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The Wrong Way to Look at Helping the Poor

In a New York Times op-ed today, Gary MacDougal tackles a pressing and complicated question: What is the most effective way to fight poverty in America? With 15 percent of the population--and one in five children--living below the federal poverty line, this is exactly the conversation we need to have as a country.

The problem is that after wondering if the vice presidential candidates will give poverty the attention it deserves in tonight’s debate, the question gets almost immediately obscured by bad math.

Dean Baker enumerates a number of ways MacDougal’s arithmetic just doesn’t add up. To highlight one example, MacDougal cites research from the Cato Institute showing that as a nation we spend $1 trillion a year to help the poor. He acknowledges that, in fact, that money goes to a wider population than just those living below the poverty line because it includes things like the Earned Income Tax Credit (EITC), which can be available to families with incomes as much as twice the poverty level. However, that doesn’t stop him from dividing that figure by the 46 million people living below the federal poverty line to claim that we spend $21,700 per poor person, and that perhaps the poor population would be better off simply receiving that money as a direct transfer (ignoring the fact that policies like the EITC actually already function that way for low-income workers). Short of direct cash transfers, MacDougal suggests block granting these programs and devolving responsibilities to the states.

Bad math aside, block grants are not a silver bullet solution.

MacDougal makes sense when he points to the inefficiencies and redundancies that exist in our current federal anti-poverty policy framework. They pose real challenges, particularly in an era where the geography of poverty has shifted significantly; the number of poor Americans has reached a historic high; and the looming fiscal cliff could significantly ratchet back current programs that help low-income people and families. Fragmentation and duplication across agencies and policy silos, compounded by lack of flexibility and cross-agency coordination, create unnecessary administrative burdens and ultimately stifle innovation. In the context of shrinking resources and rising need, MacDougal is right that data-driven and outcome-oriented decision making is critical now more than ever.

But block grants are hardly the answer. For instance, as the Center on Budget and Policy Priorities has argued, block granting a program like SNAP (food stamps) would effectively mute its responsiveness to changes in the economic cycle, exacerbating poverty in a downturn and removing the broader economic stimulus the program provides. Moreover, block grants can end up re-creating the same fragmentation and inefficiency that currently exists, just at a lower level of government. For MacDougal, it’s as though block grants are a hammer, and every problem with anti-poverty programs looks like a nail.

Rather than passing administrative burdens and costs to the states, the federal government should play its essential role in combating poverty, but do so in a more targeted and efficient way. First, the federal government should continue to support at scale key programs that are shown to help alleviate poverty. The latest Census Bureau poverty numbers show that had EITC and SNAP benefits been counted toward income, the number of Americans in poverty in 2011 would have been reduced by 5.7 million and 3.9 million, respectively.  

Second, just as data should drive decisions on what anti-poverty programs to maintain, rigorous evaluation should also be used to eliminate the ones that aren’t working or are needlessly duplicative. This sort of evaluation was one motivation for the Obama administration’s proposal to halve spending on the Community Services Block Grant (which Congress subsequently ignored).

And between keep and cut, there is also “improve.” From steps to align reporting requirements across programs and ease integration of programs and funding to implementing more outcome-oriented, enterprise-level funding, the federal government can fuel innovative approaches to poverty alleviation while improving efficiency. Why, for instance, shouldn’t high-performing non-profits that administer a range of federal programs be able to devise and propose their own reporting systems to federal agencies? That’s devolution everyone can believe in.