 

GAO identified 160 programs spanning 20 federal entities tasked with housing assistance through the Departments of Housing and Urban Development (HUD) and Agriculture (USDA).  Forty-five fragmented and duplicative programs are tasked with finding employment for Americans with disabilities.  There are 12 federal agencies administering 13 different programs for financial literacy.

In theory, a deluge of federal programs across the spectrum are intended to cure any number of America’s ills, including poverty.  In practice, with little to no coordination, the federal anti-poverty ship has become leaky, rudderless, and ineffective.  Much of this results from a tendency to get an ever-growing number of Americans onto these programs as opposed to a focus on creating the right incentives and economic climate needed for them to get off and become self-sufficient.

National Public Radio highlighted an example of this trend in a March 22, 2013 article describing how states are hiring consultants to comb through their welfare rolls in order to “work to identify those folks who have the highest likelihood of meeting disability criteria.”  This is effectively transitioning people from government welfare programs to the government disability program, which has fewer work or income requirements. 

Federal poverty programs are also lacking in taxpayer safeguards to prevent improper payments.  One of the largest culprits for waste is the IRS’s Earned Income Tax Credit (EITC).  The EITC leads the way with 27.2 percent of payments made in error, resulting in a $17.7 billion loss in 2014.  Improper payments in Medicaid reached $17.5 billion in 2014. 

At the Kemp Forum, candidates, moderators, and sponsors laid out an alternative to the half-century of a federally-administered poverty war.  Ideas included devolving programs to states and localities where funds can be more judiciously appropriated and potentially saved, to increasing work requirements, which is fundamentally the best way for people to escape poverty and government dependence.

Ultimately, the forum made progress in dispelling the myth that free market solutions to poverty are rigid or those that espouse them are lacking in compassion.  The conversation about how best to help the poorest among us deserves an alternative infused with principles of free enterprise, not solutions based on the same old failed federal formula. 

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