The new Paul Ryan report on poverty and safety net programs

I read much of the document last night, here are a few comments:

1. The so-called “war on poverty” has gone better than most of this document would appear to suggest, although this ends up being acknowledged in the appendix on poverty measures.

2. High implicit marginal tax rates are a problem for poor families, but they receive too much attention in this report.  Those same high implicit rates never stopped higher earners, who at some point were (often) much poorer themselves.  Furthermore, without some assumption of dysfunctional behavior, high implicit marginal tax rates will hurt society but should not hurt lower earners per se.

3. There is an implicit ranking of programs as good or bad.  If a program is ranked as bad, there is a cataloging of its cost, but this is not compared to potential benefits, even granting that net cost is positive.

4. Two things that work to cure poverty are immigration and cash transfers.  These points should be stressed more.  More generally, not much of an analytical framework is imposed on the material.  And the discussion of barriers to advancement is extremely thin.  Collapsing families surely constitute an important issue, but reading the discussion of that topic yields precious little knowledge, not even “false knowledge.”

5. Reading through the long list — the too-long list I would say– of programs, one really does get the feeling that a lot of them ought to be replaced by cash grants or pro-employment cash incentives, such as EITC.  But what else should we be doing differently?  If one insists that the point of the document is simply to list extant programs, so be it.  But what is the point of that exercise?  Why not introduce some material on the causes of dysfunctional health care, educational, and rental sectors?

Overall this needed to be a lot better than it was.  The document has almost no vision, only a marginal command of the scholarly literature, and it is a good example of how the conservative movement is still allowing the poverty issue to defeat it and tie it up in knots.

There are further criticisms here, not all of them convincing.  Paul Krugman had a few posts on the document too.

I am tonight doing an event on poverty with Neera Tanden, Steve Pearlstein, and Reihan Salam, and a few others on the Arlington campus of GMU.


"4. Two things that work to cure poverty are immigration and cash transfers." But is poverty in El Salvador the issue?

No, but you can drive a truck in North Dakota instead of living on food stamps in a declining mining town in Virginia.

Yes. There are also ways out of the ghetto. People sabotage their prospects by dropping out of school and making babies they can't afford. Maybe they just don't know their options. Instead of throwing money at people, the government could invest some of that money in PSAs that run on the channels that those people watch all day while they're not working. "Hey, the reality of it is, you're not going to be the next Rap diva/NBA star/Drug Cartel boss, stay in school." Or, "It may seem fun to make babies, but here's what one sounds like at 3 in the morning. Wear a condom."

Maybe I am wrong, but it sure seems like this type of government nagging has some effect. It seems to have worked in the area of seat belts, drunk driving, and smoking.

Seems like a cheap fairly non intrusive method of changing behavior.

Every kid gets several years of this nagging in schools. Around here, you have to carry around a fake baby with a chip in it so your teacher can tell if you "fed" it at night. Still several unmarried pregnant teens in the small high school each year.

I guess if you put it on TV it might be different, but I think it's the same thing that's been discussed here a few times -- if you assume people participate in X behavior for stupid reasons, and try to talk them out of it, you will not change the behavior if it is actually based on other, situationally rational reasons. Even if you talk a lot.

In those other instances the culture has to change too. Not wearing your seat belt is just plain stupid, and your friends will tell you so. Drunk driving and smoking have gone from ignored/tolerated or even glamorized to considered really dumb and disgusting respectively among most folks.

The cultural pressure to not have kids when young is pretty strong among the middle and upper classes, but still not so much among the lower. Maybe the PSAs could start the ball rolling on the culture changing there too.


I agree, I think among the lower classes it is still seen as a way to higher welfare checks


I agree. The goal has to be to change the culture. But I think calling stupid stupid gets the ball rolling on the culture. No one wants to be seen a dumb, even if they are. You need to foster some social stigma in the way that being forced to carry a fake baby for a week does not. Peer pressure is a hell of a thing.

@ eccdogg: Yep, that is what I was getting at. Hopefully that culture will change. Hasn't there actually been a pretty significant drop in teen pregnancy? Maybe it's already happening.

Hasn’t there actually been a pretty significant drop in teen pregnancy? Maybe it’s already happening.

I think that it has.
I think that what happens is the culture changes and then you get a super majority supporting PSA's and then you get the PSA's and the politicians taking credit.

Please tell us more of your experiences in leaving the ghetto.
You certainly have expressed what appears to be a deep knowledge of what impoverished people do to spend time, sitting around all day in public housing watching big screen tvs they stole druing the last riot and having a multitude of babies they will never pay for.
Is that scenario drawn from your personal experiences?
What led you to leave that lap of luxury and head out into the world of used car sales or check cashing or bikini espresso maker, whichever career lets you seize the moral high ground sufficiently that you can make strong experience based judgments on your fellows and their wicked non-Calvinist ways?
And if you are black, how did you manage to not get shot or arrested and beaten by white cops?
Thanks in advance for your deeply considered and thoughtful elucidation of your harrowing experiences rising up from the warm pillow of welfare dependency.

Nicely put.

@Binky Bear

That goes both ways. Please tell us more of your experiences trapped the ghetto despite your best efforts. Lest we think that you are also talking some stuff that you don't know.

BTW the poorest county in the USA is Kiryas Joel.

