The Flimflam Man, as Paul Krugman dubbed him, has said since his failed 2012 vice presidential bid that he is working on the issue of poverty — which really means that he is working on writing a revisionist history of the “war on poverty.” See, The War on Poverty: 50 Years Later | Budget.House.Gov (.pdf). Professor Krugman laid waste to this report in The Hammock Fallacy.
With the recent unrest in Baltimore, the Sunday morning bobblehead shows this past Sunday wanted to talk about the issue of poverty, so naturally the media villagers invited The Flimflam Man to talk about poverty, because he is the GOP’s alleged boy genius, and he says that Baltimore is stuck in ‘poverty trap’ and The war on poverty ‘not getting the results we need.
Ryan appeared on CBS’ “Face The Nation” and said that ““After a 50-year war on poverty and trillions of dollars spent, we still have the same poverty rates – 45 million people in poverty.” The Washington Post’s Fact Checker Glenn Kessler examines Paul Ryan’s slick use of poverty rates to declare the ‘war on poverty’ a failure:
There was [Paul Ryan] on one show saying the war on poverty launched by President Lyndon B. Johnson had left the nation with “the same poverty rates” and 45 million people in poverty. And, then, there was a [Chris Van Hollen] saying that without that effort, 40 million more Americans would be in poverty.
This is a classic example of how politicians pick the best statistic to make their case. But the case for Van Hollen’s stat is stronger. Let’s take a look.
In 2013, we dinged Ryan for claiming that “we have spent $15 trillion from the federal government fighting poverty, and look at where we are, the highest poverty rates in a generation, 15 percent of Americans in poverty.”
A key issue was that the $15-trillion figure was rather facile, with fuzzy definitional issues and a mixing of federal, state and local spending. We note with approval that Ryan has dropped the “$15 trillion” figure and simply uses a vaguer term — “trillions of dollars.”
So what does Ryan mean when he says “we still have the same poverty rates” as when the war on poverty was launched 50 years ago. A spokesman said that he was referring to the official poverty rate. Sure enough, the Census Bureau (see page 12) shows it was about 15 percent in 1965 and it is now about 15 percent. The number of people below the poverty line is about 45 million, as Ryan said.
But this is also a case when the official estimate is also a bit misleading. As we have noted before, increasingly scholars believe the official figure is not especially informative.
For instance, transfer payments, such as the Earned Income Tax Credit (EITC) or food stamps, are not recorded as income, meaning that the impact of programs for the poor is not reflected in the official estimate. (This makes it especially difficult to assess whether these programs actually help fight poverty.) The Census Bureau has tried to mitigate these concerns with a new Supplemental Poverty Measure (SPM), introduced in 2011, but that has come under attack as well.
At a hearing that Ryan chaired in 2013, American Enterprise Institute scholar Douglas J. Besharov said there are a variety of systemic problems with the official measure and that the poverty rate is really 7.2 percent.
“In the past five decades, we have made much more progress against poverty than is suggested by the official poverty measure or the administration’s new Supplemental Poverty Measure,” Bersharov said. “In fact, both measures substantially understate our progress — thus distorting academic as well as political debates.”
Bruce D. Meyer and James X. Sullivan, in a paper for the National Bureau of Economic Research, also forcefully argued that the rate was both higher when the “war” was launched and is significantly lower than the official rate now, largely because of changes in tax policies. (See the charts starting on page 51.)
This is what Van Hollen was referring to when he claimed that “if you did not have the Great Society war on poverty, 40 million more Americans would be in poverty.” He was basing that figure on the Supplemental Poverty Measure, according to the communications director Bridgett Frey, citing calculations in the 2014 report by the White House Council of Economic Advisers. The report reassessed poverty rates over time using the SPM.
“Poverty rates fell from 25.8 percent in 1967 to 16 percent in 2012—a decline of nearly 40 percent,” the report concluded. “In 2012 alone, the combined effect of all federal tax, cash and in-kind aid programs was to lift approximately 14.5 percent of the population — over 45 million people — out of poverty.”
So does Ryan have a particular concern about the SPM, which is why he does not cite it? Robert Swift, his press secretary, declined to answer. “He was referring to the official poverty rate,” Swift said. “He wasn’t referring to the SPM.”
