THE WAR ON POVERTY: $21 Trillion Later, Government Has Only Made Things Worse

Guest post by Matthew Vadum
 

The War on Poverty has barely made a dent in actual poverty, states the 205-page report unveiled last month by the House Budget Committee, which is chaired by Rep. Paul Ryan (R-Wisc.).

The paper, created in the hope of starting a discussion in Congress about reforming America’s bungled poor-relief programs, came out before Ryan released the GOP’s new budgetary blueprint yesterday that lays out how to balance the budget in 10 years. That document calls for reducing federal government spending by $ 5.1 trillion over a decade largely by getting a grip on out-of-control social programs. The House Budget Committee could vote on the fiscal plan as soon as Friday. Leadership in the Democrat-dominated Senate, which hasn’t even tried to adopt a budget in recent years, isn’t planning to craft a fiscal blueprint this year, either.

The heart of the War on Poverty report is its observation that most federal poverty-alleviation programs are essentially useless or incapable of having their impact measured in the real world.

The study observes that in 1965, the poverty rate was 17.3 percent. In 2012, it was 15 percent. This means taxpayers blew a staggering $ 20.7 trillion over the last half century in order to achieve a paltry 2.3 percentage point decrease in poverty.

The War on Poverty has barely made a dent in actual poverty

Broken down into less mind-blowing, easier-to-grasp figures, between 1965 and 2012 the average family of four spent roughly $ 146,000 per percentage-point drop in poverty, or $ 335,000 per family for the whole 2.3 percentage-point reduction.

Only the most blinkered or jaded among us in the body politic believe that sucking $ 9 trillion out of the private, productive economy for each single percentage-point reduction in the poverty rate constitutes an acceptable return on investment.

Which brings us to the modern “progressive” Left.

Those on the Left consider the gentle statistical dip in poverty over five decades to be social progress achieved by way of holy coercive redistribution. Mere results have always been less important to the Left than intentions.

Although a sane person would consider the extremely modest reduction in poverty a humiliating defeat, left-wingers have successfully been changing the subject, hurling epithets, smearing opponents, and intimidating adversaries, all in an effort to move the discussion away from their 50 years of human misery-generating policy failures.

The Obama White House self-servingly slices and dices the statistics to portray the War on Poverty as a smashing, if flawed, success.

While the Obama administration admits that some of the government’s poverty-fighting approaches are less than optimal, President’s Obama Council of Economic Advisers issued a ringing endorsement of the War on Poverty.

According to that body, poverty has declined by more than one-third since 1967. “The percent of the population in poverty when measured to include tax credits and other benefits has declined from 25.8 percent in 1967 to 16.0 percent in 2012.” Predictably, the council opines that “[d]espite real progress in the War on Poverty, there is more work to do.”

The council also obsequiously slaps President Obama on the back, praising him for taking steps to “further increase opportunity and economic security by improving key programs while ensuring greater efficiency and integrity.”

It then moves from servile flattery to outright revisionism, claiming that Obama’s actions have “prevented millions of hardworking Americans from slipping into poverty during the worst economic crisis since the Great Depression.”

OBAMA: Big government, a lawless administration, and radical attacks on civil society aren’t worth worrying about

Ever the class warrior, in a December address on income inequality, Obama showed just how much a prisoner he is of his own self-imposed ideological bubble. Without mentioning the devastating impact that the high tax rates and runaway social spending he ardently supports have had on American society, the president argued that it’s all deterministic, all the fault of capitalism. He said:

“But we know that people’s frustrations run deeper than these most recent political battles. Their frustration is rooted in their own daily battles—to make ends meet, to pay for college, buy a home, save for retirement. It’s rooted in the nagging sense that no matter how hard they work, the deck is stacked against them. And it’s rooted in the fear that their kids won’t be better off than they were.”

Big government, a lawless administration, and radical attacks on civil society aren’t worth worrying about, according to Obama.

It is “a dangerous and growing inequality and lack of upward mobility that has jeopardized middle-class America’s basic bargain—that if you work hard, you have a chance to get ahead.”

This is “the defining challenge of our time,” he said, even though Americans don’t give a farthing’s cuss about economic inequality.

That challenge consists of “making sure our economy works for every working American,” Obama declared, slyly anthropomorphizing the economy, an intangible abstraction, in order to push the illusion that markets, like animals or streams, can somehow be controlled and centrally managed.

All of this rhetorical blatherskite had its heyday in the awful 1960s, an era historian Paul Johnson correctly described as “America’s suicide attempt.” Instead of being satisfied with New Deal-era programs like Social Security, left-wingers resolved to move America even farther away from its founding ideals, fundamentally changing the country by erecting a supremely sclerotic behemoth welfare state answerable to no one.