Did you know that the poorest town in America is a mere 50 miles from New York? According to Census data, Kiryas Joel, the Orange County town that is the home base for the Ultra-Orthodox Satmar Hasidic Jews, has a higher proportion of its population living in poverty than any other city, town or village with 10,000 people in the country. About 70 percent of its 21,000 residents live below federal poverty levels with nearly half of the village's households reporting annual incomes less than $15,000. But the story isn't that simple.

It is not the lack of money that brings the greatest misery.

@Binky Bear. Spot on. My brother and I (caucasian) have had a circle of friends over the years and during our military service which, fortunately for us, included minorities. Learning about their life experiences was sobering, to say the least. My brother is currently teaching at a historical black college. Those students are motivated and determined. On one side of the campus, there are frequent drive-by shootings, but yet these young people make it to school and get a degree despite the threat to their personal safety. You are entirely justified to calling out the originator re his/her experience of living in "the hood."

@Floccina. That's about the most unproductive response anyone could have thought of. Pointless.

There was a study that came out recently suggesting that an MTV show about teen moms has had an additional effect in the continuing drop in teenage pregnancy in the USA.

Your prescription seems to be, "if only everyone was as moral as I am". Indeed, it is a pity there aren't more perfect people, isn't it.

Only until driverless cars are perfected and widespread. So only about ten more years at most I'd say.

Also ND blows ateoviding kpbs you can support a family on in general.

Have you tried to move to North Dakota to live and drive a truck?

Do you know that is is possible for the unemployed Virginia miner surviving on food stamps?

Do you imagine that the market for people without money has developed to transport them for free and house them until they can get the required North Dakota CDL that driving a truck for hire requires?

Do you even know what is required to drive a truck for hire where you live?

The cost of CDL training is probably around $5000 for most people. The funding for grants administered through the States has been repeatedly cut by Republican demands for spending cuts.

And you are assuming a miner in Virginia would pass the physical required to get a job driving trucks or a CDL in some States.

“4. Two things that work to cure poverty are immigration and cash transfers.”

That seems wrong, at least from one frame of reference. I see how emigration cures poverty. But I fail to see how immigration cures it.

And it's not as simple as saying they are two sided of the same coin. Mexicans moving to the US (and sending back cash transfers) do a lot to cure poverty in Mexico, but they may well enhance poverty in the US.

How do immigration and cash transfers cure poverty?

Cash transfers mask poverty. Jobs and increase productivity and wealth stem poverty.

As for immigration, in Canada - which is lauded for its "smart" skill based system, the government identifies three segments of society as prone to poverty: aboriginals, single mothers and immigrants, and not necessarily in that order.

Unless I'm completely misreading this and you meant the immigrants from port countries had their poverty "cured."

High skilled immigrants in Canada are barred from practicing the professions that they have trained for. Canada has the worst results for immigrants in the first world because of this. Since they don't let immigrants into many professions if they haven't trained in Canada they might just be better off admitting low skilled immigrants.

What you mean to say is that foreign doctors and engineers have trouble passing the Canadian exams.

The problem is that a Canadian bureaucrat sees an engineer from Guanzhou or MD from Karachi and says Great! But the company sees someone who can't pass the tests to qualify.

There have been peer-reviewed studies on this. Whereas close to 100% of Canadian med students pass their tests to become doctors, only half of foreign graduates do.

My wife was a practicing doctor in a perfectly respectable country in eastern Europe. When she came to Canada she had to take grueling entrance exams and then redo her entire five-year residency. And this in a country with a doctor shortage (though not particularly short in her specialty). She has many colleagues from her home country who were unable to get through that same tough process, and some of them are in the specialties needed in Canada, such as GP's. Most of them are now working in medical-related fields, wasting their expertise and earning considerably less money.

Cash transfers mask poverty.

Worse than that, they subsidize poverty, which means they create more of it (or, more specifically, more "maksed" poverty, as you put it).

Yeah. 50 years in, the War on Poverty is still going strong as ever.

In a market economy, with lax import restrictions (iPhones assembled for $135/mo at one point) and automation, how exactly did you expect this war to end?

It certainly is not going to end with the invisible hand fairy giving everyone a higher than median income. That much is apparent by inspection. And lacking that, it looks like we are heading for robot-socialism, with decreasing human employment (self-driving everything) and a more permanent system of transfers. I think Tyler agrees with this, as do Brynjolfsson abd McAfee in The Second Machine Age.

This is probably the outcome.

I'm talking about the past, not the future. Poverty rates in this country declined steadily until the War on Poverty. Since then, we've seen The Great Stagnation in Poverty.

The govt poverty figures don't count govt transfers in them, as Paul Ryan and Tyler note. There are arguments to be made about whether the purpose of the welfare state is eventually cause its own demise, but we as a society have continued to update what we consider to be a basic subsistence in a rich society; if the measure is lifting people out of the poverty of 1965, then there's no question that the war on poverty has been a success. Not always unqualified success, and various reforms have differing merits, but we must keep sight of the overall aims and challenges of the programs.

Meanwhile, the classic counter-argument, that the dynamism and flexibility of the US economy and less stratified social structure leads to much greater social mobility has been shown to be less and less true compared to the social democratic states in Europe as inequality and middle class stagnation are decades old at this point.

[Poverty rates in this country declined steadily until the War on Poverty. ]


Steve J,

Your own graph supports my assertion. Thanks!

