The war we won and lost

Robert J. Samuelson :
We are awash in retrospectives of the “War on Poverty,” launched 50 years ago this month by Lyndon B. Johnson. A furious debate has developed between those (mostly liberals) who consider the war an important, if incomplete, triumph and those (mostly conservatives) who judge it a wasteful defeat. In reality, we both won and lost the war on poverty. This is an ambiguous truth that our acrimonious political culture has trouble accepting.
We won in the sense that programmes for the poor have dramatically reduced hardship and have kept millions from destitution. To those who think that Washington mainly serves “fat cats”, Ron Haskins of the Brookings Institution says: “Look at the numbers.” In 2011, he estimates federal spending dedicated to the poor averaged $13,000 for every person below the government’s poverty line, now $23,000 for a family of four.
Similarly, the Congressional budget office reports that in inflation-adjusted dollars, spending on the largest “means-tested” programmes (eligibility set by low income) increased from $55 billion in 1972 to $588 billion in 2012. Most of these programmes – including Medicaid, the earned-income tax credit (EITC) and Pell college grants – didn’t exist in 1964. They represent a sixth of federal spending and four per cent of the economy (gross domestic product), up from one per cent in 1972. Even this significantly understates spending on the poor, because it omits social security and medicare benefits, which also go to the non-poor.
The war on poverty is often branded a failure because the share of Americans below the official poverty line has barely budged. In 1982, at the end of a harsh recession, it was 15 per cent. In 2010, after the Great Recession, it was 15 percent.
The trouble is that the official poverty rate is a lousy indicator of people’s material well-being. It misses all that the poor get – their total consumption. It counts cash transfers from government but not non-cash transfers (food stamps, school lunches) and tax refunds under the EITC. Some income is under-reported; also, the official poverty line overstates price increases and, therefore, understates purchasing power. Eliminating these defects, economists Bruce Meyer of the University of Chicago and James Sullivan of the University of Notre Dame built a consumption-based index that estimates the 2010 poverty rate at about five per cent.
People at the bottom aren’t well-off, but they’re better off than they once were. Among the official poor, half have computers, 43 per cent have central air conditioning and 36 per cent have dishwashers, report Meyer and Sullivan. These advances are especially impressive because the massive immigration of unskilled Hispanic workers inflated the ranks of the poor. From 1990 to 2007, all the increase in official poverty was among Hispanics.
But this wasn’t the war LBJ envisioned – and we lost that war, which aimed to catapult the poor into the economic mainstream. The root problem, Johnson said, was that many poor didn’t have “a fair chance to develop their own capacities”. The government would remove the obstacles holding them back through “better schools … health … training”. Thus liberated, most poor people would become more productive, independent and middle class. A phrase at the time was “a hand up, not a handout.”
This failed dismally. America remains a tiered society with millions at the bottom still living more chaotic and vulnerable lives. The government’s capacity to boost them into the mainstream was oversold. Although Head Start produces some gains for three- and four-year-olds, improvements dissipate quickly; one study found most disappeared by third grade. Schools are continually “reformed” because they don’t produce better results. The war on poverty became the welfare state.
Worse, the breakdown of marriage and spread of single-parent households suggest that poverty may grow. Regardless of the causes and despite many exceptions, children in single-parent households face a harder future. They’re more likely to drop out of school, get pregnant before age 20 or be unemployed. Poverty becomes self-perpetuating.
The war on poverty’s success at strengthening the social safety net – a boon in the Great Recession – should not obscure its failure as an engine of self-improvement. The government is fairly good at handing out money; it’s less good at changing behaviour. The two roles intersect. If the safety net is too generous, it will weaken work incentives. If it’s too stingy, it will condone suffering. This tale of two wars has left the fight against poverty in a costly and unsatisfying stalemate.  
The Washington Post Writers Group, (Robert J Samuelson is a senior American journalist).