October 11, 2012
As part of the NYT’s affirmative action program for right-wingers, it ran an oped column by Gary E. MacDougal, a former business consultant and executive and advisor to former Illinois Governor Jim Edgar. The main point of the piece is that we spend almost $1 trillion a year on anti-poverty programs (combining spending at all levels of government), yet we still have 46 million people in poverty. MacDougal does the arithmetic and points out that this comes to over $23,000 a year for each person in poverty. He then concludes that we would be much better off blockgranting all this money to state governments, who we know to be wizards in dealing with poverty.
Apart from the questionable assessment of the effectiveness of state governments, the main problem with MacDougal’s argument is the arithmetic. A large portion of his $1 trillion goes to people who are above the poverty line. For example, more than a quarter of the money is the $250 billion spent each year on Medicaid and other health care programs. Eligibility for Medicaid varies by state but in all cases has cutoffs well above the poverty line. The same is true of the Earned Income Tax Credit (EITC), which has a cutoff for a family of four of more than $40,000, nearly twice the official poverty line. This means that MacDougal’s $1 trillion is going to a population that is more than twice the size of the poverty population, so his arithmetic is wrong by a very large factor.
It’s also worth noting that much of this money is dedicated to educational programs of different sorts where payments are made to school districts and educational institutions, it is never seen by the families themselves. The money that the government spends on public education for poor children is not included in the calculation of the poverty line.
The urge to just hand money to the states may seem less compelling when we consider that more than half of the $668 billion in federal spending (18 percent of total spending) targeted by MacDougal consists of health care programs that are already administered by the states, the EITC which is paid directly to working families through the tax code and Pell grants. (Food stamps account for roughly a quarter of the rest of the money.)
While many anti-poverty programs are undoubtedly wasteful and should be reformed or eliminated, the notion that the government spends a massive amount on poverty programs is an invention of the right-wing that has no basis in reality.
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