One of the reasons the observed measure of poverty reduction prior to 1969 is due to the fact that poverty thresholds weren't adjusted to keep pace with inflation. Poverty thresholds began to be adjusted for inflation with CPI-w in 1967, back-dated to 1963. Thus the proportion of people under the poverty threshold steadily declined as incomes increased with inflation. The other reason is that during the period the economy was growing faster than it ever had and the boomer's hadn't come of working age yet so labor was in high demand.... forcing wages up.

In real terms though poverty rates since 1959 has remained within the same range. .. much of the reason for this is the criteria used to measure poverty rates was 'adjusted' by political interests to make it appear that poverty rates weren't too high. .. which would have been a political embarrassment for such a rich nation.

Free trade movements, and the rise of container shipping, also come after 1965. Automation was happening, but not to the degree we have today. I mean, when did "robots in the workplace" become a labor issue? 1970s?

john personna, keep going.

Poverty rates in this country declined steadily until the War on Poverty. Since then, we’ve seen The Great Stagnation in Poverty.

Only if you don't count the effect of non-cash benefits, including tax credits.

Should we get rid of SSI for poor elderly people? After all, all it does is mask the poverty that they would be in without it.

cash transfers don't cure poverty. there are simply the most pro-market means available of alleviating some of the suffering caused by poverty. its a treatment of the symptoms, not a cure for the underlying condition.

immigration DOES cure poverty. moving to a location with better economic prospects is one of the tried and true ways of ensuring a better future for yourself and your family. this should be obvious to the vast majority of Americans. my grandparents immigrated from easter Europe where they were dirt poor. three generations later I'm in the middle class and still rising.

I think he means emigration. You send the poor people out of the country and the number of poor people declines.

It works for the places guys like Tyler hang their hat:

All the hipster places are doing it these days. It's like Stalin has taken over urban planning in America.

If he's a hipster what does that make the trolls that hang out in his comment section?

Yes, "Emigration" would make a lot more sense. You know, like letting kids behind on their student loans move to another country that has pro-employment policies and jobs. But gotta keep the kids down on the farm to keep the gravy train flowing for all those high-paid professorships. Funny how all these academic libertarians don't give a fig about the financial iron curtain being erected in the US (nice quick overview at: ) but are manning the ramparts to keep restaurant help cheap. I imagine it would be a different story if there were a move to increase entry of highly educated academics in order to require universities to upgrade their teaching staff with foreigners.

Here's a soundbite for TC: poverty is relative. In the Philippines pedicab drivers (bicycle taxis with a sidecar, it's hard work) make 100 pesos a day, or about $2.25 a day. So quit complaining lard azz Americans! LOL

Just think of the demand we could generate of we banned the engine!

How much do you pay your girlfriend a day? Quit lecturing, perverted American! LOLz

The american system of zoning and building regulations creates a certain gulf between "low income" and "lives under a bridge." Yes, there are people in Southern California who might collect $2.25 in aluminum can deposits. They live under bridges.

Indeed, there are a multiude of laws in the USA that make being poor more difficult. Cheaper cost of living in poorer countries is not just due to cheaper labor but also things like zoning and building regulations.

Wonder what licensing I'd need to run a pedicab business in a U.S. tourist area, and how the law would look on my use of the roadways.

"Furthermore, without some assumption of dysfunctional behavior, high implicit marginal tax rates will hurt society but should not hurt lower earners per se."

Thinking about first world poverty without some assumption of dysfunctional behavior is like thinking about cosmology without some assumption of the existence of gravity.


"Thinking about first world poverty without some assumption of dysfunctional behavior is like thinking about cosmology without some assumption of the existence of gravity"


However, it's not PC to talk about the failings of the poor and Ryan is already hated by the PC media. Ryan's ideas don't add up. He pressed for tax cuts as Romney's VP candidate with no plausible way to pay for them or rationale as to why they were even a good idea.

Ryan may be following his religious beliefs rather than political correctness. His anti-abortion stance is not very PC, and is unlikely to win him more with the hard right than it will lose him on the public stage. He may sincerely not believe the poor to be particularly more inclined to failure or dysfunction than the rest of us. Look at the guys he works with -- plenty of extreme dysfunction there, but successful in life.

Without dysfunctional behavior (by labor) there will no longer be low-paying jobs! Hooray!

This is not to say that behavior should not be improved for its own sake, but a ton of people just aren't all that bright. Our host thinks roughly 90% of people are headed towards the global mean income no matter what they do, right?

90% of people will never earn anywhere near global mean income.

Is that because they are stupid or because the global trading/economic system "just works that way"?

If we really lived in a meritocracy, every homeless man under every bridge would have a chance to prove themselves tomorrow if they wanted. Where can they get their foot in the door, when the people they know are also sleeping under bridges?

How to identify someone who never lived in poverty or who forgot to be grateful for the hand up they eventually got: they lecture the poor about how it's their fault.

Come on, every needs a chance to get ahead, no matter how hard you work. Poor people are less likely to have the connection they need to get their skills into place somewhere where they can make a decent wage.

Beat your head against enough brick walls, and you wonder why eventually they consign themselves to $2.25 in returns for cans, hot soup at the Salvation Army and yet another night under the bridge, where at least they can take solace in not budging a muscle to contribute to a system which they do not see as having helped them.

I have difficulties understanding how people who hit the jackpot in the market system can decry the system as being against them when we go so far as to tax back a quarter or a third of what the system "allowed" them to gain. How about we go back to the old ways where you're on your own to make your fortune, which you then need to spend to keep away the dozen ruffians who would eventually steal your daughters and your gold. Believe me ... the rich get so much more benefits from the system than they are readily willing to acknowledge. It keeps you, your money and your family safe. Be thankful it only takes a third. If the poor were allowed half the access to strings of power as the rich obtain, perhaps you would hear more often how hard it can be to get out.

