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Policy: Economy

Examiner Editorial: New weapons are needed to win the war on poverty

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Opinion,Editorial,Jobs,Labor,Entitlements,Economy,Poverty,Washington Examiner

Fifty years ago today, President Lyndon B. Johnson addressed Congress in his first State of the Union Address in the wake of the assassination of John F. Kennedy. “This administration today, here and now, declares unconditional war on poverty in America,” Johnson said. “I urge this Congress and all Americans to join with me in that effort.”

By the time Johnson left office in 1969, Congress had passed a raft of anti-poverty legislation, including the Economic Opportunity Act, Medicaid and the food stamp program. The effort has been at the heart of one of the critical public policy debates since World War II. In pure statistical terms, the poverty rate, which was 19 percent in 1964 when LBJ declared war, according to Census Bureau data, had declined to 12.8 percent by 1968, the final year of his presidency.

But to put those numbers in context, when LBJ declared the war, the U.S. economy was surging and the poverty rate had already declined from 22.4 percent in 1959, the earliest year available from the Census. Between 1965 and 2012, the national poverty rate has stubbornly averaged 13.6 percent per year and it has never fallen below 11.1 percent.

During the current economic downturn, the poverty rate was 15.1 percent in 2010, and 15 percent in 2011 and 2012 (the last year for which Census data is available). That’s the highest it’s been in a three-year span since 1964, and it means a stunning 46.5 million people are still living in poverty half a century later.

It’s fair to argue that had it not been for the social safety net programs, the poverty rate would likely have been higher. But it’s also worth keeping in mind the staggering cost of social welfare programs. In fiscal year 2011, the federal government alone spent $746 billion on anti-poverty programs, according to an October 2012 report from the Congressional Research Service.

When state and local programs are included, the annual total spent by the United States is nearly $1 trillion, or roughly 6 percent of the economy. By comparison, defense spending was 3.7 percent of gross domestic product in 2013. In total, according to a Cato Institute analysis, the government has spent an estimated $15 trillion on anti-poverty programs since LBJ's war was declared.

Though spending on anti-poverty programs would naturally grow with the size of the population and to keep up with inflation, a recent study by the Brookings Institution calculated that the federal government spent $516 on the 10 largest means-tested programs per person in poverty in 1962, but that number exploded to $13,034 per person by 2011, in constant 2011 dollars. And this doesn't account for all federal spending, nor does it take into account state spending.

The question confronting policy makers is not whether throwing trillions of dollars on federal programs can produce some semblance of reduction in poverty. Rather, it is are the current programs producing satisfactory results at an acceptable cost or is there a better way perhaps seen in the four years prior to LBJ’s landmark speech.

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