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Without the Safety Net, More Than a Quarter of Americans Would Have Been Poor Last Year

I pointed out earlier this week that six recession-fighting initiatives enacted in 2009 and 2010 kept nearly 7 million people out of poverty in 2010 — under an alternative measure of poverty that takes into account the impact of government benefit programs and taxes.

Our report also shows that if the government safety net as a whole — these temporary initiatives (all were featured in the 2009 Recovery Act) plus safety-net policies already in place when the recession hit — hadn’t existed in 2010, the poverty rate would have been 28.6 percent, nearly twice the actual 15.5 percent (see graph).


This shows the powerful anti-poverty impact of policies ranging from tax credits like the Earned Income Tax Credit and Child Tax Credit to unemployment insurance, SNAP (food stamps), Social Security, Supplemental Security Income, veterans’ benefits, public assistance (including Temporary Assistance for Needy Families), and housing assistance.

The safety net was responding to the downturn even without the Recovery Act initiatives.  Between 2007 and 2010, the share of Americans that the safety net kept out of poverty rose from 9.5 percent to 10.8 percent.  This increase mostly reflects the growth of programs like unemployment benefits and SNAP, which expand automatically to help people hit by the recession and then shrink as the economy recovers.

But these automatic increases wouldn’t have been enough by themselves to prevent a large increase in poverty in the recession.  Without the temporary Recovery Act initiatives, the poverty rate would have jumped from 14.9 percent to 17.8 percent between 2007 and 2010, and 6.9 million more people would have become poor than actually did.

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