Even though this was posted at 5:50am, I'm still impressed that an hour 15 minutes later this comment section is still civil. Kudos.

High implicit marginal tax rates are a problem for poor families, but they receive too much attention in this report. Those same high implicit rates never stopped higher earners, who at some point were (often) much poorer themselves.

Isn't the issue there what the next step in the career is?

If I'm working at McDonald's while in college, I don't care if my marginal tax rate is 0% or 150%. I'm just getting some cash, and getting some work experience. The next steps in my career are going to be very big leaps, possibly an entire order of magnitude.

If I'm working at McDonald's without some big payday in the future, I need to think about the next steps much more carefully. The career ladder is to become (say) a shift manager and then an assistant manager and then a manager. There aren't really any leaps that involve double or tripling my wages in there.

I'm thinking out loud here; I haven't necessarily come to any conclusions.

I think this is mostly right, although I would describe it as about income trajectories or rates of human capital formation more than the next job per se. People who expect their human capital to snowball don't actually face very high marginal tax rates because most of their compensation is in tax deferred human capital accumulation. When they actually get the bigger jobs later in like they are in the more normal middle and upper class tax bracket structure which has the less incentive distorting convex shape.

You (and the other teenagers and strivers) don't face those high implicit tax rates because you're not taking or not eligible for those benefits. That's a surprising error by Cowen.

"Even though this was posted at 5:50am, I’m still impressed that an hour 15 minutes later this comment section is still civil. Kudos."

Most of the commenters on this site are civil and intelligent. It would appear the less civil ones don't post until later in the day. :)

What is the multiplier on cash transfers? Sure, if you take a dollar from a guy making one dollar over the poverty line and give it to the guy making one dollar less than the poverty line you have solved poverty- until tomorrow.

I think the comparison is to taking the one dollar, putting it into the bureaucracy, and giving 37 cents of in-kind aid. The claim is that giving 1 dollar of direct aid would be more effective, even if the recipient doesn't spend the 1 dollar on the "right" things.

Just to clarify, the 37 cents is not a real statistic; it's just a generic number less than a dollar.

A generic number specifically chosen to be absurdly low. You made a valid point but ruined it with that number.

It's not about the multiplier, it's about the net increase in utility in taking Jay Leno's 50th car away and giving the money for poor people to use on more basic services.

I keep hearing that Jay Leno spends his money more wisely. How else could he be so rich without being wise?

You made an excellent point.

Just wondering, how many of Jay Leno's cars should be taken away...and who decides? Do "poor people" in this country really not have "basic services" or are we taking away Jay Leno's cars to provide greater-than-basic services to folks who are really not "poor people"?

"5. Reading through the long list — the too-long list I would say– of programs, one really does get the feeling that a lot of them ought to be replaced by cash grants or pro-employment cash incentives, such as EITC. But what else should we be doing differently?"

Wouldn't doing this one thing already be a lot? Even if not, given that we do not seem close yet to accomplishing this No. 1 thing, why would we expect any emphasis on Nos. 2, 3, 4, etc., especially since they are far less significant?

"1. The so-called 'war on poverty' has gone better than most of this document would appear to suggest..."

If that were the case, then why are we still talking about poverty? If the War in Iraq or Afghanistan were still going on in 50 years, could anyone claim that either was going well? The War on Drugs started 20 years after the War on Poverty, and it has already been declared a failure. If two generations (25 yrs/generation) is not enough for this government bureaucracy based approach, then is the goal of the War on Poverty that we will eliminate poverty for our great-grandchildren?


We have been waging a War on Rape, Murder, and Robbery since the beginning of civilization. We aren't winning. The crimes continue.

Should we just give up and surrender?

Rape, murder and robbery are far less than they were 1,000 years ago, or 100 years ago and even quite a bit less than 50 years ago. Poverty on the other hand doesn't seem to have declined much since the War on Poverty started.

So, maybe we should consider a different approach.

Hard to say that the program all failed when you add in the fact that the Reagan revolution happened followed by the "contract with America" crowd gaining real power in the 90s

The patient did not take the medicine.

Can you please identify anything specific they did to undermine the war? Even if they did, they weren't very good at it, as far as I know, these programs still have all-time record enrollment and budgets.

"By the early 1960s, welfare cost about two percent of GDP, and health cost about one percent of GDP.

The Great Society programs started welfare on an upward path, so that after 1980 welfare spending fluctuated between 3 and 4 percent of GDP."

Somebody's got to pay the bills.

200 years ago, almost the entire world lived barely above a subsistence minimum, legitimizing the Malthusian perspective.

Methinks we got somewhere on poverty. Why stop when the target is in sight?

Reihan supports my plan and Tyler should too:

You should change the color of your title. It's hard to see on the background picture.

I am going to write a report on the wealth trap:

How government programs (or lack thereof) keep children of the wealthy in the same wealth conditions as their parents.

First on my list of government policies limiting the mobility opportunities of wealthy children is the estate tax, and the stepped up basis for estates. Next will be policies that help convert ordinary income into capital gains, to be taxed at lower rates of the poor. And, finally, during my vacation..sorry, seminar trip written off as an ordinary and necessary business expense...I will write about how food stamps for children deny them the opportunity to learn how to beg for a living.

