Effect of Federal Spending on Poverty

Does government spending have any effect on poverty?

The associated chart shows that poverty was declining very well until, oh, about the time Johnson commenced the War on Poverty. It has been more or less flat since, mostly trending up and down with expansionary and recessionary periods. Or, more specifically, the percentage of people living under 125% of the government poverty threshhold have been fluctuating but mostly flat. Yet real, per capita government spending has been increasing during that entire period, and rather dramatically. To find the per capita costs, I divided by the entire population, but realistically the money is being spent on a much smaller group of people, so these are drastically understated figures (approximately $4840 per person spent in 2003).

The spending is a statistic tracked in the Statistical Abstract as "Human Resources" (HR), corrected with BLS data to 2004 dollars and divided by census population data, and the poverty numbers are from http://www.census.gov/hhes/poverty/histpov/hstpov6.html. These figures only reflect the quantity of spending and say nothing about the quality of the spending.

As you can see in the other charts, spending increases under both Bushes typically exceeds that under Clinton and Carter. In fact, it was flat under Carter, and the Clinton era looked like the Reagan era. And, as always, Congress is a primary factor to consider.

Charitable Spending

Some time ago, I read that a good way to manage your charitable giving was to (1) pick a spending goal, (2) carefully select charities, and (3) divide your goal among those carefully selected charities. This strategy helps you to make sure that you achieve your giving goal, but it also helps you say "No" in good conscience. Denying requests from people or organizations whom you have not researched helps you to avoid impulsive giving, scams, and organizations with whose philosophy you might not agree.

So what is a good spending goal? I think the biblical requirement is 10%, but I doubt many people achieve it in practice. A friend turned me on to the idea that poorer people give more than people who are better off in terms of percentage of their income. The nearby chart shows that, of the people who itemize on their taxes, poorer people give about 5.5%. That seems like a good goal for everyone, especially if we want to see the kind of civil society that most libertarians would like to see. Granted, most of us already give a great deal to government institutions through our taxes, and would be inclined to give more to charity if weren't sending so much to Washington and the state capitals, but still I doubt that very many people - especially very many atheists - set a 5% goal.

As the next chart shows, those poor people are likely to be older people. Generally, older people have lower incomes, but more wealth and certainly more inclination to give it away. So maybe it's not poor people so much as it is older people who are donating at the higher rates.


Another interesting aspect to these numbers is the direction of their giving, shown in the third chart. By far, most of it is going to religious organizations, nearly $100 billion per year (chained 2004 dollars). After that, education (donations to alma maters?), health and human services have been consistently the next 3 recipients of largesse. For a while, foundations were a rapidly growing target, but that seems to have slowed. Perhaps, in the go-go 90s, people wanted to shelter their rapidly growing wealth from the tax man? In any case, the contributions are increasing in real terms year after year.

Bush Administration Spending (2 in a series)

Today's topic are three spending programs that tend to be grouped together: Medicare, Health, and Income Security. These figures are from the Statistical Abstract (spanned over several years) and are in current dollars. The chart below has been converted to chained 2002 dollars. The anomaly around 1976 has to do with a redefinition of the fiscal year in that year (this is a common problem in historical tables of federal spending).

Medicare ($M) Health ($M) Income Security ($M)
1960 0 55 1,514
1961 0 211 1,137
1962 0 268 4,097
1963 0 291 5,071
1964 0 795 7,378
1965 0 1,791 9,462
1966 64 2,543 9,671
1967 2,748 3,351 10,253
1968 4,649 4,390 11,806
1969 5,695 5,162 13,066
1970 6,213 5,907 15,645
1971 6,622 6,843 22,936
1972 7,479 8,674 27,638
1973 8,052 9,356 28,264
1974 9,639 10,733 33,699
1975 12,875 12,930 50,160
1976 15,834 15,734 60,784
1976 4,264 3,924 14,981
1977 19,345 17,302 61,044
1978 22,768 18,524 61,488
1979 26,495 20,494 66,359
1980 32,090 23,169 86,540
1981 39,149 26,866 99,723
1982 46,567 27,445 107,717
1983 52,588 28,641 122,598
1984 57,540 30,417 112,668
1985 65,822 33,542 128,200
1986 70,164 35,936 119,796
1987 75,120 39,967 123,250
1988 78,878 44,487 129,332
1989 84,964 48,390 136,031
1990 98,102 57,716 147,076
1991 104,489 71,183 170,276
1992 119,024 89,497 196,948
1993 130,552 99,415 207,250
1994 144,747 107,122 214,036
1995 159,855 115,418 220,493
1996 174,225 119,378 225,989
1997 194,256 127,630 238,855
1998 192,822 131,442 233,202
1999 190,447 141,079 237,707
2000 197,100 154,500 251,286
2001 217,400 172,300 269,600
2002 230,900 196,500 312,500
2003 244,700 223,100 330,100

These numbers are a little tougher to analyze than Head Start. The enrollment is harder to define as people move on and off of the programs, whereas kids tend to move in and out of HeadStart in fairly predictable patterns as they age. For example, it shouldn't be surprising to see Income Security rise as the economy tanks, and then fall as it improves.

