Next Steps on Poverty:

Opportunities and Threats

Bob Greenstein

March 28, 2014

Poverty Has Fallen Significantly Since

the 1960s Under the “Anchored”

Supplemental Poverty Measure

Safety Net Cut Poverty Rate Nearly

In Half In 2012

Note: Figures use the federal government’s Supplemental Poverty Measure (SPM).

Source: CBPP analysis of Census Bureau data from the March 2013 Current Population Survey and SPM

public use file.

Safety Net Programs Keep

Millions out of Poverty

Source: CBPP analysis of Census Bureau data. 4

As the Early Food Stamp Program

Was Rolled Out, County by County,

Children’s Life Course Improved

As the Early Food Stamp Program

Was Rolled Out, County by County,

Children’s Life Course Improved

Source: Hoynes, Schanzenbach, Almond (2012).

Percentage-point change in adult outcomes for disadvantaged children when food stamps

became available

Disparities Emerge Early

At age 24 mos, low-income toddlers score lower

than middle & high income toddlers on:

• Receptive language

• Expressive vocabulary

• Listening/comprehension

• Early counting/quantitative skills

Source: Child Trends analysis of of U.S. Department of Education, National Center for Education Statistics, Early

Childhood Longitudinal Study, Birth Cohort (ECLS-B), 24 month data.

Children Raised at the Bottom of

the Income Scale Likely to Stay

There as Adults

cbpp.org 8

Tuition has far outpaced income growth, especially for

low-income households

States Have Cut Higher

Education Funding

Deeply in Recent Years

Note: Data for Illinois was calculated directly because Grapevine data included pension funding. Source: Grapevine data from the Center for the Study of Education Policy at Illinois State University

Long-Term Unemployment

Remains Near Historic Highs

Source: Bureau of Labor Statistics and National Bureau of Economic Research

Some places we can make progress

at federal, state & local levels

• Focus on the necessary conditions for children’s success – Income & stability: housing assistance, EITC, improve implementation & take up of

current supports, help for very disadvantaged families (such as home visiting), etc.

• Address the education gap – Disparities emerge early and persist

– Early education; K-12 success; postsecondary access and success

• Helping more people succeed in the labor market

– Economic growth

– Make work pay to reduce poverty and increase incentive to work for workers without children

– Address lack of jobs for less educated workers

– Address needs of very disadvantaged parents

• Health reform/Medicaid expansion

• Incarceration

• Immigration reform

Fiscal context has to support antipoverty/opportunity efforts

Many Poor Children Likely Eligible for

SNAP and Medicaid/ CHIP Fail to

Receive One or Both Supports (2009)

Note: Program participation among citizen children with family income below the poverty level and no

reported health insurance.

Source: CBPP analysis of a Survey of Income and Program Participation. 13

Percentage of poor children who:

Childless Workers Receive Much Smaller

Average EITC Benefit

Source: IRS

Current Childless Workers’ EITC

Does Little to Offset Income

and Payroll Taxes

Source: Internal Revenue Service 15

Obama Proposal Would Boost

Earned Income Tax Credit (EITC) for

Childless Workers

* CBPP estimate based on 2013 official poverty line.

Source: President’s FY 2015 budget, Internal Revenue Code

17

Note: Unlike the Census Bureau’s official poverty measure, the SPM counts the effect of government benefit programs and tax credits.

Source: Executive Office of the President, and U.S. Treasury Department

The President’s Childless EITC Proposal

Would Reduce Poverty

79 Percent of Recent Deficit Reduction

Has Come From Program Cuts – Just

21 Percent Has Come from Revenues

4/1/2014

Note: Recent policy savings come from cuts in 2011 funding, Budget Control Act of

August 2011, American Taxpayer Relief Act of January 2013, and the Bipartisan Budget

Act of December 2013. Estimates are for 2014-2023 and assume sequestration occurs.

Source: Center on Budget and Policy Priorities based on Congressional Budget Office and

Joint Committee on Taxation data. 18

Non-Defense Discretionary Cuts

Remain Deep Despite Budget

Agreement

19

*Gross funding includes increases in funding from savings due to changes in mandatory programs.

**Bipartisan Budget Act of 2013

Source: CBPP calculations based on data from the Congressional Budget Office and Office of Management and Budget.

Non-Defense Discretionary Spending

Set to Fall to Historic Lows As a

Percent of the Economy

20 Source: Center on Budget and Policy Priorities based on Office of Management and Budget and

Congressional Budget Office data.

Low-Income Program Expenditures

Outside Health Care Set to Fall Below

Average of Last 40 Years

Source: OMB through 2012; CBPP analysis of CBO data thereafter.

21

Tax Expenditures Are Costly

Notes: Tax expenditure estimates do not account for interaction effects; estimate does not include associated outlays ($129 billion) or the effects on excise and payroll receipts ($120 billion).

Source: Office of Management and Budget, Historical Tables 8.5 and 8.7 and Analytical Perspectives Table 14-2. 22

How Entitlement Benefits Are

Distributed

Source: CBPP analysis of data from Office of Management and Budget, U.S> Departments of Agriculture,

Health and Human Services, and Labor, and the U.S. Census Bureau.

23

How Tax Expenditure

Benefits Are Distributed

Note: The bottom 20% means the 20% of tax units with the lowest incomes; the same is true for the other income categories.

Source: Tax Policy Center. 24

Tax-Based Student Aid

and Pell Grants

Tax-Based Student Aid and Pell Grants

Source: Center for Law and Social Policy, based on data from the Tax Policy Center.

Source: Center for Law and Social Policy, based on data from the Tax Policy Center.