Get your boots off of their cashmere coattails, Uncle Sam!

Indeed, we need significantly improved policy to ensure fair access of children of the wealthy to a diversity of living conditions.

Another profile in courage, from Cowed.

Here is an idea -- pay women NOT to have children.

Last time I checked, it takes two to Tango.

How about paying men not to have sex?

Yeah, that's a good one. Won't get many comers for that one.

I thought we called that Silicon Valley.

What about pay young men to get a reversible vasectomy? (say $5000)

The problem with eugenics is the nazi's took it too far and ruined it for everyone else.

Legalize (subsidize) prostitution?

You could pay women to go on long term birth control, like the IUD or the norplant thing. You could pay men to have vasectomies.

We could just stop paying women to have children.

Cheaper to substitute oral and digital (both the computer- and finger-related) teaching for the failed abstinence education system.

It has the added benefit of reducing some STD transmission, thus reducing the burden on healthcare.

It's called give them decent access to education. It works.

"The so-called “war on poverty” has gone better than most of this document would appear to suggest, although this ends up being acknowledged in the appendix on poverty measures." Nice little implied causal assumption. It could just as easily be assumed poverty measures have improved in spite of the war on poverty.

Especially since most of the metrics were improving, drastically on some, before the war was implemented, especially for minorities which quickly reversed trend once the policies were enacted sadly.

Not sure what you are talking about with minorities and trend reversals. Can you clarify? Otherwise I'd be inclined to think that you're putting forward an unsubstantiated perspective that helping poor people is against their own best interests.

Pick one, minority growth in income, employment, marriage and family statistics were all improving prior to the 60's.

1: "would appear to suggest" ?? Seriously? The man put down 204 pages of information showing just how badly the War is going. Offhandedly replying "Hey, it's not that bad" is not a quality response.

3: So what? If a program is a net negative, it should be eliminated and replaced. I find it absurd that you think there is not enough data in this report.

4: I'm sorry he did not focus on your favorite pet topic of immigration. But to put it mildly, there is disagreement whether more immigration will cure US poverty.

5: "the too-long list of programs." Well, there you go, you've learned something. The list is FAR too long, and the data shows that we can dump nearly all of it -- if indeed it's the poor we care about, and not DC rent-seekers and politicians who love to announce yet-another useless program. You should find this to be wildly useful information.

Especially if you care about taxpayers. Alas, you don't.

This post definitely had the tone necessary to for burnish credibility among the hip blogger set, "I'm with you fellas, let's carp & harp on the guys in the arena."

What the man did was put down 204 pages of BS. Read the critiques, including some from the authors of papers Ryan cites.

Look. It's time to get over Paul Ryan. He's a charlatan.

I want my money back.

4. "High implicit tax rates . . ." Er, lottery tix, bling, Colt .45, cheap wine, weed, crack, $200 basketball shoes, etc.

In the 50 years since LBJ declared war on poverty, the US stole $20 trillion from productive Americans and gave it to bureaucrats, politicians and social-justice racketeers, who filtered some of it to poor Americans.

That is half the story. The middle class has been decimated.

Nowhere will you see any policies that actually would create jobs and raise incomes in a healthy, growing economy.

Fifty years and $20 trillion spent to defeat poverty and we have, believe it or not (gasp!), MORE poor people. In 2014, the main theme (class war, dependency, social racketeering) again will be (how many more $$$ trillions?) addressing the disparities in income and wealth: tax the hated rich and throw a trillion or so more at welfare programs for the noble poor.

The number of working age Americans who have jobs has crashed to levels not seen since Carter (since 2009 the second worst president). The percentage of people working is the same as it was during a recession (Carter) 40 years ago.

Employment under Obama: unemployment 2007 – 5%, 2013 – 8%; Labor Force Participation Rate 2007 – 66%, 2013 – 63%; Employment (employed persons to labor force persons) 63% - 2007, 59% - 2-013; Part-Time Employment 17% - 2007, 19% - 2013. The unemployment rate for Americans ages 16-17: 34%. The unemployment rate for teenage Hispanic Americans is 48%, and the rate for teenage Black Americans is 60%. Increase the minimum wage!! Extend long term unemployment payments!!!!

Government dependence is sky-rocketing in this so-called "economic recovery." In 2013, an astonishing 20% of American families depended on food stamps. It’s a sign that the middle class is dying. There are 4 million Americans who have been out of work for 27 weeks or more, the highest long-term unemployment rate since World War II. Close to 50 million Americans live in poverty and more than 100 million people get money from the federal government every month. The middle class disintegrates as poverty rises to unprecedented levels. Extended unemployment benefits were ended for 1.3 million, and 5 million unemployed Americans will lose their benefits by the end of 2014. In addition, 47 million Americans had their food stamp benefits reduced. Approximately 6 million Americans ages 16 to 24-years are not in school and not working.

Government dependence and the middle class -- what percentage of middle class jobs are not directly or indirectly dependent upon a government for their existence? This is the real decimation of the middle class, it's almost impossible to get a middle class job these days where you are not taking government money, more or less. And getting the middle class job takes a college education that you normally get by using government funds.

Is anyone addressing this?

Gee, way to cherry pick the starting date of your data, just ignore the Great Recession that his well before Obama became President. Why not compare mid-2009 (which would be a more accurate starting point for any comparison to how the economy has done under Obama) to 2013. Oh, right, that might not justify your hatred of Obama.

Interesting that you chose 2007 as your comparison point.

