Why America’s Poor Shouldn’t Be an Excuse to Milk More Economic Stimulus

us social programsSome 46 years ago, President Lyndon Johnson declared “an unconditional war on poverty in America.” Almost five decades later, this war is still carrying on. Not that a massive amount of money was not thrown into it — approximately $15.0 trillion to be precise, and all in an effort to end poverty in America. Incidentally, this amount exceeds the total sum of U.S. national debt, yet there is still no end in sight to poverty.

According to the U.S. Census Bureau, the U.S. poverty rate has increased to 14.3%; that is, it has impacted 43.6 million Americans in 2009. In 2008, this rate was 13.2%, impacting 39.8 million Americans. In other words, within a year, 3.8 million Americans have joined the ranks of the poor. What make this statistic scary are predictions that the upward poverty trend is nowhere near done increasing. Some are figuring that, in the next four years — marking 50 years since President Johnson’s declaration of war on poverty — the U.S. poverty rate will hit 16%, and potentially even 18%.

No president could stand idly by such devastating statistics. On his end, President Obama is doing what all his predecessors have done since 1964 — he is trying to buy his way out of poverty. To stop the surge in the poverty rate, President Obama is calling for more government spending; now seeking Congress approval for an additional $180 billion. I would say, “You go, Obama!” if only throwing money at poverty had worked in the past 46 years. It has not, despite the U.S. having in place about 122 different federal programs aimed at helping Americans at or below what is called the “poverty line” (i.e. family income of less than $22,000).

I would also say, “You go, Obama!” if government spending had not been one of the root causes as to why poverty rates have surged in the past two years. For example, the 2009 round of stimulus spending saw the creation of something called an “emergency fund.” That fund required the government to cover no more and no less than 80% of total costs of any new anti-poverty program introduced by any of the 50 states. In the end, that idea amounted to little more than the creation of an incentive for new welfare recipients. In the grander scheme of things, the emergency fund program effectively killed Clinton’s welfare reform of the 1990s.

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It does seem odd, however, that the government of the world’s most powerful economy could not buy an end to poverty. It is even more curious that it did not even diminish it. Are the numbers the government is working with reliable? And, if not, why develop more programs to address something that potentially doesn’t exist? Questioning of the poverty rates seems apropos when you look at the 2008 numbers, for example, when the one-fifth of America’s poorest reported incomes of $10,000 per year only, yet somehow managed to spend about $22,000? The U.S. Labor Bureau of Statistics offers no explanation for this oddity, but common sense dictates that there must some income coming from somewhere that is not reported or not reportable, such as cash earned “under the table” or food stamps.

Government spending has its value and purpose. Social programs also have their value and purpose. The two should not be equated or taken lightly. At this point, the U.S. economy cannot absorb even the economic stimulus already in its systems, let alone stimulus proposed in the near term. Policies and legislations should be thought through and triage-type decisions will need to be made. That said, I believe that the 122 federal programs already in place to address poverty are sufficient. Instead, what the economy and American people need are systemic changes from the top down and then from the bottom up, not more debt and certainly not more deficit.