Thursday, January 31, 2013

Jobs, not government spending, lift Americans out of poverty

Jobs, not government spending, lift Americans out of poverty:
During his inaugural address, President Barack Obama launched a defense of entitlement programs and spoke about income equality. But despite the rhetoric and increased spending on welfare programs during his first four years, the poverty rate in the United States hasn’t declined.
Writing at US News and World Report, Keith Hall, a senior research fellow at the Mercatus Center, explains that government spending won’t lift people out of poverty, noting instead that Congress should pursue policies that create private-sector jobs to lift Americans out of poverty:
Since the start of the recession, the number of Americans in poverty has grown by 9 million. This increase has come at a time when government spending on the poor has also reached record levels. In 2011, more than 100 million people lived in households that received some kind of low-income government assistance; spending on these programs at the federal, state, and local level combined now exceeds $1 trillion annually. Government assistance for low-income families now equals a shocking 10 percent of all household spending.
It has been long recognized that recessions can increase the number of families in poverty, and over the past 20 years it has become clear that the rising and falling poverty rate correlates directly with the jobless rate. The graph below shows this relationship.
Obama and Democrats can talk about poverty and the need for welfare spending all day long, but until more Americans are able to find jobs, which will only happen when government gets out of the way and promotes pro-growth economic policies, we will not see poverty fall.