Especially since the entire world economy ground to a halt in 2008 right before he took office.

Also interesting is that the US has recovered much more than countries that went full bore austerity.

Specifics please, this has been the slowest recovery on record employment wise so if you're going to say well at least we aren't as bad as these other guys, at least name them.

Look at the recessions of 1981, 1990, 2001, and 2007, and there is a clear trend that employment recovery is slower and takes longer is each time. Lots of theories out there for why. My own is a combination of increasingly-capable automation and changes in the way we manage the high finance sector that has disconnected most of the traditional channels that ran between cheap Fed money and domestic business hiring.

Might be a good opportunity to take a look at Casey Mulligan's work.

Your post is worthy of red state. Just a spew of numbers.

I think a big problem is that society by and large views impoverished areas with despair and helplessness. This type of a depiction appeals to sympathy, pity, and what is called "Charity". The Charity Industry strips these places of self-initiatives and distorts the structure of incentives. It is lost that these places have weakness, but equally, opportunity and potential. The problem is that charity is not wealth creating. It is treating the symptoms of poverty, not the cause. Trading value for value is the way to create wealth and wealth creation through entrepreneurship is the only sustainable approach to alleviating poverty.

"Trading value for value is the way to create wealth and wealth creation through entrepreneurship is the only sustainable approach to alleviating poverty."

This is huge. And the discouragement of independent business ownership is a huge part of our "poverty" problem.

I know folks who send money overseas to buy goats for poor communities. It's great. Can you imagine doing that here, buying a goat for a poor family to start to build a business? You aren't allowed to sell goat milk or eggs, or cow's milk, or beef, unless you follow tortuous regulations that make it impossible to compete in the general market with subsidized large agricultural sellers.

Great idea. We can be like Mexico. All those little entrepreneurs selling chiclets. That's why Mexico is so much richer than the US. They have so many independent businesses.

You're right. To be on the safe side, we'd better ban gum.

In India there are millions of "entrepreneurs" digging in the garbage dumps. They'll turn that economy around in no time at all!

Should we follow the "Singapore Solution" for poor people? Simply tell anyone whose is not settled, have health insurance and an combined income over $60K that they should not have more than one baby. (Notice Singapore abortion rate is about double the US.)

You forgot to mention that the "Singapore Solution" also includes an extremely cheap and reliable public transportation system, government-provided health insurance, excellent public schools that are heavily subsidized by the government and affordable public housing that serves the majority of the population. Singapore is able to skimp on traditional "welfare" partly because it delivers first-rate public services to both the poor and middle classes.

Singapore is not sustainable. It has among the lowest birth rate on the planet, bad enough where mass immigration has basically no long term value.

Its also a tiny authoritarian city state on an island , not a model applicable in most places.

If I understand the basic argument that more and more of our future wealth will be generated by fewer and fewer people due to technology, and in the long run this is a good thing, we have to address the issues of income inequality in some way, don't we? A larger and larger portion of the US will be unable to compete with the elite winners - what should they do? Do we accept this condition or not? If not, how best to address?

As a conservative, I find it troubling that these questions are not addressed enough. Does the conservative movement have an answer? Have I just missed it?

some libertarians and few conservatives are supportive of a Basic Income (or Citizen dividend) as a replacement for the welfare complex. BIG is the only idea I've seen that addresses the reality when 95% of the wealth is created by 15% of the population (probably around 2040).

One thing a citizen's dividend does is remove the super-high implicit tax rates on people who want to move from a welfare lifestyle into the working world.

Next questions: who gets to be a citizen, and how many?

Yes, that points out the basic flaw I see in a Citizen Dividend. You either restrict it sharply and create a future Apartheid situation or you allow everyone access to it and it's quickly diluted to nothingness by a vastly expanded population. Or option 3 you sharply restrict future immigration.

"when 95% of the wealth is created by 15% of the population (probably around 2040)."

Without context that statement seems irrelevant. If 5% of the wealth can support 85% of the population at a middle class level, then it's only a wealth envy issue.

Have you considered the idea that the liberal welfare state is a safety valve for capitalism? Seems like wealth envy in the face of such extreme inequality could be a powerful political force. I think both sides would hope to avoid that situation.

"Seems like wealth envy in the face of such extreme inequality could be a powerful political force. "

You mean, even if the population became richer and better off, that if the relative wealth increased some nefarious people would fan the flames of class envy to provoke violent unrest? That would be evil.

How do you think that 95% of wealth creation would look if workers enjoyed the same ability to negotiate collectively as enjoyed by capital holders through corporate boards and management structures? My guess is ... a lot less than 95%.

Ever needed someone for a task and had a hard time finding the help you need? We all need each other.

Don't think that manipulating the system into rewarding entrepreneurs to excess while handicapping workers from negotiating is the same as explaining who actually deserves credit for making it all possible. Every step you take is thanks to thousands/millions of years of social evolution of knowledge and systems. You give yourself too much credit and are too quick to knock on those who haven't learned to or don't want to use the system to maximize their explicit financial profit.

"the conservative movement is still allowing the poverty issue to defeat it"

Umm, Tyler, you misspelled "race."

Poe's Law infraction.

"I am tonight doing an event on poverty with Neera Tanden, Steve Pearlstein, and Reihan Salam, and a few others on the Arlington campus of GMU. "

Will your contribution be of like kind with this post?

High implicit marginal tax rates are a problem for poor families, but they receive too much attention in this report. Those same high implicit rates never stopped higher earners, who at some point were (often) much poorer themselves.

