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Taking Stock of the Safety Net, Part 1: Overview

We will issue a series of posts in the coming days that will look back at some of the major programs that helped struggling families during the year — their goals, impact, and issues facing policymakers in 2012.  Today, we’ll begin by setting the context.

For America’s low- and moderate-income families, 2011 was another very bad year, as the Great Recession of 2007-2009 continued to have a large and lingering impact.  Unemployment and long-term unemployment remained very high, as did the percentage Americans without health insurance.

Yet things aren’t nearly as bad as they could have been.  The safety net is helping to hold the line against poverty and hardship, as the latest available figures in several areas show.

  • Without government assistance programs, the poverty rate would have been nearly twice as high in 2010:  an estimated 28.6 percent, compared with the actual figure of 15.5 percent, based on a measure of poverty that includes the impact of programs like food stamps and housing assistance and tax credits (including the Earned Income Tax Credit).   If the safety net hadn’t existed, another 40 million people would have been poor.
  • Just one part of the safety net — six temporary federal initiatives enacted in 2009 and 2010 to bolster the economy by lifting consumers’ incomes and purchases — kept an estimated 7 million people out of poverty in 2010.
  • The number of young adults with private health coverage has risen by roughly 2.5 million since an Affordable Care Act provision took effect last year requiring insurance companies to allow young adults to stay on their parents’ insurance plans through age 26.
  • Up to 2 million more people are employed in the fourth quarter of 2011 because of the 2009 Recovery Act, according to the Congressional Budget Office.  The law’s impact on employment peaked in the third quarter of 2010, when as many as 3.6 million people owed their jobs to the Recovery Act; large parts of that Act have since expired.

These silver linings come with a big cloud, however.  The temporary initiatives either have expired or are set to expire, and the Budget Control Act enacted in August calls for roughly $2 trillion in spending reductions; some in Congress want to cut even deeper.

All major deficit-reduction agreements of the past 25 years have reflected the principle that deficit reduction should not increase poverty or inequality.  Upholding that bipartisan principle should be a top New Year’s resolution for policymakers in 2012.

The next post in this series will look at Temporary Assistance for Needy Families (TANF).