When House Speaker Paul Ryan began rolling out a new antipoverty plan last week, he highlighted a dire-sounding statistic: that since the War on Poverty began, the U.S. poverty rate has barely budged. “Washington has spent trillions of dollars on dozens of programs to fight poverty,” he said in last week’s Republican address. “But we have barely moved the needle.”
On Tuesday, House Republicans officially unveiled the new proposal, crafted over the past few months by five committee chairmen, and Ryan’s favorite statistic came up in one of the first paragraphs. “Even though the federal government has spent trillions of taxpayer dollars on these programs over the past five decades, the official poverty rate in 2014 (14.8%) was no better than it was in 1966 (14.7%), when many of these programs started,” the report said.
That trillions of dollars have been wasted in the War on Poverty has come to be gospel on the right, an indictment of the current anti-poverty system and a clear sign that a widespread overhaul is needed.
Just one problem: That figure isn’t the whole story. In fact, when the government assesses whether someone is poor, it deliberately ignores many of the benefits they’re getting from federal programs, from food stamps to refundable tax credits. If you include those dollars when you measure poverty, the result is a very different picture of the War on Poverty—and leads to different policy prescriptions.
Since the War on Poverty began, the anti-poverty system has undergone many changes, but one of the most profound ones has been a shift from cash benefits to non-cash benefits, most notably through welfare reform in 1996 when Aid for Families with Dependent Children—a largely cash-based system, the typical “welfare” program critics imagine—was replaced by Temporary Assistance for Needy Families, which imposed work requirements and time limits on welfare benefits. The food stamp program has also grown over time, along with refundable tax credits like the Earned Income Tax Credit and Child Tax Credit.