Oh, come now. True, people who will eventually become high-earners are not going to be dissuaded by a high marginal tax rate. But people who are never going to become high-earners will definitely be dissuaded by a high marginal tax rate, and thus will end up earning less (and being less productive) than their potential would otherwise allow. And those are the very people that "progressive" policies are ostensibly trying to help.

We can never really tell, but I suspect this is what he is saying. I wish we could give the poor to the Democrats, give the productive to the Republicans then trade.

The high implicit marginal taxes faced by the poor stem from the fast withdrawal of transfers as gross income increases. In this context high marginal tax rates =/= the top marginal rate on the rate schedule.

"an event on poverty " sounds cynical and cliched . Why not mention taking part in a discussion on " War on Poverty?"

Government as "employer of last resort" .. I'm wondering if that phrase even gets mentioned anymore. Note that in general the US military services don't take people over thirty, and are much more selective than in the past.

It doesn't get mentioned much because government is an employer of almost everybody now, directly or indirectly.

Here is the link to the report -
I am surprised that Tyler didn't include it.

The proper reference for Ryan's document isn't the 'best' academic studies, it's what the other politicians are saying and proposing.

And most of that is one version or another of the Detroit model: loot the economy to enrich my side's rentiers and retainers.

Ryan's document should be the start of a discussion. It's flaws shouldn't be the end of one.

It seems strange that when talking about the War on Poverty no one here likes to talk about its largest component - Social Security. Which has drastically reduced poverty among the elderly.

Funny that....

All workers are taxed so that most of the elderly are paid to keep something like 20% above poverty while leaving 9% below, at as yet undisclosed consequences. Do we need really more than that to doubt this program as well-targed to poverty?

Do we need really more than that to doubt this program as well-targed to poverty?

Why should it be well targeted? They key to its effectiveness and political popularity is that it's universal.

Because that's also the key to its ultimate failure.

Also because poverty rates in other age groups are up, and also because your cause-and-effect assertion is questionable.

Because that’s also the key to its ultimate failure

Increase FICA by 1.4% and decrease benifits by 12% and actuarially sound forver. Where are you getting this "ultimate failure" meme.
"Perhaps the biggest reason why poverty declined from the 1950s through the mid–1970s was the steady increase in earnings (adjusted for inflation). The following table shows vividly how the two trends—poverty falling, earnings rising—tracked each other."
Community Advocates, Public Policy Institute, Poverty Can Be Greatly Reduced,

The question is whether you consider the government spending about half its budget on old people to be either:
1) "At least due to universality/popularity/whatever at least we are getting people to support old people because otherwise we'd support nobody."
2)"Maybe that targeting to old people is causing a scarce resource to be directed away from the other people zero-sum style"

Choose your own adventure.

"the conservative movement is still allowing the poverty issue to defeat it and tie it up in knots."

Given the common conservative view that if you're poor it's because you're doing it wrong and it's almost certainly your fault, I think the GOP stance on poverty is exactly what they want it tobe.

Are you arguing that isn't a more healthy stance than "don't worry its just the rich white man holding you down, daddy politician will make it all better"?

Can you direct me to show some info suggesting the war on poverty has shown some success?

Black guy here who grew up in poverty. Lifting folks out poverty is not a matter of just handing folks money and getting them over some income level. To truly lift them out you need to address education, culture, habits etc.

By that measure the war on poverty is an abject failure creating more havoc than anything that came before.

creating more havoc than anything that came before.

Oh yeh, this was a golden age....

One picture is worth a thousand post hoc fallacies.

I'm objecting to the ahistorical meme that before there was a war on poverty there was less poverty than we have now.

Is that where the bar is set? Shouldn't it be set it "hey we've spent $20 trillion over 3 decades for questionable gains, lets take a look at what is working and cut what isn't"?

His point is that the gains aren't 'questionable', that there have in fact been gains, that in general the poor are a smaller fraction of the total today than before, and even those still poor live many times better lives than they did before the "War on Poverty" started.

It's certainly fair to look at the current situation and say it can be improved, perhaps dramatically, but it's not fair to say things haven't generally gotten significantly better for the poor, and that there's proportionally fewer of them to boot.

That's not good enough, if you're going to spend that massive an amount of money, you can't just say that poor people have it better these days without any attempt to draw a causal link to the War on Poverty programs. I could just as easily argue they're significantly better off because things like refrigerators don't cost $2000 anymore. I view "gains" for these programs as improving the rate of poverty, and looking at any graph (or any of these programs ever growing budgets) of that rate shows very questionable gains for any amount of money spent.

Fair enough but it's pretty tough to determine causality in massive topics like this.

I do agree poverty-fighting programs need a lot of improvement, and better results per $ spent, so we agree on that.

"I’m objecting to the ahistorical meme that before there was a war on poverty there was less poverty than we have now."

We also have color photography.

Except, msgkings, that may not be true. Yes, more old people get resources. Everyone else is an open question. So, the first question for improvement is whether the old people getting the lion's share a feature or a bug.

The poverty of that picture was Dust Bowl poverty, no? That's event driven, like poverty following Katrina.

The comparison shouldn't be poverty post-catastrophic events vs. endemic poverty, you need to apples to apples.

You could compare these pictures:

To ones like this: (closing Cabrini Greens)

Why do you have to even show gains? They are part of the polity. They have the right to vote. Some of them did. They got some benefits.

