Posts tagged with: Welfare and poverty

Former U.S. President Lyndon B. Johnson declares a “war on poverty” – Jan. 8, 1964

Former U.S. President Lyndon B. Johnson declares a “war on poverty” – Jan. 8, 1964

Last week the U.S. Census Bureau released its report, Income and Poverty in the United States: 2013. The agency announced that “in 2013, the poverty rate declined from the previous year for the first time since 2006, while there was no statistically significant change in either the number of people living in poverty or real median household income.”

Sure to spark reactions from both sides of the political aisle, the report, along with this year’s 50th anniversary of the U.S. government’s launch of a “war on poverty,” present an opportunity to reflect on the effectiveness of the United States’ domestic poverty alleviation strategy to date.

But amid the necessary analysis and debate about government’s role in helping the least among us, it is essential to keep at the forefront of our thinking the primary figure poverty alleviation efforts are intended to help: the human person. Through taking the time to recognize each individual’s unique gifts and creative capacity, we can more fully appreciate his/her contribution to society and form relationships that enable this flourishing to take root.

Ismael Hernandez, founder and executive director of the Freedom and Virtue Institute, echoes the importance of recognizing people’s true nature. He says, “The person needs to be called by name, the ‘poor’ need for us to dump that label and look at them as unique and unrepeatable human beings, not simply another token belonging to an expansive and yet shallow sea of sameness.”

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basic-income-guaranteed-and-minimum-wage_thumb1For decades conservatives and libertarians have pondered ways to replace the defective American welfare state. One of the boldest and most controversial ideas is to simply give everyone a basic guaranteed income. Instead a variety of ad hoc welfare programs, people would simply be given cash.

Matt Zwolinski outlines an example proposal that includes an unconditional cash grant — no strings attached. Just give people cash and leave them “free to spend it, or save it, in whatever way they choose.” Zwolinski outlines a number of benefits we could gain by replacing welfare programs with a guaranteed income.
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“You are a slow learner, Winston.”
“How can I help it? How can I help but see what is in front of my eyes? Two and two are four.”
“Sometimes, Winston. Sometimes they are five. Sometimes they are three. Sometimes they are all of them at once. You must try harder. It is not easy to become sane.” – George Orwell, 1984

In a calculation that surely qualifies as “new math,” the government has created an equation in which $29,000 is equal to $69,000. Within the current welfare structure a single mother is better off making $29,000 per year in income and subsequent welfare benefits, than she is making $69,000 per year in income alone. This perverse incentive is what perpetuates the cycle of poverty and condemns impoverished moms to dependence on a paternalistic state. Social Security, Medicare, Medicaid, and SNAP (food stamps) are all larger than ever before with no subsequent reversal in the level or scope of poverty.

The “Welfare Cliff,” an economic model developed by Gary Alexander, the Secretary of Public Welfare in Pennsylvania, shows the amount of net income a person would need to receive in order to match their current net income plus welfare benefits. This is called a cliff, as there are drastic drop-offs in welfare benefits as one increases their income. In this graph, “the single mom is better off earning gross income of $29,000 with $57,327 in net income and benefits than to earn gross income of $69,000 with net income & benefits of $57,045.” In fact, if a single mother were to raise her income from $29,000 to just $30,000, she would lose nearly $10,000 in welfare benefits per year.

The incentives provided under this system replace the desire for individual development with the maintenance of the status quo.  A single mother is highly unlikely to spend the time, effort, or capital in order to gain skills that result in receiving a lower disposable income. (more…)

War on Poverty special page article banner“Why, if we have made such great strides reducing poverty,” asks Scott Winship, “is there such widespread belief that, to quote Ronald Reagan, ‘We fought a war on poverty, and poverty won’?”

We won the War on Poverty in the sense that the prevalence of material hardship has declined. According to Meyer and Sullivan, just 8 percent of Americans live at the low standard of living endured by a third of Americans in 1963. But it was a limited and costly victory. Elderly entitlements will bankrupt the country moving forward. Great Society-style no-strings-attached welfare may have had behavioral and cultural impacts that have hurt child opportunity at the bottom. Upward mobility has not expanded. The conservative turn toward welfare reform after 1980 and the limited embrace of a work-promoting safety net by New Democrats produced an important shift in anti-poverty policy, but historically conservatives have not been constructively engaged in formulating a positive opportunity agenda for children at the bottom. That this is changing is the most hopeful sign in domestic policy in some time.

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“Today’s welfare state is largely the construction of decades of liberal political activism,” writes James C. Capretta. “If it is failing, and there is strong evidence that it is in many ways, then that is a stinging indictment of the liberal governing philosophy more than anything else.” He argues for more conservative activism on the poverty problem, particularly in education.

