Social Security Pulled 22 Million Out of Poverty in 2012

Elizabeth Stoker and I wrote a piece for Salon yesterday comparing Christian political movements in Europe to those in America. It turns out that Christian political movements in Europe are pretty serious about combatting poverty and inequality while so-called American value voters are not. As expected, the Twitter fall out from such a piece was interesting to say the least.

As regular readers here know, I am a big fan of reducing inequality and combatting poverty by distributing income more evenly. This involves, among other things, increasing taxes on the rich and using the revenue from such taxes to boost the incomes of the poor. It's pretty simple and has been a winner of a policy everywhere it has been tried.

But on the right-wing, especially this value voter wing, they have this story they always tell about how doing this won't actually reduce poverty or inequality. After I pointed out that cash transfer programs pull millions upon millions out of poverty each year, one Twitter user asked rhetorically "Are you asserting the gov pulled people out of poverty by giving them a hand-out? The gov. traps our impoverished by dependence."

While it is true that some programs are not well designed, it is undeniably true that the government pulls huge numbers of people out of poverty by sending them so-called "hand-outs."

The obvious case in point is the Social Security program, which is the most successful anti-poverty program in the history of the country. I decided to run the numbers on the program for 2012 using the recently-released March supplement microdata. If you subtract each family's Social Security (OASDI) income from their total income, the number of impoverished individuals in 2012 jumps from 46.5 million to 68.7 million. That is, without Social Security income, 22 million additional people would have fallen below the official poverty line last year.

Of course, if you eliminate Social Security, some old folks might work longer to avoid living on cat food. Also, some might save more for their old age. So the world without Social Security probably wouldn't mean exactly 22 million extra impoverished people. But we know, as a historical matter, that life before the more generous Social Security pension we now have was rife with elderly poverty. In 1960, the elderly poverty rate was 35 percent. With the expansion of Social Security however, that rate plunged to 10 percent by 1995, eradicating 71 percent of elderly poverty. For 2012, I calculated that the over-65 poverty rate was 9.1 percent. Subtracting Social Security, it would be 44.4 percent (a difference of more than 15 million seniors).

So yes, as a matter of undeniable fact, handing out money does pull people out of poverty. It is astonishing to me that saying something like that is met with such gobsmacked skepticism. It is nearly the most obvious thing in the world that giving people more income makes them less poor.