The War on Poverty itself was a part of the massive left-wing social engineering and vote-buying scheme known as the Great Society

The War on Poverty itself was a part of the massive left-wing social engineering and vote-buying scheme known as the Great Society. This war really should have been called the war on American values. As a result of misguided government policies that grew out of the War on Poverty, social evils have not only been encouraged but subsidized with taxpayer dollars. For example, out-of-whack financial incentives have caused out-of-wedlock birthrates to mushroom, as David Horowitz and John Perazzo reported in “Government vs. the People.”

Despite an orgy of federal spending, blacks and other minorities have suffered the most from big government poverty alleviation efforts. The anti-marriage, anti-family tilt of welfare policies has devastated black communities and society at large.

In his first State of the Union address on Jan. 8, 1964, President Lyndon Johnson ushered in a half-century of government-incentivized sloth, indolence, dependency, and social decay. He exhorted Congress to launch a new belligerency against a perpetually ineradicable foe.

“Let this session of Congress be known,” Johnson exclaimed, “as the session which declared all-out war on human poverty and unemployment in these United States.”

The Economic Opportunity Act (EOA) of 1964 became the centerpiece of the new war.  It expanded the nation’s social safety hammock, turning government resources into war materiel to be used against the American system of constitutionally limited government.

The War on Poverty gave taxpayers’ money to so-called community groups like ACORN and Saul Alinsky’s Industrial Areas Foundation

The War on Poverty gave taxpayers’ money to so-called community groups like ACORN and Saul Alinsky’s Industrial Areas Foundation in order to encourage them to agitate against the status quo. This, in turn, stimulated demand for more government spending as taxpayer dollars became a kind of ever-increasing subsidy for pro-big government activism. The federal government still hands out significant grants to left-wing groups to subsidize their efforts to take away our economic freedoms. Many of the EOA-created programs still exist today, including VISTA (Volunteers In Service To America), now known as AmeriCorps VISTA, Job Corps, and Head Start.

Many more excuses for handouts were created after the mid-1960s—so many, in fact, that it is difficult nowadays for poor people to tiptoe through the ever expanding minefield of government assistance unscathed.

Loud calls for yet more welfare spending continue unabated from the echo chambers of the Left every single day whether the national economy is good or bad.

These calls come even after the country has saturation-bombed poor people with welfare over the past 50 years, to the tune of $ 20.7 trillion in 2011 dollars, far exceeding what the U.S. has spent on every actual, non-figurative war it has fought. Federal and state welfare spending, adjusted for inflation, is now 16 times greater than when this phony war was declared, according to Robert Rector of the Heritage Foundation.

While millions of Americans remain stuck in poverty, the House Budget Committee’s white paper from March inventories a dizzying array of expensive failed programs on which mountains of money have been lavished.

The federal government now administers at least 92 federal programs designed to help lower-income Americans. 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 2012 alone, according to the report.

Among more than 15 programs, more than $ 100 billion was spent on food aid. More than $ 200 billion was spent on cash aid. Spread over more than 20 programs, more than $ 90 billion was spent on education and job training. Almost $ 300 billion was spent on health care and close to $ 50 billion was spent on housing.

Let’s look at some of the eye-popping numbers involved in the major aid category of cash aid.

There were three federal agencies involved in spending $ 220 billion on cash aid in fiscal 2012. They are the Social Security Administration, Department of Health and Human Services, and Department of the Treasury.

Created in 1974, the Supplemental Security Income program provides cash benefits to elderly, blind, or disabled persons with limited income and assets. It weighs in at $ 50 billion.

Temporary Assistance for Needy Families (TANF), created in 1935, provides assistance to needy families. In 2012 it weighed in at $ 16.7 billion.

The Earned Income Tax Credit, established in 1975, provides cash assistance to low-income working families. The EITC, which some analysts consider to be a rare federal anti-poverty success, is the largest measure in the tax code that is aimed at reducing poverty. In 2012, its budget was $ 59 billion.

The Child Tax Credit, enacted in 1997, provides assistance to families with children. The IRS spent a little over $ 57 billion on total child credits in 2013.

The Title IV-E Foster Care/Adoption Assistance program, created in 1997, helps states pay for arranging temporary homes for disadvantaged children or for facilitating their adoption. The federal government spent $ 6.8 billion on the program in 2012.

But most of the 92 federal poverty-alleviation programs have a mediocre to downright dreadful track record of helping people in need.

