Nonsense from the Far Right

Fortunately, the discerning Iowan can find the facts about the federal budget by looking for them, and not buying into Dick Morris’ spin.

Political consultant Dick Morris slipped into Iowa last week, and the Spin-O-Meter was in overdrive.

Now, rather than repeat Mr. Morris’ misinformation, here is a link to a Des Moines Register story about his appearance at a rally orchestrated by the national right-wing organization Americans for Prosperity.

What Iowans need to know is that (1) Morris is wrong about what is driving the federal budget deficits, and (2) the causes are clear: You can’t cut taxes and fight two wars at the same time without digging a big budget hole.

Center on Budget and Policy Priorities graph
Center on Budget and Policy Priorities

As shown in the graph at right from the Center on Budget and Policy Priorities, the economic downturn, President Bush’s tax cuts and the wars in Afghanistan and Iraq explain the vast majority of the deficit through 2019. One thing folks must recognize is that deficits caused by those factors cause more debt down the road, because we have to keep paying interest. Even after the Iraq war ended, we have to keep paying for it.

As we deal with these self-inflicted budget problems, we must maintain the fundamental and long-accepted responsibilities of our nation — to care for the most vulnerable and put them on their feet to get work and succeed in our economy.

Dick Morris has a big megaphone to try to instill something other than a factual presentation about what’s causing our deficits and debt. Fortunately, the discerning Iowan can find the facts by looking for them, and not buying into the conventional spin he delivers in his traveling medicine show.

Posted by Mike Owen, Assistant Director

New Census measure shows good policy reduces poverty

The new measure helps policymakers view the impact of public initiatives to alleviate poverty.

Andrew Cannon photo
Andrew Cannon

Working-family tax credits and food assistance are among ways public policy lifts millions of Americans out of poverty. At the same time, continued high unemployment rates and low wages have put more and more Americans into poverty.

Those are some of the inescapable conclusions from the Census Bureau’s latest information.

In order to better capture what poverty means and how public programs help (or fail) to alleviate it, the Census Bureau devised a new poverty measure.

The Supplemental Poverty Measure (SPM) does not replace the official poverty measure, which is used to determine eligibility for many public programs, but provides policymakers with another way of viewing the impact of public programs.

The SPM measures what it costs to maintain a minimal standard of living using average costs of necessities: food, rent, clothing, utilities, etc. In addition, SPM also accounts for the increase in overall well-being individuals experience as a result of public programs. Those include the Supplemental Nutrition Assistance Program (SNAP, formerly known as Food Stamps), the Earned Income Tax Credit (EITC) and the Low Income Heating and Energy Assistance Program (LIHEAP), among others. It also accounts for the decrease in overall well-being an individual experiences through out-of-pocket medical costs, child care, child support, and other expenses.

Using the SPM, 49 million Americans, or 16 percent experienced poverty in 2010. The official poverty measure shows about 46.6 million or 15.2 percent in poverty. Among seniors, the difference is even more drastic: The official measure found 3.5 million seniors, or 9 percent in poverty in 2010; the SPM found 6.2 million or 15.9 percent in poverty.

Not all the results of the SPM are so grim, however. The SPM finds a lower rate of poverty among children than the official measure, 18.2 percent vs. 22.5 percent. As noted above, this is because the SPM accounts for the increase in income and living standard individuals experience when they benefit from public support programs.

Additionally, the SPM illustrates the effect public programs have on reducing poverty. For instance, SNAP keeps 5.2 million people, including 973,000 children, out of poverty. The EITC prevents about 6 million people, more than 1.1 million of whom are kids, from living in poverty.

On the other hand, medical out-of-pocket expenses, meaning everything from co-pays and deductibles to paying for medical services with cash or through debt, added about 10.1 million, or 3.3 percentage points, to the number of Americans in poverty.

Successful problem-solving requires that first the problem be understood. The Supplemental Poverty Measure is an important new tool for policymakers in alleviating poverty.

Posted by Andrew Cannon, Research Associate

Food insecurity data symptom of larger affliction

Food insecurity, though a big problem, isn’t the problem. It is merely a symptom.

Andrew Cannon photo
Andrew Cannon

Here’s the good news from this week’s Department of Agriculture report on food security in America: Fewer American households reported serious disruptions in access to food in 2010 than in 2009.

Here’s the bad news: Overall, the number didn’t budge among Americans experiencing some level of food insecurity due to a lack of money. Nearly 49 million Americans — 16 million of whom are children — experienced hunger or the threat of hunger* in 2010 — a year in which, by official measures, the economy was improving.

Here’s where the bad news tells us: Food insecurity, though a big problem, isn’t the problem. It is merely a symptom.

In a lecture at the University of Iowa Wednesday night and in a recent New York Times commentary, former Labor Secretary Robert Reich diagnosed the real problem: stagnant income and wages.

It’s a problem IPP has recently noted, too. Our State of Working Iowa 2011 report found that median wages have stagnated and, adjusted for inflation, are lower now than they were a decade ago. And while the employment picture in 2010 improved, too many of those jobs pay lower wages than workers’ previous jobs — or are simply low-wage jobs, period.

The 2010 food security figures show that combating this particular symptom of stagnating incomes and wages — and others like it — requires different policy strategies. To name just a few: Increasing the wages and incomes of the middle- and working-class will require boosting the minimum wage, enforcing labor laws already on the books and making it easier for workers to unionize and enter collective bargaining contracts with employers, and encouraging employers to pay living wages.

Now, how about some more good news?

The data from recent years also suggests that stimulus measures in the 2009 Recovery Act worked as intended. Food insecurity elevated as the recession worsened in 2008; despite upward-creeping unemployment in early 2009, however, food insecurity held steady. The Supplemental Nutrition Assistance Program (SNAP), formerly known as Food Stamps, was boosted by the Recovery Act, increasing benefits and eligibility.

In other words, we can shape the economy; policy can improve situations.

Effective policy, of course, requires a correct diagnosis. In this case, the correct diagnosis requires looking at things a bit more holistically — looking at wages and other economic indicators in conjunction with food security numbers.

* Each year, the USDA measures food security — the “access by all people at all times to enough food for an active, healthy life.” Participants in the Census Bureau’s Current Population Survey — a nationally representative sample — are asked to respond to a series of statements and questions regarding the food situation in the household in the preceding 12 months. Household respondents responding negatively to several questions are classified as having “low food security;” those with negative responses to several questions and indicating disruptions in eating patterns due to a lack of resources are classified as having “very low food security.”

In the three years immediately following the onset of the recession (December 2007), the food insecurity rate among households has held steady at about 14.5 percent. In 2010, that meant 48.8 million individuals – 16 million of whom are children. This is a significant (both statistically and numerically) increase from the pre-recession years, when only about 36 million individuals, or 11 percent of households, experienced food insecurity.

Sample sizes are too small to provide one-year estimates for states; however, USDA does provide three-year averages. In Iowa, an average of 12.1 percent of households experienced food insecurity over the 2008-10 period, more than a third of whom experienced very low food security.

Posted by Andrew Cannon, Research Associate