WASHINGTON – Is a family with a car in the driveway, a flat-screen television and a computer with an Internet connection poor?
Americans – even many of the poorest Americans – enjoy a level of material abundance unthinkable just a generation or two ago. That indisputable economic fact has become a subject of bitter political debate this year, half a century after President Lyndon B. Johnson declared a “War on Poverty.”
House Republicans, led by Rep. Paul D. Ryan of Wisconsin, have convened a series of hearings on poverty, including one Wednesday, in some cases arguing that hundreds of billions of dollars of government spending a year may have made poverty easier or more comfortable but has done little to significantly limit its reach.
Indeed, despite improved living standards, the poor have fallen further behind the middle class and the affluent in both income and consumption. The same global economic trends that have helped drive down the price of most goods also have limited the well-paying industrial jobs once available to a huge swath of working Americans. And the cost of many important services crucial to escaping poverty – including education, health care and child care – has soared.
“Without a doubt, the poor are far better off than they were at the dawn of the War on Poverty,” said James Ziliak, director of the Center for Poverty Research at the University of Kentucky. “But they have also drifted further away.”
Democrats have generally argued that addressing this disjunction requires providing more support for the poor, raising the minimum wage, extending unemployment insurance benefits and making health care more affordable by expanding the reach of Medicaid and subsidizing private insurance for those who lack employer coverage.
Republicans, by contrast, have proposed reducing government regulations and overhauling existing programs to encourage more work, arguing that this would allow Washington to decrease spending on the poor.
“The question isn’t whether the federal government should help; the question is how,” Ryan said at the hearing Wednesday.
Two broad trends account for much of the change in poor families’ consumption over the past generation: federal programs and falling prices.
Since the 1960s, both Republican and Democratic administrations have expanded programs such as food stamps and the earned-income tax credit. In 1967, government programs reduced one major poverty rate by about 1 percentage point. In 2012, they reduced the rate by nearly 13 percentage points.
“There’s just a whole lot more assistance per low-income person than there ever has been,” said Robert Rector, a senior research fellow at the conservative Heritage Foundation. “That is propping up the living standards to a considerable degree,” he said, citing a number of statistics on housing, nutrition and other categories.
Decades of economic growth, however, have been less successful in raising the incomes from work of many poor families, prompting a strong conservative critique this year that hundreds of billions of dollars in anti-poverty programs have failed to make the poor less dependent on government.
“That’s the crux of the problem,” Rector added. “What sort of progress is that?”
But another form of progress has led to what some economists call the “Walmart effect”: falling prices for a huge array of manufactured goods. Since the 1980s, for instance, the real price of a mid-range color television has plummeted about tenfold, and televisions today are crisper, bigger, lighter and often Internet-connected. Similarly, the effective price of clothing, bicycles, small appliances, processed foods – virtually anything produced in a factory – has followed a downward trajectory. The result is that Americans can buy much more stuff at bargain prices.
Many crucial services, though, remain out of reach for poor families. The costs of a college education and health care, for instance, have soared.