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Everyone's Favorite anti-Poverty Program Doesn't Reduce the Poverty Rate


As we mentioned during the rollout of Paul Ryan's poverty plan last week, expanding the Earned Income Tax Credit is one of the few anti-poverty measures both parties can agree about (even if they can't come to an agreement on how to fund it). But at the same time, the EITC does exactly nothing to reduce the official poverty rate.

The reason has nothing to do with the effectiveness of the policy — the best evidence we have is that the EITC improves health, school achievement in children of recipient households, and those children's wages once they grow up, among other things. It has to do entirely with what is and isn't included in the official poverty numbers.

The official poverty measure was developed by the Social Security Administration's Mollie Orshansky in 1963 and defined as three times the "subsistence food budget" for a family of a given size. As former acting Commerce Secretary Rebecca Blank (then a Brookings Institution fellow, now chancellor of the University of Wisconsin - Madison) explained in 2008 Congressional testimony.