COVID Relief Packages Dramatically Reduced Poverty


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Source: Truthout

Last week, the Urban Institute released stunning data on how the huge infusion of government assistance to counter the economic effects of the pandemic had reduced poverty in the U.S. The researchers found that because of enhanced unemployment benefits, rent assistance, eviction moratoriums, increased access to food stamps, tax credits and stimulus checks paid directly to families, the U.S. poverty rate (a conservative, and at times inadequate, estimate of poverty, but one used by poverty scholars for generations) had plummeted to a projected 7.7 percent for 2021. This contrasts with an official poverty rate, calculated by the U.S. Census, of 10.5 percent in 2019; and an Urban Institute estimate that by the end of 2020, the poverty rate had declined to 9.5 percent, largely because of federal and state government interventions to support the income of huge numbers of Americans. That trend continued into 2021: The Urban Institute researchers concluded that child poverty has now declined to 5.6 percent, a far lower number than ever previously recorded in the U.S.

On one level, the data was entirely counterintuitive. After all, as the COVID crisis has raged the past 18 months, we have witnessed Great Depression-era level spikes in unemployment and unprecedented increases in housing and food insecurity. On the other hand, it oughtn’t to have been entirely surprising, because in 2020 and 2021, Congress, despite its general dysfunction, managed to pass into law several pandemic relief packages worth trillions of dollars — and much of that money ended up flowing, often at speed, to households around the country.

The lesson is clear: Ambitious, outside-the-box government programs and investments can be extraordinarily effective in helping vulnerable Americans escape poverty. The Urban Institute’s research concludes that absent these interventions, the poverty rate at the end of 2020 would have been above 20 percent of the population.

There’s a historical precedent for big-thinking and big-spending government programs successfully driving down the poverty rate: At the height of the “war on poverty,” in the 1960s and early 1970s, the United States also began posting huge drops in the number of residents living in poverty — though at a slower pace than occurred in 2020 and 2021.

From 1964 to 1973, from the year Lyndon Johnson began putting in place the building blocks of his anti-poverty programs to the year that Richard Nixon began shifting the emphasis away from these programs and toward more punitive social policies such as the “war on crime” and the “war on drugs,” poverty in the U.S. declined by 42 percent.

But, as political priorities shifted, and as the moral language around poverty morphed from the LBJ-era notions of poverty being a societal problem to the Reagan-era notions of poverty being the fault of poor people’s behavior and choices, the needed investments in social infrastructure began to wane. From the 1970s on, for most groups of Americans, the poverty rate either plateaued or increased. The numbers waxed and waned somewhat, but by and large, for most of the past half-century, with the exception of dips in 2000 and in 2018-19 triggered by historically low levels of unemployment, between 12 and 15 percent of Americans in any given year have lived in poverty — with a shockingly large number of those living in what economists term “deep poverty,” where their incomes only take them to (at most) half of the poverty threshold, and where significant physical and mental health impacts are most likely to occur.

Of course, poverty has never been distributed evenly. Thanks to this country’s foundations in slavery and colonialism and its ongoing practices of systemic oppression, African American, Indigenous and Latino communities have long had far higher poverty rates than whites. And until the most recent anti-poverty interventions, young people, especially those living in single-parent households, were more likely to live in poverty than were older Americans.

In fact, during these decades, for the elderly — who benefited from the creation of Medicare and a series of other targeted efforts — poverty plummeted, and continued to decline even after the broader war on poverty ended. At the start of LBJ’s anti-poverty efforts, more than one in four seniors lived below the poverty line. A half-century later, with Medicare, Supplemental Security Income and other benefits having been cemented into the social compact, fewer than 1 in 10 seniors were in similar straits.

Of course, some of this data should be taken with a grain of salt: For decades, experts have critiqued the government’s definition of poverty, and the threshold that it uses to determine whether individuals and families are income-insecure as failing to fully measure economic hardship. Most poverty measures used by the federal government don’t, for example, fully take into account the high cost of housing in states such as California or New York; nor do they fully recognize that things such as affordable broadband access are now necessities of life rather than luxuries. Certainly, during the Trump era, falling official rates of poverty masked deepening fissures of inequality and deepening financial straits faced by those at the bottom of the economic pyramid.

When the government invests in anti-poverty programs, across-the-board measures of poverty show that these programs can work to improve the financial condition of millions of Americans. Yet, despite that, too often those programs fail to sustain popular support over the long-term.

In fact, historically, across-the-board anti-poverty programs have only ever attracted lukewarm political support from U.S. leaders. Poverty embarrasses those in power. They don’t like to talk about it or admit its durability. In the 1960s, the sociologist Michael Harrington wrote of a poverty that was rendered invisible by the broader affluence that hemmed it in. As a society, we have, over the decades, been remarkably willing to sweep our poverty crisis under the rug and pretend it doesn’t exist.

Harrington’s book, The Other America, helped trigger a political and cultural awakening around poverty. It helped open eyes and create the conditions in which it was possible to put in place interventions such as Medicare and Medicaid, an expansion of food stamps, free and reduced school meals, increased job training and housing programs in poor neighborhoods, and so on. But, over time, the public’s appetite for these programs — and the costs of maintaining them — waned, and poverty rates began creeping up again.

Today, in 2021, the country has a huge opportunity. Out of the pandemic, remarkably creative economic and political thinking has emerged about how to reduce poverty. Federally, one-year child tax credits are now in place that will massively reduce child poverty this year. At a state level, states like California are implementing universal pre-K education. Ideas around creating guaranteed income programs are no longer dismissed as being utopian or un-implementable. A dramatic expansion of unemployment benefits was shown not only to be possible, but to be remarkably effective at keeping unemployed people afloat economically.

Yet all of these changes are as fragile as were so many of the programs of LBJ’s war on poverty. Already, Republican states have dismantled their expanded unemployment benefits. Already, Congress and President Biden have allowed the federal eviction moratorium to sunset — despite millions still struggling to pay their rent. Already, there is a political battle underway about whether or not to continue the child tax credits beyond this current year.

Take these tools away, and poverty could all too easily boomerang back up to pre-pandemic levels within months. That would be a tragedy of historic proportions — and an entirely avoidable one at that.

 

Sasha Abramsky is a freelance journalist and a part-time lecturer at the University of California at Davis. His work has appeared in numerous publications, including The Nation, The Atlantic Monthly, New York Magazine, The Village Voice and Rolling Stone. He also writes a weekly political column. Originally from England, with a bachelors in politics, philosophy and economics from Oxford University and a master’s degree from the Columbia University Graduate School of Journalism, he now lives in Sacramento, California, with his wife, daughter and son.

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