Government Can’t Rescue the Poor

Federal programs have reduced material poverty at the cost of promoting idleness and dependency.

While the Census Bureau reports that in 2016 some 12.7% of Americans lived in poverty, it is impossible to reconcile this poverty rate, which has remained virtually unchanged over the last 50 years, with the fact that total inflation-adjusted government-transfer payments to low-income families have risen steadily. Transfers targeted to low-income families increased in real dollars from an average of $3,070 per person in 1965 to $34,093 in 2016.

.. Compared with what they pay in Social Security taxes, the lowest quintile of earners can receive as much as 10 times the lifetime benefits received by the highest quintile of earners and three times as much as the middle quintile.

.. The measured poverty rate has remained virtually unchanged only because the Census Bureau doesn’t count most of the transfer payments created since the declaration of the War on Poverty. The bureau measures poverty using what it calls “money income,” which includes earned income and some transfer payments such as Social Security and unemployment insurance.

But it excludes food stamps, Medicaid, the portion of Medicare going to low-income families, Children’s Health Insurance, the refundable portion of the earned-income tax credit, at least 87 other means-tested federal payments to individuals, and most means-tested state payments. If government counted these missing $1.5 trillion in annual transfer payments, the poverty rate would be less than 3%.

..The number also reconciles the current disparity between the low income levels used by the Census Bureau to define poverty and studies such as the Department of Energy Residential Consumption Survey, which find consistently rising spending among poor families on cars, home electronics, cable, household appliances, smartphones and living space. The 3% poverty rate would fall even further if it accounted for transfers within families, some $500 billion of private charitable giving, and the multibillion-dollar informal economy, where income is unreported.

Transfer payments essentially have eliminated poverty in America. Transfers now constitute 84.2% of the disposable income of the poorest quintile of American households and 57.8% of the disposable income of lower-middle-income households. These payments also make up 27.5% of America’s total disposable income.

.. The stated goal of the War on Poverty is not just to raise living standards, but also to make America’s poor more self-sufficient and to bring them into the mainstream of the economy. In that effort the war has been an abject failure, increasing dependency and largely severing the bottom fifth of earners from the rewards and responsibilities of work.

.. The expanding availability of antipoverty transfers has devastated the work effort of poor and lower-middle income families. By 1975 the lowest-earning fifth of families had 24.8% more families with a prime-work age head and no one working than did their middle-income peers.

.. By 2015 this differential had risen to 37.1%.

The Meaning of Ryan’s Departure

Paul Ryan’s fate over the past several years is as good an indication as any of how far our politics have fallen.

.. Though the anti-Ryan vitriol faded after Steve Bannon’s defenestration, he continued to be viewed with suspicion by the talk-radio crowd and other arms of Trump Inc.

This was his reward for attempting to drag his party, and the country, toward a grown-up reckoning with our debt. Nearly singlehandedly, Paul Ryan had managed to put tackling entitlements on the national agenda.

.. making incremental reforms now—with no changes for current beneficiaries or those in their 50s—can prevent drastic shortfalls and extreme benefit cuts that will be necessary in just 16 years when Social Security is depleted. The outlook is even worse for Medicare and Medicaid.

But Donald Trump arrived on scene with the supposedly blinding insight that changes to entitlements are unpopular. Well, no kidding. He promised never to touch Medicare and Social Security—not even to ensure their future solvency. And so, the responsible, future-oriented Paul Ryan found himself governing with a backward-looking, whistling past the graveyard president.

.. Ryan and the party he helped to lead also lost its compass on Ryan’s own signature issue—fiscal responsibility.

.. it would have been nice if the party that fulminated about the dangers of deficits in the Obama years had found anything at all to cut—particularly when the economy is growing and unemployment is low.

.. Under Republican guidance, the federal deficit will be roughly double what it was in the final year of the Obama administration.

.. What has Trump taught? That trade wars are the way to improve the lives of the working class? They are popular, at least with Republicans.

.. 65 percent of Republicans favored Trump’s steel and aluminum tariffs.

.. We are not behaving as responsible adults. Our greatest political challenge is out of control debt. Our greatest social challenges are declining families, increasing dependency, and eroding social cohesion. The debt could have been addressed by government.

Trump to propose big cuts to safety-net in new budget, slashing Medicaid and opening door to other limits

Trump’s budget plan would follow through on a bill passed by House Republicans to cut more than $800 billion over 10 years.

.. The Congressional Budget Office has estimated that this could cut off Medicaid benefits for about 10 million people over the next decade.

.. The White House also will call for giving states more flexibility to impose work requirements for people in different kinds of anti-poverty programs

.. Numerous social-welfare programs grew after the financial crisis, leading to complaints from many Republicans that more should be done to shift people out of these programs and back into the workforce. Shortly after he was sworn in, Trump said, “We want to get our people off welfare and back to work. . . . It’s out of control.”

.. In that budget, he sought a big increase in military and border spending combined with major cuts to housing, environmental protection, foreign aid, research and development.

.. The White House also is expected to propose changes to the Supplemental Nutrition Assistance Program, though precise details couldn’t be learned. SNAP is the modern version of food stamps, and it swelled following the financial crisis

.. As the economy has improved, enrollment in the program hasn’t changed as much as many had forecast.

.. An average of 44 million people received SNAP benefits in 2016, down from a peak of 47 million in 2013. Just 28 million people received the benefits in 2008.

.. SNAP already has a work requirement, which typically cuts benefits for most able-bodied adults who don’t have children. But states were given more flexibility during the recent economic downturn to extend the benefits for a longer period

.. the U.S. government spends between $680 billion and $800 billion a year on anti-poverty programs, and considering wholesale changes to many of these initiatives is worthwhile, given questions about the effectiveness of how the money is spent.

.. it could pave the way for states to pursue even stricter restrictions, such as drug tests, that courts have often rejected.

.. In March, the White House signaled that it wanted to eliminate money for a range of other programs that are funded each year by Congress. This included federal funding for Habitat for Humanity, subsidized school lunches and the U.S. Interagency Council on Homelessness

.. a change in the funding for Social Security’s Supplemental Security Income program, which provide cash benefits for the poor and disabled.

.. budget director, former South Carolina congressman Mick Mulvaney

.. A key element of the budget plan will be the assumption that huge tax cuts will result in an unprecedented level of economic growth.

.. these tax cuts would end up creating trillions of dollars in new revenue, something budget experts from both parties have disputed.

.. The tax cuts would particularly benefit the wealthiest Americans, as Trump has proposing cutting the estate tax, capital gains and business tax rates.

.. Robin-Hood-in-reverse

.. there has been a deficit in the United States every year since the end of the Clinton administration

.. “People think government is cheaper than it is because we’ve allowed ourselves to borrow money for a long period of time and not worry about paying it back.”

.. Its premise is that the creation of more wealth will help all Americans succeed, and the Trump administration believes that some anti-poverty programs have created a culture of dependency that prevents people from re-entering the workforce.

.. “I don’t think the Republicans on the Hill are going to feel a strong compulsion to follow the president,” Haskins said. “They are not afraid of him.”

.. the White House is expected to call for $200 billion for infrastructure projects and an additional $25 billion over 10 years for a new program designed by Ivanka Trump that would create six weeks of parental leave benefits.