Are Programs for the Poor Actually Poor Programs?

Kevin Drum of Mother Jones takes on the conventional wisdom that "programs for the poor are poor programs." He makes two points, both of which I believe to be mistaken. I address both points below and add another point that Drum did not address.

Spending Has Gone Up

Here is Drum: 

First, although means-tested benefits (EITC, food stamps, Medicaid, etc.) are, indeed, often under attack from conservatives, they've nevertheless increased rather smartly over the past few decades. The chart on the right, from Brookings, shows the growth of means-tested benefits since 1980. It comes from Ron Haskins, a conservative, but it pretty closely matches a more recent analysis from the CBO. Adjusted for inflation, means-tested benefits over the past 30 years have increased steadily; have never decreased; and even before the Great Recession were more than 4x higher than in 1980.

As an initial matter, it's important to note that the proper metric here is not raw dollars adjusted for inflation. It's spending as a percent of GDP, which the CBO provides:

In 1980, the spending is around 2 points of GDP. In 2007 (the year before the Great Recession), it's around 3 points of GDP. This is an increase of 50%, not 400%. The vast majority of the increase is in health care, an economic sector whose unit costs have grown at a faster clip than GDP over this period, which explains a good deal of its growth here.

Additionally, if you peer beneath these headline numbers, the trends actually tend to confirm the fact that poor people's programs are quite vulnerable.

Consider the case of cash assistance. The CBO tracks four categories of cash assistance: SSI (for disabled and elderly), AFDC/TANF (for poor families with children), and the refundable portions of the Child Tax Credit and Earned Income Tax Credit (also for poor families with children). If we look only at programs for poor families with children over the period the CBO tracks, we get this:

Under Drum's analytical approach, you'd conclude that things are looking up: total cash assistance for poor families with children more than doubled from 0.3% of GDP in 1972 to 0.7% of GDP in 2011. But what really happened during this period is cash assistance for the bottom half of poor families was gutted while the upper half of the poor and near poor saw expansions. Specifically, AFDC/TANF got shredded while EITC and CTC for the more "deserving" working poor got bumps.

This is a key finding of Robert Moffitt's SIPP work:

Not surprisingly, this particular reallocation of transfers coincided with a spike in extreme $2-a-day poverty.

The story of rising overall cash assistance, which is now concentrated on the "deserving" poor, is actually the story of why programs for the poor are poor programs. It also goes to show why simple aggregates like those relied upon by Drum can mislead.

It's About Age

Drum's second point is that universal programs in the US are only well-liked because they are old-age programs and are perceived as benefits that retired people have paid for during their working lives. To the extent that we haven't tried many other universal programs, this point is hard to prove one way or another. My intuition is the opposite of Drum's however. It's hard for me to see how universal paid leave would be anything but adored once it was put in place. The same goes for child care and the other programs the US currently lacks.

We do actually have a big universal welfare program that doesn't involve elderly people: public K-12 education. While some people complain about education particulars, one of the most striking things about educational debates is that basically no one wants to simply get rid of it. Even voucher people still endorse the basic idea that the government should massively redistribute income to pay for the universal education of children.

Missed the Point

Finally, Drum seems to miss one of the main parts of the "poor programs" point. It's not just that programs for poor people are vulnerable (which I think AFDC/TANF shows they are). It's also that they are often immiserating in other ways.

States try to drug test SNAP recipients and limit their food options. States try to limit TANF withdrawals to $25 per day. Asset tests on means-tested programs require people spend themselves down into complete asset destitution, which paradoxically makes it even harder for them to get reattached to the labor force. Although Medicaid has grown (both through unit costs and more recently through expansions in participants), 19 states still refuse to implement the Obamacare expansion. Something tells me this would not have happened if Medicaid was the name of our new universal health insurance system, and not simply a program for the poor.

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