–Rep. Chris Van Hollen (D-Md.), on CNN’s “State of the Union,” May 3, 2015
Viewers of the Sunday news shows might have felt a bit of whiplash.
There was a Republican 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 Democrat 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.
(Note: Johnson officially announced the war on poverty in his 1964 State of the Union speech, when the poverty rate was about 19 percent. But it would be remarkably silly to criticize Ryan on that score, given that Johnson’s proposals would not be enacted until the next fiscal year.)
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, University of Maryland 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,” Besharov said. “In fact, both measures substantially understate our progress — thus distorting academic as well as political debates.”
(Update: In an email to The Fact Checker, Besharov said his calculations show the “vast bulk of the poverty reduction comes from the elderly, and that is because of Social Security.” Social Security, of course, is not considered welfare. He said that means-tested programs reduce poverty by about 20 percent, compared to 70 percent for Social Security.)
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.”
Swift added: “The point is that none of us should be satisfied with the status quo, and we need to rework our poverty fighting strategies so that we’re focusing on outcomes and results — getting people out of poverty and making that OPM rate decline — rather than inputs — how much money we spend or how many new programs we create.”
The Pinocchio Test
Increasingly, the official poverty measure is considered inadequate for assessing whether efforts to fight poverty have been effective over time. In particular, it seems odd to rely on a measure that does not include some of the most effective anti-poverty programs around, such as the Earned Income Tax Credit. (In fact, Ryan has called for expanding the EITC.)
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.
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