To make matters worse, over the past three years, “deep poverty” has reached its highest level on record and about 21.8 percent of children live below the poverty line, the report states. Although changing demographics and slow economic growth contribute to continued poverty, federal policies are also discouraging work. For example, a rapid increase in disability caseloads has shrunk the labor force.

“But a large problem is the ‘poverty trap,’” the report states. “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.”

Because these programs are means-tested—meaning that benefits fall as recipients earn more money—poor families face very high implicit marginal tax rates. The federal government, in effect, is discouraging them from making more money.

“Congress has taken a haphazard approach to this problem; it has expanded programs and created new ones with little regard to how these changes fit into the larger effort. Rather than provide a roadmap out of poverty, Washington has created a complex web of programs that are often difficult to navigate.”

Some programs work, some don’t, and with many of them, “[t]here’s little evidence either way.”

Federal programs are not only failing to address problems in society; in some ways they are making the problems worse

Federal programs are not only failing to address problems in society; in some ways they are making the problems worse. “Changes are clearly necessary, and the first step is to evaluate what the federal government is doing right now,” the report said.

But President Obama, neo-Marxist ideologue that he is, isn’t interested in making changes to anti-poverty programs. Obama is seeking $ 56 billion in new spending for a variety of programs expanding educational offerings for preschoolers and job training for laid-off workers. No doubt he’ll find a way to lard still more billions of dollars in so-called emergency spending onto the budget as the year progresses.

“The two sides have converged in terms of the problems they’re diagnosing,” said Alan D. Viard of the American Enterprise Institute. “But the solutions are very far apart.”

That is an understatement.

 
Matthew Vadum, matthewvadum.blogspot.com/, is an investigative reporter at a watchdog group in Washington, D.C. His new book Subversion Inc. can be bought at Amazon.com (US), Amazon.ca (Canada), and as an e-book at Kobo (Canada).

Doug Ross @ Journal

The 4 Pillars of Poverty

Guest post by Marc Faber

I think it is remarkable that, despite the growth the US has enjoyed since the 1960s, the poverty rate has barely changed. Writing for the Wall Street Journal last month under the title “How the War on Poverty Was Lost”, Robert Rector notes that: “Fifty years and $ 20 trillion later, LBJ’s goal to help the poor become self-supporting has failed.” He writes further:

On Jan. 8, 1964, President Lyndon B. Johnson used his State of the Union address to announce an ambitious government undertaking. “This administration today, here and now,” he thundered, “declares unconditional war on poverty in America.”

Fifty years later, we’re losing that war. Fifteen percent of Americans still live in poverty, according to the official census poverty report for 2012, unchanged since the mid-1960s. Liberals argue that we aren’t spending enough money on poverty-fighting programs, but that’s not the problem. In reality, we’re losing the war on poverty because we have forgotten the original goal, as LBJ stated it half a century ago: “to give our fellow citizens a fair chance to develop their own capacities.”

…LBJ promised that the war on poverty would be an “investment” that would “return its cost manifold to the entire economy.” But the country has invested $ 20.7 trillion in 2011 dollars over the past 50 years. What does America have to show for its investment? Apparently, almost nothing: The official poverty rate persists with little improvement.

My impression is that there are far more “poor” people today as a percentage of the population than there were in the 1960s, because lower middle-class and middle-class people have moved into the ranks of the poor. (Since 2007, the bottom 50% by wealth percentile lost more than 40% of their net worth and their debts are up 16%.) This may be a factor that explains the still muted consumer confidence at a time when stock investors’ sentiment is at its highest level since 1987.

In my opinion, the increase in poverty rests on four pillars: cultural and social factors, educational issues, excessive debt, and government handouts, which encourage people not to work. Other factors include: international competition, which keeps wages down; and monetary policies, which create bubbles and impoverish the majority.

As an example, social factors and government handouts led to a sharp increase in out-of-wedlock births. In the 1960s in the US, out-of-wedlock births comprised only 5.3% of total births; in 1980, 18.4%; and today, over 40%. Babies born out of wedlock are likely to have fewer educational opportunities than those raised in two-parent families.

This is one reason; educational standards have also slipped – certainly relative to the rest of the world – due to poor policies. Of course, by far the worst cause of rising poverty rates is monetary policies that have encouraged credit growth, enslaving poor people with debts and financing an increase in entitlement programs by the government.

According to Rector, “The federal government currently runs more than 80 means-tested welfare programs that provide cash, food, housing, medical care and targeted social services to poor and low-income Americans. Government spent $ 916 billion on these programs in 2012 alone, and roughly 100 million Americans received aid from at least one of them, at an average cost of $ 9,000 per recipient. (That figure doesn’t include Social Security or Medicare benefits.) Federal and state welfare spending, adjusted for inflation, is 16 times greater than it was in 1964. If converted to cash, current means tested spending is five times the amount needed to eliminate all official poverty in the U.S.”

