The Poor Know: Government Works

The poverty rate for 2011 hit 15.1% but it's only partly Obama's fault.

I can hear the howl from rightwing radio without tuning in. A new US Census report to be released this fall will show that the 2011 poverty rate reached 15.1% and hit its “highest level since the 1960s." Expect Limbaugh, Beck, Medved, Hannity, Savage, and other Ignororamuses of the Airwaves to seize upon this as further proof that “socialism” and “government” don’t work. Once they get a good lather going they’ll up the ante to “Obama’s tax-raising socialist Big Government programs.”

They will conveniently leave out the rest of the announcement, which says poverty has spiked “since the 1960s.” Let’s be precise; it should say “since 1964.” (or 1983--read on.) 1964 was the year that President Lyndon Johnson–who would be on Mt. Rushmore if he had possessed the wisdom to walk away from Vietnam–announced his “war on poverty.” At the time, about 36 million Americans lived below the poverty line. That was more than 18.5% of the population of the day. Conservatives seldom tell you that during the “golden age” of the 1950s, poverty was over 20%. In 1959, it hit a stunning 22.5%.

Enter LBJ and Big Bad Government. Johnson, to borrow a phrase loved by conservatives, threw a lot of money at the problem–tax money. He, to use Huey Long’s words, soaked the rich. The top 1% of taxpayers had rates from 43%-67% and the top .01% paid a 91% tax rate some of their income.  These figures, it should be noted, were only somewhat higher than they had been in the 1950s, when the richest paid 84% when they hit the ceiling of $400,000 ($3 million in 2012 dollars).

Did the U.S. economy collapse form Johnson's crippling taxes? Did rich people send their assets to the Cayman Islands (to pick a random example!)? Did companies seek to move job overseas to take advantage of cheap labor and get away from job-killing labor unions? Nope. The US economy boomed in the 1960s. Moreover, Vietnam was the major reason for tax increases of any sort; without runaway military spending that was a parasitical drain on the economy (ahem!), the nation would have been wading in cash.

But surely all that money spent on welfare, job training, urban renewal, and antipoverty programs was wasted, right? To be sure, some was squandered in inefficient programs. Hell, some of it was probably given to welfare cheats. But the bottom line is that poverty was cut in half from its 1950s peak. In 1971, poverty dipped to 11.1%. In my estimation, a nation as rich as America has no business having any sizable percentage of poverty, but this was a stunning achievement. It’s simply a load of mule dung to say that throwing money at poverty has no effect.

“But it didn’t last,” cry rightwingers fearful of losing tax breaks for their third homes. That’s correct, but it wasn’t for the reasons they say. The horrifying stagflation of the 1970s took its toll, but despite double-digit inflation, soaring prices, and job loss, in 1979 the poverty rate stood at 12.4%. If you’re wondering how it got so high after the prosperity of the Clinton years, the answer is simple: we stopped spending money on poor people. Blame Ronald Reagan, not Barack Obama. The culprit was Reagan’s profligate spending on the (nonproductive) military sector and his ideology-driven, budget-killing tax cuts.  Reagan increased the debt by 189%, a move that necessitated cutting social spending given the steep decline in federal tax revenue. The poor were the easiest targets for cuts and by 1983, the poverty rate hit 15.3%. (Yes, the advanced announcement is wrong. Poverty was higher in 1983 than in 2011.)  The rate was 13.3% when Reagan left office, and hit 15% again during the recession of the 1990s. Clinton prosperity? The president who “ended welfare as we know it” saw poverty dip a few ticks, but nothing like what was seen under LBJ. That's because the deficit has continued to grow (high military spending again being a major reason why) and no president has had enough spare change to throw into the collective poverty bucket.

It will be tempting to “blame Obama” for the 15.1% rate for 2011, which is exactly what conservative (and Neanderthal) commentators will do. The sheep­–formerly known as the American masses–will probably believe it. To the degree he hasn't spent enough money on the poor, the charge is true. Yep--the real reason for persistent poverty is that we don’t throw enough money at it. The biggest lie ever told was Reagan’s “government isn’t the solution, it’s the problem.” Tell it to the poor. They know that government works.