The Social Safety Net is Working

Posted on May 6, 2015

0



Greg Sargent has a piece up today that describes the finding of a new study released this morning that piggybacks on Dylan Matthews’ piece yesterday explaining how Paul Ryan does not understand or that Ryan does understand yet is purposefully obfuscating how poverty is calculated for political gain. Trying to frame the social safety net as a failure is nothing new for Ryan or his cohorts. Ever since FDR implemented the New Deal – thereby establishing social insurance policies, Conservatives have been trying to dismantle it.

The most recent attack is that LBJ’s the War on Poverty has failed, and that it wouldn’t be prudent to provide additional funding to a failed policy. Well, this study, as well as Matthews’ analysis, shows the nation’s social safety net has been extremely effective, and is far from a failed policy. In fact, it’s quite successful:  reducing the poverty rate from 29.1 percent to 13.8 percent and lifting 48 million people above the poverty line, including 12 million children in 2012.

 

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.

Advertisements
Posted in: Poverty