News and Commentary

Is Poverty Declining? If So, Does Obama Get The Credit?

There’s a new report that shows that poverty has declined and there has been a spike in household income. This has caused some leftists to start doing cartwheels and pronouncing victory:

So is poverty actually declining and vindicating President Barack Obama’s economic policies?

Answer: not exactly.

In Reutersarticle on the newly released Census Bureau report, they cite a decline in the poverty rate from 14.8 percent in 2014 to 13.5 percent in 2015, even declaring it the “the largest annual percentage point decline since 1999.”

But then Reuters points out that the metric the Census used to show the decline in poverty rate is misleading “because it does not account for non-cash benefits, including food stamps and refundable tax credits”: (emphasis bolded)

According to the Center on Budget and Policy Priorities, these non-cash benefits and tax credits provide far more assistance than they did when the official poverty rate was established in the 1960s, and have led to a substantial reduction in economic hardship.

Taking such programs into account, the Census Bureau put the 2015 so-called supplemental U.S. poverty rate at 14.3 percent, one percentage point lower than in 2014.

In other words, the poverty rate actually only declined by one percentage point, which is still a positive sign but not by as much as Reuters indicated at the beginning of their article.

Even if you take the 13.5 percent poverty rate at face value, it still isn’t a number to be excited about:

Indeed, the poverty rate was actually below 13.5 percent in 2008.

The Census report also mentions that household income increased by 5.2 percent from 2014, the largest increase since 1967, when the Census began tracking this measurement. This does appear to be a legitimately good number. But it is not a number that Obama can take credit for.

The Daily Signal cites reports from the New York Federal Reserve Bank and the Mercatus Center concluding that Obama’s stimulus bill was nothing more than $840 million down the drain since it did nothing to help the economy. The massive amounts of regulation that the federal government spits also didn’t help, as “2015 was a record-setting year for the Federal Register,” reported The Hill in December, as the data clearly shows that increased regulation results in a decline of hiring and business startups.

The Cato Institute’s Ike Brannon explains how the economy can grow despite the federal government’s interference:

When a recession occurs the unemployment rate can fall quickly, but it usually takes a long time before it returns to its previous pre-recession levels. no matter how aggressive our infrastructure spending may be. What eventually helps low-income workers is an economy where labor–skilled and unskilled–becomes difficult to find. When that happens companies bid against one another to find workers or else become creative-perhaps by investing in labor-saving equipment or else taking a chance on workers who haven’t been in the labor market for a while and don’t have the most sterling resumes.

In other words, it’s normal for job growth to occur and for the economy to be on an upward trajectory after a recession because that’s part of the booms and busts of the business cycle. The question is whether or not the economy is growing at maximum capacity, and the fact that there’s a 14 million jobs gap and that Obama is on pace to be the only president to never reach 3 percent GDP growth suggests that the economy is not growing as fast as it should be.

The increase in income and decline in poverty have occurred in spite of Obama, not because of him.