Paul Ryan's Poverty Report -- A Disappointment

Earlier this week the House Budget Committee, chaired by Congressman Paul Ryan of Wisconsin, came out with a report titled The War on Poverty: 50 Years Later.  The Report has generated a lot of commentary, on both left and right, most of it -- from both sides -- unfavorable.  I'll join the commenters from the right in giving a less than rave review.  There is much useful information in here, but overall a shortage of vision. 

But let's start with the useful information.  More than anything else, this Report is an attempt to catalog every federal anti-poverty program, what it does, how much it costs, and whether it works.  The count of programs is 92, and the count of annual federal spending is $799 billion.  Just looking at the vastness of the federal anti-poverty effort, together with the overlap, inconsistency, and multiple bureaucracies stepping on each others' toes, is something of an eye-opener.   The $799 billion of spending will not surprise readers of this blog.  In the Report, we slog through the programs one by one for almost 200 pages.  The discussion of each program includes a section called "Evidence" where, often, scholarly publications that have studied the program are cited.  Generally, the "evidence" of success or failure is either lacking completely or is cited to the effect that this program does not accomplish much.

Despite the large effort to compile this Report, there is good reason to think that it is not comprehensive.  For example, a section on Education and Job Training programs, starting at page 21 of the Report, identifies 24 such programs, at an annual cost of $94.4 billion in 2012.  Well, that's a start, but actually GAO identified 47 federal job training programs in 2011, which is why VP Biden was just designated in February to head a task force to rationalize the mess.

But the biggest problem with this Report is that its format is such as to make it a fairly easy target for left-wing critics, while at the same time missing the obvious points to which those critics have no answer.  Academics who study anti-poverty programs are virtually uniform in their political support of the programs, and thus trying to cite their work as evidence against the programs is fraught with problems.  Unsurprisingly, many of the academics whose work is cited as evidence of the ineffectiveness of these programs have spoken up to say that their work has been used inappropriately.  A publication called the Fiscal Times for a March 4 article contacted several academics whose work was cited, and all of those quoted criticized the Ryan Report for misusing their work.  (Of course, FT may have omitted citing others whose views were favorable to Ryan.)  Meanwhile other critics have piled on.  Official Manhattan Contrarian Worst Economics Writer Paul Krugman called the Ryan Report a "con job."

Ryan's committee should have saved the huge effort of compiling these data and stuck to the obvious.  The obvious is that "poverty," by official federal definition, is a monetary problem.  "Poverty" means less than about $6000 of "income" (varying somewhat by family size) for a person for a year.  And the population defined to be in "poverty" already has about half the income it would need to get across the thresholds.  By the official definition, approximately 45 million people in the United States are deemed to be "in poverty."  Do a little math and you reach the obvious conclusion that, by the official definition, "poverty" can be completely cured in the United States by the expenditure of about $150 billion per year.  And yet we are spending more than five times that, some $799 billion per year, only to have 45 million people still in "poverty."

I don't know that it would end the debate over "poverty," but that debate would certainly be fundamentally transformed by the simple device of converting about $150 billion per year out of the $799 billion into cash grants that are in a form that is allowed to count in the measure of "poverty."  Given the vast level of spending, there is absolutely no excuse for not spending the first dollars in a way to eliminate "poverty" as we have officially defined it.

Meanwhile, the Ryan Report continues substantially to buy in to the idea that everyone deemed to be "in poverty" by federal statistics must be somehow going through some real deprivation.  Only if you get all the way to the appendices at about page 200 do you find out that "consumption and income are not strongly correlated. . . .  [and] families in the bottom 20 percent often consume far more than their income."  But they make no attempt to draw out what this means -- namely that there are large numbers of clearly non-poor people included in the official "poverty" statistics, such as advanced-degree students with student loans and fellowships, 20-something slackers supported by their parents, and early retirees consuming savings.  When is someone going to look at those things to determine how distorted these official numbers are?  That would have been a far more valuable exercise than what Ryan's committee has produced.