It is no wonder, therefore, that with these generous social programs, largely financed now by the Fed, single women have been encouraged to have babies without the “inconvenience” of having a husband.

The problem, however, as I mentioned above, is that (again according to Rector) the Heritage Foundation has found in a study that “children raised in the growing number of single-parent homes are four times more likely to be living in poverty than children reared by married parents of the same education level. Children who grow up without a father in the home are also more likely to suffer from a broad array of social and behavioral problems. The consequences continue into adulthood: Children raised by single parents are three times more likely to end up in jail and 50% more likely to be poor as adults.”

Now, I realise that it would be unfair to place the entire blame on the Fed for the failure of entitlement programs. However, the Fed and other central banks around the world have been enablers of Big Government and poor economic policies. As John Taylor (a professor of economics at Stanford University, and one of the few economists who appears to be sane) opined in the Wall Street Journal about the various secular stagnation hypotheses:

In the current era, business firms have continued to be reluctant to invest and hire, and the ratio of investment to GDP is still below normal. That is most likely explained by policy uncertainty, increased regulation, including through the Dodd Frank and Affordable Care Act, about which there is plenty of evidence, especially in comparison with the secular stagnation hypothesis.

I suppose the emergence of the secular stagnation hypothesis shouldn’t be surprising. As long as there is a demand to pin the failure of bad government policies on the market system or exogenous factors, there will be a supply of theories. The danger is that this leads to more bad government policy [emphasis added]

Concerning increased regulation it is clear that “Big Business” loves increased regulation. Take, as an example, the increasingly complex tax laws (click the chart to enlarge). Large corporations can hire an army of accountants, lawyers, tax consultants, and lobbyists in order to reduce their tax burden. But, what about the small business owner?

He is at the mercy of some tax collector who can waste his time endlessly with repeated audits. The same goes for other regulatory requirements, which lead to less competition and favour large business groups.

Many of my friends who own independent small money management firms are being forced to close down their businesses, merge, or sell to larger financial institutions because of increased regulation. The more regulation there is, the more likely it becomes an inhibiting factor for innovation.

Furthermore, I am certain that the secular stagnation hypothesis is another attempt by the government to justify more interventions with fiscal and monetary policies into the free market.

The question is, of course, who are the governments? Will Durant opined in The Age of Louis XIV that the “men who can manage men manage the men who can only manage things, and the men who can manage money manage all”. In Lessons of History, he wrote:

…the bankers, watching the trends in agriculture, industry, and trade, inviting and directing the flow of capital, putting our money doubly and trebly to work, controlling loans and interest and enterprise, running great risks to make great gains, rise to the top of the economic pyramid.

From the Medici of Florence and the Fuggers of Augsburg to the Rothschilds of Paris and London and the Morgans of New York, bankers have sat in councils of governments, financing wars and popes, and occasionally sparking a revolution. Perhaps it is one secret of their power that, having studied the fluctuations of prices, they know that history is inflationary, and that money is the last thing a wise man will hoard [emphasis added].

I suppose that one solace for poor people, in view of this rather sobering fact, may be these words of Frank McKinney Hubbard:

“It’s pretty hard to tell what does bring happiness; poverty and wealth have both failed.”

Regards,

Marc Faber
for The Daily Reckoning

Read more of Marc Faber at Daily Reckoning

Doug Ross @ Journal

THE TRIFECTA: Poverty, Mass Murder, and Liberals

Guest post by The DiploMad

Words evolve. They take on new meaning over the years. Social and political movements appropriate certain words, redefine them, and then use them to shape the ideological battlefield. The classic example of that, of course, is “bolshevik” and “menshevik.” The Bolsheviks were, in fact, the Mensheviks and vice-versa. The word bolshevik, derived from the word meaning “majority,” was appropriated by the radicals who were in reality the minority of the old Social Democratic party. The minority labeled the majority the minority and got away with it. Clever. There are many other examples of this in history such as the insistence on calling nazis and fascists right-wing when they are clearly left-wing products.