• Real spending on Health increased slightly from the mid 60s until the mid 70s, then stayed flat throughout the Carter era and Reagan's first term. It then accelerated through Reagan's second term and the first Bush term. It slowed (but still grew) a little in Clinton's first term, and then began an acceleration into the second Bush presidency.
• Real spending on Medicare increase steadily (and rapidly) from inception through Clinton's second term, at which point real spending actually decreased for a few years before accelerating again in Clinton's last year. The increase trend has persisted into W's Administration.
• Real spending (and again, these last three paragraphs are a description of realspending) on Income Security accelerated from the mid 60s to the mid 70s, slowed a bit in the late 70s, accelerated slightly in the Carter/Reagan I terms, then stayed flat until the Bush I Administration, accelerated for two years, flattened out as Clinton took office, and accelerated as Bush took office. This is interesting: real spending increases in a rough economic patch, but then stays at the new higher level.
  

From this, I believe that Bush spending looks more like Clinton spending, and Reagan spending looks like Carter spending. I think this underscores the fact that spending - while typically associated with presidents - is really attributable to Congresses. From a fiscally conservative standpoint, it looks as if having a President and Congress of opposite parties is good and turmoil in Congress is good, but once the Congress is firmly controlled by one party for several years (and it doesn't appear to matter which), spending accelerates. Current spending never decreases significantly, but real spending may.

Bush Administration Spending (1 in a series)

One of the most frustrating things to me is that partisans will not be consistent. There arguments are frequently opportunistic. For example, do Democrats want Bush to be fiscally responsible, or do they want him to spend more? (Or, do they want both, and believe that this can be achieved by raising marginal tax rates?)

I have been gathering figures on spending on various programs. In this post, I have the figures for Head Start spending. The three columns are Year, enrollment, and appropriations in current $Million.

1965 561,000 96.4
1966 733,000 198.9
1967 681,400 349.2
1968 693,900 316.2
1969 663,600 333.9
1970 477,400 325.7
1971 397,500 360
1972 379,000 376.3
1973 379,000 400.7
1974 352,800 403.9
1975 349,000 403.9
1976 349,000 441
1977 333,000 475
1978 391,400 625
1979 387,500 680
1980 376,300 735
1981 387,300 818.7
1982 395,800 911.7
1983 414,950 912
1984 442,140 995.8
1985 452,080 1075
1986 451,732 1040
1987 446,523 1130.5
1988 448,464 1206.3
1989 450,970 1235
1990 548,470 1552.01
1991 583,471 1951.8
1992 621,078 2201.8
1993 713,903 2776.3
1994 740,493 3325.7
1995 750,696 3534.1
1996 752,077 3569.3
1997 793,809 3980.5
1998 822,316 4347.4
1999 835,365 4658.2
2000 857,664 5266.2
2001 905,235 6199.1
2002 912,345 6536.6


A few points from this:

• Real, per student spending was flat throughout the 70s, decreased slightly through the 80s, but has exploded since then. The apparent reduction in real, per student spending under the mostly-Democrat Congress and Ronnie was due to increasing enrollment and inflationary erosion, not actual cuts.
• The first president Bush began the prolific spending. It subsided slightly at the beginning of the Republican Revolution in 1995/96, but picked up again afterwards.
• The current enrollment and spending levels are higher than they were at the end of the Clinton Administration and nearly twice as high as they were in the first years. Are there really that many more poor children? If so, then the Clinton miracle economy must not have treated children that well. Or is means-testing becoming less popular or less feasible?

Subtle bias, lazy journalism, or Truth?

Regarding a Mary Kelly piece on Morning Edition last week, I thought it was interesting that only one view was presented, when the entire story begged to be turned on its head. Every person interviewed more or less said, "The president took seriously the 2002 NIE that said that Saddam had WMD, but not the 2004 NIE that says that Iraq is headed toward civil war, and therefore he is cherry picking. NIEs are serious, and therefore the President is a rube for ignoring them."

Okay, but couldn't the opposite be said? "The current NIE is being treated as Revealed Truth because it counters the Administration's claims, but none of the people cheerleading for it are willing to say that the President went to war on the best information available at that time (the 2002 NIE). Therefore they are cherry picking." Of the two groups - the administration and its critics - who is standing on firmer ground?

The 2002 NIE was tragically wrong, and it seems that the President is justified in his skepticism of their consultations with the crystal ball. Yet his detractors are insisting that he is a rube for not believing the same people who were dead wrong! Why should he? Simply because the new NIE squares with their world view? Do they, like John Kerry, get their intel from TV news? In that case, the NIE is irrelevant and the Prez need only consult with his detractors to find out what to do. Of the two groups, the President believed the NIE when the authors had no track record (actually, their track record vis-a-vis Soviet economic performance was not good), while his detractors believe the authors now that they have a dismal record. Who is the real cherry picker?

I say this as an opponent of the war. I am less interested in listening to such shallow criticisms of the President than in finding (1) the truth (what is or what was), and (2) a reasonable approach to foreign policy when the actual truth can only be expressed in probabilities (what is going on in North Korea? In Iran? How should we approach those problems?). Personally, I don't think the President is cherry picking in this case (I think he is optimistic, perhaps overly so), but then neither do I think he was justified in going to war even if the 2002 NIE had turned out to be correct. He should have viewed that NIE as skeptically as he views this one. Stories as poorly reported as this overlook part of the truth, do nothing to help us understand how to think about the issues, and give credibility to those who accuse NPR of a subtle left-wing bias.

Welcome.

The point of this blog is to highlight things that I encounter - in the news, in the blogosphere, in popular culture - that I think illustrate inconsistent or sloppy thinking. Of course, the outcome may be that I have these shortcomings pointed out in my own thinking. So be it.

There are two things of late that - to me - seem to be especially egregious examples of sloppy thinking. When deciding on something, it seems to me that points should be both factual and relevant. Quite frequently, people point to contrary evidence that may or may not be factual, but it is certainly irrelevant.

Also, this may be occasionally be fun.