In 2008, the first year of the Great Recession, the number of Americans living in poverty rose by 1.7 million to nearly 47.5 million. While hugely painful, that rise wasn’t surprising given the unraveling economy. What is surprising is that recent census data show that those poverty numbers held steady in 2009, even though job loss worsened significantly that year. Clearly, the sheer scale of poverty — 15.7 percent of the country’s population — is unacceptable. But to keep millions more Americans from falling into poverty during a deep recession is a genuine accomplishment that holds a vital lesson: the safety net, fortified by stimulus, staved off an even more damaging crisis.
Congress should take a good look at those numbers, and consider that lesson carefully, before it commits to any more slashing and burning.
The latest poverty figures are from the census “alternative” data, developed in the 1990s to count income and expenses that the “official” data omit. For example, the official measure counts only cash income to gauge poverty (defined as $21,756 for a family of four in 2009). The alternative figures cited above, which closely follow criteria from the National Academy of Sciences, include noncash federal benefits, like food stamps (and set the poverty line at $24,522 for a family of four). That gives a truer picture of a family’s economic status.
What analysts have found is that the antipoverty effect of government intervention in 2009 was profound. Calculations by the Center on Budget and Policy Priorities, a liberal-leaning research group, show that specific stimulus provisions — including expanded federal jobless benefits, new and improved tax credits for workers and bolstered food stamps — kept 4.5 million people out of poverty in 2009. Only Social Security and the earned income credit did more to fight poverty.
The results are likely to be roughly similar in 2010 because most of the 2009 law was continued last year. The portents going forward are not good.
Federal aid is being scaled back, even though growth is not yet robust enough to make a sizable dent in unemployment. Late last year, Republicans blocked the extension of a successful stimulus program that had created 250,000 subsidized jobs for young people and low-income parents. They claimed the stimulus was an expensive failure, even as they pressed to renew the high-end Bush tax cuts. As part of the tax-cut deal, President Obama and Congress agreed to extend federal jobless benefits in 2011, but the checks will be $25 less a week than under the stimulus. That reduction could push an estimated 175,000 more people into poverty in 2011. The deal also included a one-year payroll tax cut that will benefit most workers, but it is less helpful to the lowest-income workers than a now-expired tax break in the stimulus.
With 14.5 million people still out of work, and more than 6 million of them jobless for more than six months, reducing federal help now will almost ensure more poverty later. That would impose an even higher cost on the economy and budget because ever poorer households cannot spend and consume.
We know it goes against the prevailing rhetoric to argue that more and better government policies are still needed to repair the economy. It is also unpopular to argue that programs that have succeeded for decades in reducing poverty, like Social Security, need to be preserved even as they are retooled for the 21st century. To do otherwise is to deny the evidence.
President Obama must explain to the American people that the country needs to continue relief and recovery efforts, especially programs to create jobs. Without that, tens of millions of Americans stuck in poverty will have little hope of climbing out — and many more could join their ranks.