In our once great, still beloved, but evermore daft United States, precisely those who are not liberal, as in broad minded and generous in their attitudes towards others, have appropriated “liberal” as theirs. The political philosophy of this “liberalism” is one which portrays life as a series of problems that needs addressing by the state–the state guided and run, mind you, by the “well-educated liberal elite” produced by our increasingly decrepit “liberal” universities and informed by “liberal” Hollywood and “liberal” Big Media. Modern U.S. liberals are a variant of European social democrats who believe in a big state and mistrust the individual; the big difference being that US liberals have much more power in the world than their European co-religionists ever could hope. They advocate the “positivist” attitude so aptly summed up in the motto emblazoned on the national flag of Brazil, “Ordem e Progresso,” so long, of course, as they are in charge of imposing the order and defining the progress. They take positivism’s emphasis on rational thought and logic, and its opposition to superstition and fantasy, and turn it on its head into a “science-based” fantasy that somehow just so happens to lead to more power for them and their state. Global climate change is one stirling example of how liberals have taken a legitimate scientific-based concern over pollution, and turned it into a monumental hoax, known as Manmade Climate Change. That hoax somehow, just somehow ends up demanding more money and power for–guess who?–the liberals and their state. As we will discuss, this philosophy comprises followers who proclaim a great love for humanity while in practice exhibiting a great hatred for people.

Sorry for the long-winded intro, but it brings us to today’s topic, for which I provide the following bumper sticker, “Liberals love humanity and hate people.” Oh, and by the way, liberals will get you killed. Yes, killed. Modern liberalism kills people, and does so by the millions, all in the name of humanity, of course. It should have a warning label that asks you not to practice liberalism at home, or something along the lines of “I am a trained professional, do not attempt liberalism on your own.”

Liberals hate all sorts of people but their special, most lethal hatred is reserved for the poor and the “uneducated.” They kill the poor by the bushel, by the ton, by the hectare . . . they kill them at home and abroad. No poor person is safe from the lethal loving embrace of the liberals.

So many examples, it’s hard to know where to begin. I don’t pretend to provide an exhaustive account of liberal mayhem, just a glimpse at the tip of the iceberg. So, where do we start? How about with DDT? This extremely useful pesticide was virtually banned around the globe for decades because of the bogus writings of Rachel Carson, the lesbian biological mother of today’s whacky environmental movement. The ban on DDT, ostensibly to save birds, puppies, and other wonderful warm things, resulted in the deaths of millions of poor persons around the globe from malaria and dengue, which came soaring back on the wings of now safe mosquitos. This tradition of sacrificing the poor on the altar of Gaia continues to this day. The insistence on the global warming hoax, long after the “science” has been shown to be false, perpetuates policies, e.g., ethanol in gasoline, opposition to domestic drilling and nuclear energy, that increases the cost of living, promotes food shortages, stifles employment, and, yes, leads to death. The opposition to cheap energy and food, the zoning restrictions in upperclass neighborhoods, all under the guise of protecting the environment, take direct aim at the lives and welfare of the poor. Liberals kill.

Liberal welfare policies create havoc throughout our society. What slavery, Jim Crow, the KKK, and racial discrimination could not do, liberal polices have done, to wit, destroy the black family and turn millions of blacks into permanent wards of the state and of the liberal political machines that control most of our cities. Liberal immigration policies, beginning with the disastrous 1965 Kennedy-Johnson immigration law, insure a constant stream of poor third world immigrants, altering irrevocably the nature of our society and ensuring that the struggling black (and white) American poor cannot compete with the ultra-poor pouring in from Mexico, El Salvador, Bangladesh, and so on. Liberal minimum wage laws ensure the disappearance of the starter jobs, once a platform for the poor to spring out of poverty. All of these people, the old poor and the newly arriving poor, need, of course, social programs and more and more government help. The liberal political machine dispenses jobs and money, and the productive sectors face rising taxes, a labyrinth of regulations, and the constant presence of “helpful” government regulators and enforcers. Let the poverty and misery spread!

Liberal gun control policies also target the poor. The poor in our cities must live with the drug dealers, gang bangers, and the other hoods in the hood. The comfortable liberals live in secure high-rises, and tony suburbs well protected by overpaid and over equipped police and fire departments and expensive security firms. The poor must put up with the inability to defend themselves; they must allow themselves to be murdered in the name of ridding America of gun violence.

Likewise liberal education policies deny the poor the right to choose the schools their children will attend. Instead an alliance of politicians and teacher unions keeps the poor trapped in failing and unsafe schools, while the wealthy liberals, well, you know what they do, and it isn’t to send their own kids to those schools.

The examples are endless. From the liberal refusal to allow us to become energy independent, the liberal refusal to see what Islam does everywhere it takes root, and the liberals’ seemingly endless assault on the family, everywhere we look we see the death and destruction that modern liberalism brings to our shores and promotes overseas.

To speak out on this is to risk being labeled a racist and hate-monger. To fail to speak out, however, means being complicit to some of the greatest crimes on the planet: the crimes of the liberals.

The DiploMad is a retired Foreign Service Officer who blogs at The DiploMad 2.0.

Doug Ross @ Journal