The United States spends some $850 billion per year on poverty programs, yet the official poverty rate has not fallen much, if at all, over the past 40 years. What could we do better?
This slideshow, originally presented at a meeting of the Northport MI Lions Club on September 23, 2021, argues that with better policy design, we could greatly reduce the poverty rate without spending any more than we do today. The slideshow is suitable for classroom presentation and may be used without further permission.
The slideshow emphasizes three major problems with the design of current poverty policies:
- Spending is fragmented among many separate programs, each designed to help a particular group or meet a particular need.
- Programs have high benefit reduction rates, which severely reduce work incentives, especially for families just crossing the line from poverty into self-sufficiency.
- Many programs have strict work requirements that have the ostensible objective of encourage poor people to help themselves by getting a job. However, in practice, work requirements don't work and often throw families into deeper poverty than before.
I recommend three broad categories of policy change that could improve the performance of antipoverty efforts even in a baseline case where total spending does not increase:
- Consolidate programs and cash out in-kind assistance.
- Expand the kind of wage bonuses embodied in the Earned Income Tax Credit.
- Introduce a permanent child benefit that is paid monthly to all families with children regardless of employment status.