Today, government spends 16 times more, adjusting for inflation, on means-tested welfare or anti-poverty programs than it did when the War on Poverty started. But as welfare spending soared, the decline in poverty came to a grinding halt. As Chart 2 shows, the more the government spent, the less progress against poverty was made.
How can this paradox be explained? How can government spend $9,000 per recipient and have no apparent impact on poverty? The answer is that it cant.
http://www.heritage.org/research/reports/2014/09/the-war-on-poverty-after-50-years
This week, the U.S. Census Bureau is scheduled to release its annual poverty report. The report will be notable because this year marks the 50th anniversary of the launch of President Lyndon Johnsons War on Poverty. In his January 1964 State of the Union address, Johnson proclaimed, This administration today, here and now, declares unconditional war on poverty in America.[1]
Since that time, U.S. taxpayers have spent over $22 trillion on anti-poverty programs (in constant 2012 dollars). Adjusted for inflation, this spending (which does not include Social Security or Medicare) is three times the cost of all military wars in U.S. history since the American Revolution. Despite this mountain of spending, progress against poverty, at least as measured by the government, has been minimal.
Living Conditions of the Poor in America[5]
Consumption by Poor Families. Since the Census Bureau dramatically undercounts the actual incomes of the poor, it should be no surprise to find that the U.S. Department of Labor routinely reports that poor families spend $2.40 for every $1.00 of their reported income.[6] If public housing benefits are added to the tally, the ratio of consumption to income rises to $2.60 for every $1.00. In other words, the income figures that the Census Bureau uses to calculate poverty dramatically undercount the economic resources available to lower-income households.
Amenities. Because the official Census poverty report undercounts welfare income, it fails to provide meaningful information about the actual living conditions of less affluent Americans. The governments own data show that the actual living conditions of the more than 45 million people deemed poor by the Census Bureau differ greatly from popular conceptions of poverty.[7] Consider these facts taken from various government reports:[8]
Eighty percent of poor households have air conditioning. By contrast, at the beginning of the War on Poverty, only about 12 percent of the entire U.S. population enjoyed air conditioning.
Nearly three-quarters have a car or truck; 31 percent have two or more cars or trucks.[9]
Nearly two-thirds have cable or satellite television.
Two-thirds have at least one DVD player, and a quarter have two or more.
Half have a personal computer; one in seven has two or more computers.
More than half of poor families with children have a video game system such as an Xbox or PlayStation.
Forty-three percent have Internet access.
Forty percent have a wide-screen plasma or LCD TV.
A quarter have a digital video recorder system such as a TIVO.
Ninety-two percent of poor households have a microwave.
For decades, the living conditions of the poor have steadily improved. Consumer items that were luxuries or significant purchases for the middle class a few decades ago have become commonplace in poor households. In part, this is caused by a normal downward price trend following the introduction of a new product. Initially, new products tend to be expensive and available only to the affluent. Over time, prices fall sharply, and the product becomes widely prevalent throughout the population, including poor households. This is a general sign of desirable economic progress.
Liberals use the declining relative prices of many amenities to argue that even though poor households have air conditioning, computers, cable TV, and wide-screen TVs, they still suffer from substantial material deprivation in basic needs such as food and housing. Here again, the data tell a different story.