![]() In effect, it ignores almost the entire welfare state when it calculates poverty. The Census Bureau counts a family as “poor” if its income falls below specific thresholds, but in counting “income,” the Census omits nearly all of government means-tested spending on the poor. The conundrum of massive anti-poverty spending and unchanging poverty rates has a simple explanation. How can this paradox be explained? How can government spend $9,000 per recipient and have no apparent impact on poverty? The answer is that it can’t. ![]() As Chart 2 shows, the more the government spent, the less progress against poverty was made. But as welfare spending soared, the decline in poverty came to a grinding halt. 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. (Again, Social Security and Medicare are not included in the totals.) ![]() Federal and state governments spent $943 billion in 2013 on these programs at an average cost of $9,000 per recipient. Overall, 100 million individuals-nearly one in three Americans-received benefits from at least one of these programs. In fiscal year 2013, the federal government ran over 80 means-tested welfare programs that provided cash, food, housing, medical care, and targeted social services to poor and low-income Americans. As Chart 2 shows, means-tested welfare spending has soared since the start of the War on Poverty. The unchanging poverty rate for the past 45 years is perplexing because anti-poverty or welfare spending during that period has simply exploded. By 1965 (the first year during which any War on Poverty programs began to operate), the rate had been cut nearly in half to 17.3 percent. In 1950, the poverty rate was 32.2 percent. The static nature of poverty is especially surprising because (as Chart 1 also shows) poverty fell dramatically during the period before the War on Poverty began. Overall, the trajectory of official poverty for the past 45 years has been flat or slightly upward. Since that time, the poverty rate has undulated slowly, falling by two to three percentage points during good economic times and rising by a similar amount when the economy slows. As Chart 1 shows, according to the Census, there has been no net progress in reducing poverty since the mid to late 1960s. This week, the Census Bureau will most likely report that the poverty rate last year was about 14 percent, essentially the same rate as in 1967, three years after the War on Poverty was announced. Despite this mountain of spending, progress against poverty, at least as measured by the government, has been minimal. Adjusted for inflation, this spending (which does not include Social Security or Medicare) is three times the cost of all military wars in U.S. taxpayers have spent over $22 trillion on anti-poverty programs (in constant 2012 dollars). In his January 1964 State of the Union address, Johnson proclaimed, “This administration today, here and now, declares unconditional war on poverty in America.” The report will be notable because this year marks the 50th anniversary of the launch of President Lyndon Johnson’s War on Poverty. ![]() Census Bureau is scheduled to release its annual poverty report.
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