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On the one hand, Ryan is referring to an official statistic from the Census Department. But at the same time he must know that Census is not especially pleased with it, which is why the agency has introduced an alternative measure. If Ryan had concerns about the methodology, then presumably his spokesman would identify them rather than duck our questions.
It’s a bit slick for Ryan to suggest the war on poverty has been a failure while touting an improvement in an anti-poverty program that is not captured in the statistic he cites. At the very least, he should acknowledge, as Van Hollen does, that the numbers can change depending on the measure that is used. He earns Two Pinocchios.
The Washington Post’s Greg Sargent adds his two cents in Safety net does more to ease poverty than previously thought, new study finds:
The Baltimore riots have re-ignited the ideological wars over the efficacy of government spending to alleviate poverty, with Republicans who want to slash the budget seizing on images of urban chaos to argue that federal anti-poverty policy has been an abject failure at accomplishing its own goal. Paul Ryan suggests dumping more cash into the bottomless pit otherwise known as federal spending on the poor will only produce the “same failed result.”
But a new study being released today finds that the federal safety net may actually be doing more to alleviate poverty than previously thought. The study, from the left-leaning Center on Budget and Policy Priorities, uses a new statistical technique to measure the impact of federal programs on the poverty rate, correcting for what it says are defects in previous accounting methods.
The study’s top-line finding is that in 2012, federal safety net programs cut the poverty rate by more than half, reducing it from 29.1 percent to 13.8 percent and lifting 48 million people above the poverty line, including 12 million children. Previous accounting had put the reduction at less than half.
The study seeks to make an important addition to a debate that has long bedeviled researchers: How to measure the impact of government on poverty. Republicans like Ryan tend to use the official poverty rate to gauge it. But as Dylan Matthews details, this excludes the impact of non-direct-cash-transfer federal programs, such as Medicaid, food and rental assistance, and lower-income tax relief, making it a rather useless metric. As Matthews notes, if you use the census-based Supplemental Poverty Measure, which does factor in such programs, you find government has helped to lift substantial numbers out of poverty.
The CBPP study goes one step further than this, however. Its operating premise is that even Census data is imperfect: It is still marred by people under-reporting government assistance they receive. So the CBPP also factors in data from a recent Urban Institute micro-simulation program which adjusts census data to “more closely match actual participation” in government programs.
“Researchers on the left, right and center have complained that it’s very hard for household surveys to reflect all income — you end up missing big chunks of income from the safety net,” Arloc Sherman, the study’s lead author, tells me. “This new report fills that in.” However, he concedes this method might not be foolproof, either.
Here are the results from 2012, the most recent year for which this additional data is available:
— The federal safety net cut the poverty rate by more than half in 2012, reducing it from 29.1 percent to 13.8 percent. That includes 48 million Americans, 12 million of them children. Under the corrected data, the poverty rate is 2.2 percentage points lower than previously thought, and 4.6 points lower for children.
— The impact on those in “deep poverty,” i.e., below half the poverty line, was even more dramatic. That rate fell from 18.8 percent to 3.6 percent, with an almost-as-dramatic drop among children.
— The SNAP foodstamp program — a target of GOP budget cutters — lifted 10.3 million people out of poverty. It lifted 5.2 million people out of deep poverty.
— Tax relief such as the Earned Income Tax Credit and the Child Tax Credit lifted more than 10 million out of poverty. The expansion of such programs is supported by some Republicans, though it’s unclear how many of them would pay for that beyond safety-net cuts elsewhere.
To be fair, because this is one year, it doesn’t really go to the question of whether the War on Poverty has worked over decades (though the CBPP thinks it has). It doesn’t go to other objections Republicans have to the safety net — that it traps people in dependency. But this study suggests once again that government engineered downward redistribution of resources — so decried by many Republicans — actually can succeed in lifting a whole lot of people out of poverty.
Dylan Matthews at Vox.com adds Paul Ryan loves talking about poverty, but he keeps getting the basic facts wrong:
[F]or all Ryan’s rhetoric on poverty, he’s also the author of a series of budgets that would absolutely wreck programs for the American poor, inflicting massive human suffering on the nation’s most vulnerable residents. It’s never been exactly clear how Ryan would resolve this tension, but his appearance on Face the Nation suggests he’s going to try to make his poverty programs work with his budgets‚ which is to say he’s going to argue that taking trillions away from the poor is somehow actually good for them.