And the rich people think THEY got the short end of the stick? How stupid can you be to think that the rich got the short end of the stick. They're RICH for God's sake.

If you want to help a poor man, give him a job. But if he won't do your bidding for pennies to the hour, don't be surprised if democracy turns around and dictates that some of the gains must be shared.

Tyle makes some good points, but #2 seems very weak to me. I read Tyler's argument as "if we assume a different human nature, incentives matter less."

Tile is too brittle for points.

With respect to #5, bear in mind that many of the programs that provide services or resources of one sort or another to the poor have multiple purposes. Food stamps (now SNAP) wasn't just a program to provide food for the poor -- it was also intended to provide income for farmers who sold that food. Or the program was intended to provide assistance to a very narrow group of people. How much more efficiently could the federal government buy health care if it unified (and paid attention to efficiency, leveraging scale, eliminating fraud, etc) Medicare, Medicaid, CHIP, the VA, Tri-Care, and employer-style health insurance for federal employees?

This is precisely the approach in the (classical) liberal reform movement of India, called Sone Ki Chidiya movement. Would appreciate comments on the total reform agenda for India - ideally in a separate blog post. Agenda can be downloaded here:

From the Report Appendix, Measures of Poverty:

"Academics generally agree in principle that the best way to measure living conditions is through consumption, though concerns remain regarding the data associated with consumption measures. Consumption more closely reflects permanent income.

Income based measures fail to capture disparities in consumption that result from differential access to credit. Consumption also better captures public transfers, which are consistently underreported in most survey data. Finally, it better captures housing and vehicle ownership.

But almost every researcher who has looked at consumption-based measures of poverty has found that consumption-based measures find a lower poverty rate than income-based measures. Bruce Meyer and James Sullivan find that over the past five decades, consumption poverty has fallen by 26.4 percentage points, and since 1980 it has declined by 8.5 percentage points. In fact, in 2010, Meyer and Sullivan find that consumption poverty would have fallen to 4.5 percentage points.

One reason consumption poverty fell is government assistance. But most of the reduction in consumption poverty was due to changes in tax policy, including decreases in tax rates for low income earners and increases in refundable tax credits, such as the EITC. Direct payments to individuals—otherwise known as “transfers”—had a much lower effect on consumption poverty, but that is partly due to underreporting issues in the survey data."

Seems reasonable…some continuing marginal improvements can and should be made but the War on Poverty has been largely won. The debate now is really about how the middle 60% can get the top 20% to pay for their lifestyle.

Emigration reduces an individual or small families poverty sometimes but given that nations with huge population outflows like Mexico and the Philippines haven't become wealthy from remittance payments I can't see this being broadly accurate.

Also migration in general is imposes pretty heavy social costs for many cultures and people I am not sure it could even be counted as a good thing in terms of well being. There is after all more to life than money and for the bulk of people who are immigrants being forced away from home. culture and family simply because of economic failures is a bad thing. I'd argue influxes of new immigrants are often bad for the host society in terms of social costs also. As I said, economics is a secondary part of human well being. Its important but past the basics not as important as culture and folk.

As for a real poverty solution, Brazil is on the right path with its massive fertility drop. These smaller families mean less poverty in urban societies and if you can get everyone especially the poor to one or none, the poverty problem will correct in not much more time than than the US has fought its war on poverty.

And yes I know there are economic costs here . Of course religious and business leaders, people are widgets Libertarians and growth oriented people will come unglued but its still its the only solution that works 100%. of the time. Less babies born into poverty, less poverty.

As no one has posted this link yet:

The claim is: In 1965 we launched a War on Poverty. And as the graph shows, in the years that followed the portion of Americans living in poverty barely budged. In 1965, 18% of the population lived in poverty. Today we are at 15%, or 50 million Americans. That’s after spending $15 trillion on antipoverty programs and continuing to spend $1 trillion a year.

Seems to me that's a lot of money and not much to show for it. The fact that if a city decides to target the poor they produce a DVD isn't because they make DVD players available, but because DVD players have become so cheap that even North Koreans can afford them.

Think of how many revolutions were averted by helping those who are down and out. How many robberies avoided because they got a cheque? Etc.

If you look at current spending, please suggest a place where you think there is a good case, either from a financial or moral perspective, to cut benefits.

There's no point in looking at decades of program spending then pretending that you know what would have happened if we never spent that money. Let's continue to focus on now, and whether we're actually in this together. 'Cause if it's that obvious that we're not in this together then we might have some troubles brewing.

Support your troops. Especially when they come back home a cripple. You owe it to them. Yes, those are tax dollars. If you don't like it, don't send them to fight stupid wars in the first place.

Two things that work to cure poverty are immigration and cash transfers.

Non-cash benefits are helpful also. This article explains some of that, and points out, for the benefit of those looking at official poverty rates, that the Census measures do not take these things, including EITC and food stamps, into account.

So if you ignore the effect of lots of things done to fight poverty you can show that those things don't help. That's Ryan's argument, anyway, and a surprising number of people seem to buy it.

It should be much cheaper than it is to help the poor. Perhaps every adult USA citizen should get a weekly check for between $150 and $200. You still need programs for the unhealthy and handicapped but you could get rid of most of the other stuff.

The Dalai clique has been treated coldly frequently while it is still willing to be a pawn for the U.S, it said. Over the past 60 years, the Dalai clique has colluded, taken advantage of and supported each other and internationalized the "Tibetan issue," the article said.

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