The poverty rate was 11.6% when Carter took office in 1977. The
poverty rate rose to 14% in 1981, when Reagan took office. The poverty
rate fell to 12.8% in 1989, when Reagan left office.
So how can the NYR of Books say "it rose under Reagan to
approximately 15 percent"? That's because in Reagan's second year there
was a very serious recession, and the poverty rate reached 15%. But
the NYR of Books creates the impression that it rose during the 8 years
that Reagan was in office, which is simply not true. Poverty fell under
Reagan. it was Jimmy Carter who presided over a surge in poverty.
Of course there are lots of ways to massage the data, such as
adjusting for changes in the business cycle, as well as inflation. As a
general rule, poverty increases during presidencies when the economy
deteriorates (Carter, Bush I, Bush II) and declines during presidencies
where the economy improves (Reagan, Clinton, Obama). Unfortunately,
Jeff Madrick seems to have an agenda, which requires his readers to
believe that poverty increased under Reagan.
One other point. Yesterday,
David Henderson quoted from a book by Peter Schuck. Here is one bit that caught my attention:
If we include noncash government benefits such as food and
housing, if we take account of the Earned Income Tax Credit, and if we
use a more realistic measure of inflation than the Consumer Price Index,
then we would conclude that the 2013 poverty rate was not the reported
14.5%, but, rather, 4.8%.
Over the course of 61 years, I've run into a surprisingly large number
of people who earn income on the fringes of the economy, doing various
odd jobs. They are often paid in cash. Many of these people probably
had very low "official incomes" being reported to the government. Thus I
suspect that if you included money earned in the underground economy,
the poverty rate would be far lower than even 4.8%.
The point of this exercise is not to suggest that there is not a lot
of poverty in America, in a relative sense. I am not trying to minimize
the problem. I'm quite happy with people claiming that 15% of
Americans are poor if they mean, "incomes that the average upper middle
class person views as low". Thus people in New York or LA who make 20%
or 30% above the official poverty line are probably viewed as "poor" by
the average well paid professional. That's a valid opinion.
Rather my claim is that absolute poverty, not having enough income
for food, clothing, and some form of shelter, has decreased sharply in
America, even as relative poverty may reasonably be said to have stayed
around 10% to 15%, or perhaps even edged up a bit.
Here is the official poverty rate data:"
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