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Greenstein on the Safety Net, Part 1

April 17, 2012 at 7:08 PM
BY
CBPP

Testifying today before a House Budget Committee hearing, “Strengthening the Safety Net,” Robert Greenstein urged policymakers to “step back from the usual type of Washington debates and political battles and consider what policies would be best for ‘the least among us.’  I urge you to follow the Hippocratic oath and ‘do no harm.’  I also implore you to adopt the Bowles-Simpson principle of protecting the disadvantaged and avoiding measures that would increase poverty and hardship in a nation as abundant as ours.”

The following excerpts are from the first section of his testimony, which looks at the safety net as a whole:

The safety net is far from perfect and contains areas that merit strengthening.  Yet as a result of a series of mostly bipartisan decisions over several decades, it is functioning far better than is often understood.

Let’s start with its effect on poverty.  Analysts across the political spectrum agree that to measure the safety net’s impact on poverty, one cannot use the “official” measure of poverty — which completely ignores SNAP (formerly known as the food stamp program), the Earned Income Tax Credit, rental subsidies, and the like and also fails to adjust for taxes that are withheld from paychecks and that families thus can’t spend. . . .

In the mid-1990s, a National Academy of Sciences’ expert panel recommended use of such a broader measure of poverty, and the Census Bureau issues several alternative, broad poverty measures.  Under the measure most closely resembling the NAS recommendation, the poverty rate stood at 15.5 percent in 2010.  Yet under the same measure, the poverty rate without the safety net — that is, the poverty rate based on household incomes before government assistance is counted — was 29 percent.  In other words, the safety net cut poverty nearly in half compared to what it otherwise would be. . . .

One also can look at the Census data on how many people individual programs lift out of poverty.  In 2010, for example, the Earned Income Tax Credit and the Child Tax Credit lifted about 9 million people in low-income working families above the poverty line, including 5 million children.  SNAP lifted about 4 million out of poverty.

Among the most striking figures are those that track poverty rates over the last few years.  Given the depth and severity of the economic downturn (sometimes called the Great Recession), one would have expected poverty to have soared.  It didn’t. . . .  The “automatic stabilizer” response of programs like SNAP and unemployment insurance, supplemented by the temporary increases in assistance in various safety net programs that were provided under the Recovery Act, counteracted most of the increase in poverty that would otherwise have occurred.  This is a substantial accomplishment, and one that speaks well for our nation.

Click here for the full testimony.