Welfare Reform and the Poverty Rate: Abuse of Data

Robert “no relation to Paul” Samuelson gets one thing right in his discussion of the poverty rate:

The economic boom of the 1990s explains much of this improvement.

Let’s review the historical record. From 1963 (the year that Johnson succeeded Kennedy) to 1996 (the year that the Personal Responsibility and Work Opportunity Reconciliation Act became law), the poverty rate fell from 19.5% to 13.7%. The overall decline had various phases. In 1978, the poverty rate was only 11.4%. The twin recessions – one during Carter’s latter years in office and one during Reagan’s first term – led to a 15.2% poverty rate in 1983 but we did manage to see poverty decline to 12.8% before the Bush41 recession.

Mr. Samuelson’s quote here relates to the fact that the poverty rate fell to 11.3% during the Clinton boom but was 12.7% in part because of the weak economy during Bush43’s first term in office. So he’s right – business cycles affect the poverty rate. But that’s not his message:

President Bill Clinton signed the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, better known as “welfare reform,” on Aug. 22 of that year. A decade later it stands as a rarity: a Washington success story. It did not succeed in the utopian sense of eliminating all poverty or family breakdown. It succeeded in a more practical way. It improved life modestly for millions of people and showed that government could orchestrate constructive change.

Our review of the big picture begs the question to what evidence would lead to this conclusion. While Mr. Samuelson looks at certain details, Max Sawicky writes:

Two can play at this game. And I can play it better than Not-Paul, because I’m not full of it.

I’ll stop there as one should read Max’s excellent rebuttal.