Hunter  Lewis

Almost all the numbers we get from the federal government are either poorly designed, or are well designed to confuse and hide the truth about what is going on. Even as the president rails against economic inequality, he is using figures that are inherently bogus, a subject that we will explore further later in this series.

It’s not that we don’t have economic inequality as well as poverty. We do. And common sense tells us that it is getting worse, in large part because of the president’s policies and those of the Federal Reserve. But it would help to have believable, not intentionally misleading numbers.

Looking behind all the smokescreens, one thing is obvious about all federal poverty programs. They not only create disincentives to work. They actually tax work at horrific rates.

As economist Thomas Sowell has explained: “ Someone who is trying to climb out of poverty by working their way up can easily reach a point where a $10,000 increase [ in pay] can cost them $15,000 in lost benefits they no longer qualify for. That amounts to a marginal tax rate of 150 percent—far more than millionaires pay.”

This outrageous tax on the poor has been made even worse by ObamaCare. A worker can earn just a few dollars more, and find that more than $10,000 in medical insurance subsidy has vanished. ObamaCare also in effect adds $2.28- $5.89 to the cost of hiring a minimum wage worker, thereby creating another major barrier to work, another subject we will explore further later in the series.

Has the war on poverty been a success? No. Does the safety net for the poor desperately need fixing? Yes.

Leading policy analyst John Goodman of Southern Methodist University has estimated that “ if there had never been a welfare state [ in the US], economic growth alone should have virtually eliminated poverty by now.”

Goodman also adds an interesting note about how progressives who designed and expanded this welfare state have become increasingly reactionary in the face of failure:

“If you are one of the folks who voted[ as a progressive] in the [2012] election, what did you vote for?… Here are three things for starters: (1) no reform of the public schools, (2) no reform of the welfare systems, and (3) no reform of labor market institutions that erect barriers between new entrants and good jobs.”

If voters really want to help the poor, they will have to start by admitting that we need some new ideas.

This article is reprinted by permission of Against Crony Capitalism.org


Hunter Lewis

Hunter Lewis is co-founder of AgainstCronyCapitalism.org.