Paul Ryan Still Doesn’t Understand the Scale of the Poverty Problem

Earlier today, House Budget Committee Chair Paul Ryan (R-Wis.) continued his study of poverty with a hearing entitled, “A Progress Report on the War on Poverty: Lessons from the Frontlines.” Featuring witnesses from several poverty-fighting non-profits, Rep. Ryan styled the hearing as a “listening exercise” to hear about the strategies these charities and non-profits use to help alleviate poverty on the local level.

While it is admirable that Rep. Ryan gave a platform for community leaders to share their stories, he seems to have no sense of the scale of the problem before him. Indeed, Rep. Ryan’s veneration for the work of private charity is quite the contrast with his opinion of the federal government’s anti-poverty programs, which he has disparaged as “duplicative,” “complex,” and “ineffective.” However, for as much good work as it does, private philanthropy has well-known biases, as charitable donations tend to flow disproportionately to more glamorous causes, and often dry up during business cycle downturns—just when they’re needed most. In short, while individual charities and non-profits do incredible work to help our communities, they lack the ability to create widespread change; only the federal government has the resources to help alleviate poverty at the scale that is required.

While all of the witnesses who appeared at the hearing—including, ironically, both witnesses called by the Republican majority—represent organizations that receive federal funding, only one of the witnesses, Marian Wright Edelman of the Children’s Defense Fund, used her time to point out the importance of government programs. She cited a 2013 Columbia University study that found that government programs such as the Earned Income Tax Credit (EITC); Supplemental Nutrition Assistance Program (SNAP, or food stamps); the Women, Infants, and Children nutrition program (WIC); and Supplemental Security Income (SSI) reduce poverty by approximately 40 percent. Kathleen Short of the U.S. Census Bureau has also performed research on this topic, finding that government programs such as WIC, SNAP, and EITC, among others, all had a significant impact on reducing the poverty rate. In addition, Feeding America estimates that private charities make up just 4 percent of all food assistance resources in the U.S., with federal programs such as SNAP comprising the other 96 percent.

But it seems that Rep. Ryan doesn’t understand the unique role only the government can play in helping lift citizens out of poverty, as his recent FY15 budget proposal cuts billions from poverty-fighting programs, as Matthew Yglesias over at Vox recently pointed out. We also analyzed the proposed Ryan budget and projected that, if enacted, Rep. Ryan’s huge cuts would have a negative impact on economic growth and cost the labor force millions of jobs.

If Paul Ryan truly wanted to help the poor, he would not just rely on local leaders and private charities to reduce poverty in our country; instead, he would propose a budget that supports social safety nets and poverty-fighting programs.  He would support increasing the minimum wage, which would give 27.8 million Americans a raise and help the parents of one in five children.  And he would vote to extend Emergency Unemployment Insurance, which would help unemployed Americans in our weak labor market and even generate jobs.

Marian Wright Edelman got things right during the hearing when she said that “all of our charity is not a substitute for justice and a fair allocation of public resources.” Unfortunately, the House majority seems to think that publicly-funded programs must be ineffective just because they are publicly-funded—despite all evidence to the contrary.

  • tylerhealey

    One of the most sensible measures for poverty reduction would be the elimination of payroll taxes for low-income workers.

  • benleet

    The Columbia Univ. study says that the market income — pre-tax and pre-transfer income — left 27% in poverty in 1968, and 29% in 2011.
    Here’s the quote, page 7: “Figure 6 shows the substantial, and growing, effect of taxes and transfer payments on poverty rates. Using the pretax/pretransfer measure, we find that poverty would have actually increased slightly over the time period, from 27% to nearly 29%. But after accounting for taxes and transfers, poverty falls by approximately 40%, from 26% to 16%. The figure also shows the growing anti-poverty role of taxes and transfers in reducing poverty, from only about 1 percentage point in 1967 to nearly 13 percentage points in 2012.” The disposable income (post-federal-taxes), per BEA measures, is $40,045 per capita, for a total personal income of $12.7 trillion, which is also $87,500 per worker. I think all transfers (of which Soc. Sec. and Medicare are 60% of total) amount to $2 trillion. That would make $800 billion the cost of public/government charity transfers, which is about 6% of all personal income. The top-earning 1% of household receive 21.7% of all pre-tax income. But I’m just guessing on the amount transferred.

  • The_Turtle

    If private charity was the entire solution to ending poverty, there would be NO poverty today, right now. Public-private partnerships chip away at the problem, but it will take a complete corporate-public-private partnership and many years to reduce poverty to nearly undetectable levels.