It doesn’t help that the first policy statement he makes is an out-and-out lie:
After a 50-year war on poverty and trillions of dollars spent, we still have the same poverty rates.
This sentence suggests that either Paul Ryan has absolutely no clue how poverty rates work, or he does know and is actively deceiving viewers. First of all, the specific claim in question isn’t even technically accurate. The poverty rate was 19 percent in 1964, when the War on Poverty was announced. In 2013, it was 14.5 percent. We do not have the same poverty rates we did then. Ryan is just wrong.
But even that dramatically understates the progress that has been made. The official poverty rate is a travesty of a statistic, and using it at all in this context is irresponsible. It’s literally based on food prices in 1955. But more relevantly for these purposes, it excludes the very anti-poverty programs Ryan is talking about. It excludes in-kind transfers like Medicaid, food stamps, and housing vouchers, as well as tax-based programs like the EITC. Blasting those programs because they don’t show up in the poverty rate is like arguing that Netflix shows have zero viewers by pointing to cable ratings.
A much better metric, which takes anti-poverty programs fully into account and is based on more recent data, is known as the Supplemental Poverty Measure. The SPM factors in government programs, and is based on current data about spending on food and other necessities. It’s the poverty rate people like Ryan should be referencing. While the federal government has only been using the SPM for a short while, a group of researchers centered at Columbia — Christopher Wimer, Liana Fox, Irv Garfinkel, Neeraj Kaushal, and Jane Waldfogel — went back and calculated SPM numbers for every year since 1967. To distinguish from the government-issued SPM metric, they call this “anchored SPM.”
The researchers found that anchored SPM (the blue line below) has fallen dramatically in recent decades. But if you take out government programs, you get the green line below, which doesn’t fall at all. Poverty — measured accurately, in a way that includes the government programs Ryan is trying to evaluate — fell, and it fell entirely because of government programs:
“After accounting for taxes and transfers, poverty falls by approximately 40 percent, from 26 percent to 16 percent,” write Wimer et al. Absent those programs, poverty actually would have increased slightly.
Ryan knows about the Supplemental Poverty Rate — he was criticized for this exact poverty rate sleight of hand in the past. But that makes what Ryan went on to say on Face the Nation even more bizarre:
It’s really not a more money thing, it’s ‘spend the money we have more effectively.’ … It’s not a function of pumping more money into the same failed system, because we’ll only get the same failed result.
It’s true that efficient things are better than inefficient things. But we don’t have a failed system. We have a system that, while flawed in certain respects, has nonetheless succeeded in cutting poverty by 40 percent relative to 1967. Pumping more money into that system would cut poverty even more. Ryan recognizes this when it comes to the EITC, but he doesn’t get it at all where other programs are concerned.
But Ryan doesn’t just want to spend the money we’re currently spending more efficiently. He wants to cut that spending by trillions of dollars. Also in the interview, he touts his plan to block-grant Medicaid, food stamps, and other anti-poverty programs and turn them over to the states. The Center for Budget and Policy Priorities’ Richard Kogan and Joel Friedman estimated that Ryan’s FY2015 budget would have slashed $137 billion from food stamps, $160 billion from discretionary low-income programs, and $150 billion in unspecified cuts to mandatory low-income programs like the EITC. They estimate that block-granting Medicaid the way Ryan specifies would lead to a $732 billion cut — and then Ryan’s Obamacare repeal cuts Medicaid still further. In total, the budget includes $3.3 trillion in cuts to programs for low- and medium-income people.
This is not the budget of a man committed to fighting poverty. It’s the budget of someone who wants a smaller government, a lower deficit, no new taxes, and a gigantic army and has decided to make all those other promises work out by massively cutting programs for the poor. The simple fact of Ryan’s budgets is that they prove he doesn’t take poverty all that seriously, at least not when it collides with his other budgetary promises.
I have said many times that Paul Ryan is a complete fraud. It is incomprehensible to me that anyone in the media treats The Flimflam Man as a “very serious person” and solicits his views about anything. It is irresponsible to give this fraud a platform from which he spew his lies.