An effective conservative critique of existing policies starts with the acknowledgement that a strong social safety net is a must in a modern, market-based economy, and that the safety net built here in the United States, though flawed, has contributed substantially to improving the conditions for the poor. The official measure of the poverty rate is completely misleading in this regard because it does not include transfer programs or the taxes people pay in the measure of income. So, in a very real sense, no matter how much the government spends, the official poverty rate remains unchanged.

But when tax and transfer programs are factored into the assessment, and when the consumption patterns of the poor are examined and not just their cash incomes, the picture changes quite dramatically. The panoply of governmental support programs—Medicaid, Food Stamps, the earned income tax credit, housing vouchers, school lunch programs, and many more—substantially raise the living standards of those who otherwise have very low incomes. (more…)

Blog author: jcarter
Wednesday, January 8, 2014
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povertyFifty years ago today, President Lyndon B. Johnson gave his 1964 State of the Union Speech, in which he launched the ‘war on poverty.’ Within four years of that speech, the Johnson administration enacted a broad ran of programs, including the the Job Corps, Upward Bound, Head Start, the Neighborhood Youth Corps, the Social Security amendments creating Medicare/Medicaid, the creation of the Department of Housing and Urban Development, and over a dozen others.

Here are a few numbers related to governmental efforts to eradicate poverty in America:

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snapMichael Tanner of the Cato Institute released a recent policy analysis that raises important questions about whether or not we should completely re-conceptualize how to provide food for the truly disadvantaged. In “SNAP Failure: The Food Stamp Program Needs Reform” Tanner argues The Supplemental Nutrition Assistance Program (SNAP) is currently crippled by high administrative costs, significant fraud and abuse, and weakening of standards. Tanner notes that SNAP breeds greater dependence on government, and, even worse, seems to have negligible long-term effectiveness in eliminating food deficiencies for the truly disadvantaged.

The statistics are overwhelming. Using primarily government data, Tanner observes that the poverty is politicized in Congress through the framing of food stamps as fulfilling two separate goals—“improved levels of nutrition” and “strengthening the agricultural economy.” This created the “bipartisan” support that has exploded funding and served the interests of both political parties. Everybody wins, except for the poor. According to Tanner, “Since 2000, spending on SNAP increased from just $17 billion per year to more than $78 billion in 2012, a greater than fourfold increase.” The increase in spending cannot even be blamed on the recession. According to Congressional Budget Office (CBO) estimates, 35 percent of the program’s growth from 2007 to 2011 was not a result of economic factors in the country.

The factors that have created the expansion include:
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poor-taxDuring the government shutdown billionaire philanthropists Laura and John Arnold gave $10 million to the National Head Start Association to keep the program for low-income children running. Mr. Arnold made it clear, however, that he did not believe this was a permanent solution, as “private dollars cannot in the long term replace government commitments.”

But some people thought Arnold’s generosity itself undermined the government’s power. As The Nation’s Amy Schiller said, “The entire shutdown is undergirded by a fantasy of a world in which the government’s power is vastly reduced and private citizens step into the breach with better, more innovative ideas for solving social challenges.”

It’s not that they are against all philanthropy — only the public donations that undermine the government’s monopoly on power. As John Daniel Davidson explains:
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01_16_2011_martin-luther-king-e1377613318307In a symposium at National Review Online about where Dr. King’s dream stands, 50 years after his historic speech, Anthony Bradley writes:

Fifty years ago, Dr. King provided America with a provocative vision, in which our republic would become a place of greater political and economic liberty for African Americans. However, in 2013, when we examine the black underclass in cities like Detroit, Chicago, and Washington, D.C., we can see how the politics of progressivism singlehandedly turned King’s dream into a nightmare.

For example, low-income black families were obliterated by welfare programs that emerged out of the Johnson administration’s failed “War on Poverty.” Welfare destroyed the incentives for men to marry and care for their children, remain employed, and save money for the long term. Today, as a result of progressivist social visions, only about 26 percent of black women marry, compared with 51 percent for white women. In 1950, 64 percent of African American women married, compared with 67 percent for white women. Without flourishing families, low-income blacks were doomed to government dependency and cyclical poverty.

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Blog author: jcarter
Wednesday, August 21, 2013
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welfareIn eleven states in the union, welfare pays more than the average pretax first-year wage for a teacher. In thirty-nines states, it pays more than the starting wage for a secretary. And, in the three most generous states a person on welfare can take home more money than an entry-level computer programmer.

Those are just some of the eye-opening and distressing findings in a new study by Michael Tanner and Charles Hughes of the Cato Institute on the “work versus welfare tradeoff.”

“Welfare benefits continue to outpace the income that most recipients can expect to earn from an entry-level job, and the balance between welfare and work may actually have grown worse in recent years,” say Tanner and Hughes. “The current welfare system provides such a high level of benefits that it acts as a disincentive for work. Welfare currently pays more than a minimum-wage job in 35 states, even after accounting for the Earned Income Tax Credit, and in 13 states it pays more than $15 per hour.”

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