Economy / August 21, 2023

Republicans Are Gaslighting Us on Poverty

Claims that poverty in America has been eliminated, and that “idleness” is the only barrier to a life of middle-class comfort, would be funny—if they weren’t so dangerous.

Brad Swanson
Former Senator Phill Gramm (R-Tex.) as his hero, Ebenezer Scrooge.
Former senator Phil Gramm (R-Tex.) as his hero, Ebenezer Scrooge. (A Christmas Carol / Getty Images)

This is a good news, bad news, worse news story.

The good news is that poverty in America is negligible, with only 2.5 percent of Americans living below the federal poverty line. In today’s America, the sole bar to joining the middle class is your willingness to work. This is substantiated by a recent 200-page volume of groundbreaking research backed up by 50 pages of footnotes.

The bad news is that it’s all gaslighting—the book is a revival of laissez-faire ideology from the Victorian Era dressed up in modern, but misleading, statistical analysis.

And the worse news is that the cruel sentiments underlying the book form part of a conservative creed and are working their way into Republican legislative priorities.

The disingenuous research in question, “The Myth of American Inequality,” comes to us courtesy of Phil Gramm—an economist by training, and a former Republican Texas senator who helped shepherd the regressive policies of Reaganomics to victory in Congress in the 1980s. He is joined by two coauthors, Robert Ekelund and John Early, who have strong academic and data scientist credentials, but apparently a very myopic view of what counts as evidence.

Their key argument is that when you add in government transfers to the poor, the poverty rate, determined by minimum income standards based on family size, falls dramatically—from the 12.3 percent official statistic calculated by the Census Bureau to a mere 2.5 percent. The authors conclude from this that government transfers are keeping people poor, and if they only overcame their “idleness” (yes, they really use this Dickensian term), poor people could readily find employment and enter into prosperity.

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While the book can be attacked from many sides, it really needs one simple refutation. The very same Census Bureau whose official poverty number is the primary target of Gramm’s assault also puts out a “Supplemental Poverty Measure” every year that does just what Gramm calls for: It adds in a full gamut of government transfers to the needy—from food stamps to housing subsidies to tax credits—to account for income in its broadest sense.

Surprisingly, a book crammed with close analysis of government statistics by recognized experts (one coauthor, Early, was assistant commissioner at the Bureau of Labor Statistics) fails utterly to deal with this well-known, congressionally-mandated, annual report, except to recognize its existence in a perfunctory footnote.

Or perhaps not surprising at all—because the supplemental poverty measurement in 2017, the latest year of Gramm’s data, was actually higher than the official measure, 13.9 percent vs. 12.3 percent. That is because the broader measure of poverty takes into account not only all income sources but also unavoidable expenses, like medical and work costs. Poverty, after all, is determined not by what you bring in but by whether you can live on it.

Gramm’s research suffers from other inexcusable omissions, like overlooking data from the non-partisan Congressional Budget office showing that income inequality has actually worsened, not improved, in recent decades. The CBO finds that the income gap in constant dollars between the lowest and highest-paid 20 percent of the population, even using a Gramm-like measure including government transfers, has more than doubled since 1980.

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Biased research is nothing new, of course. Cigarette makers set the mold in the 1950s when they parried growing evidence of tobacco’s causal links to cancer with the creation of the Tobacco Industry Research Committee, ostensibly an independent group of scientists to study “all phases of tobacco and health.” In reality, the research topics were dictated by the tobacco industry and were designed to persuade the public that smoking was safe.

The gambit worked—for decades. Despite overwhelming proof that smoking causes cancer, including a blockbuster report from the surgeon general in 1964, the white coats working for Big Tobacco sowed so much doubt that as late as 1970, 68 percent of smokers responded “True” or “Don’t know” when asked if “Cigarette smoking in moderation is safe.” It wasn’t until 1985 that cigarette consumption per capita in America fell below the 1950 level.

Similarly, only 57 percent of Americans in 2021 agreed that “Most scientists think global warming is happening”—the continuing benefit of a secret communications plan adopted by the American Petroleum Institute in 1998 to portray climate change believers as “out of touch with reality.”

While Republicans have long sought to tie welfare to work, the appearance of academic rigor in Gramm’s book—bogus as it is—has upped their game. The report has been anchored with a cadre of right-wing think tanks—including the American Enterprise Institute, the Cato Institute, the Heritage Foundation and the Hoover Institution—lining up to promote Gramm’s work.

In addition, The Wall Street Journal proclaimed it one of the best books of the year 2022. Acolytes from academia like Mitch Daniels, former Republican governor of Indiana and then Purdue University president, have penned op-eds in mainstream publications like The Washington Post to gain public acceptance for Gramm’s manipulated data. Conservative pundits like George Will cite the lower poverty rate figure as established fact. Current polling shows growing support for welfare work requirements, with 80 percent of Republicans in favor, and even Democrats equally divided, with only 51 percent opposing.

Emboldened GOP legislators managed to significantly tighten work requirements for family assistance and food stamps in the debt ceiling legislation last June for the first time in years. But that is just the first step. Republican House members are now targeting a further reduction in food stamp eligibility in the upcoming negotiations over the Farm Bill, a massive piece of legislation enacted only once every five years.

“We kind of got what we could get in the debt ceiling,” said Garrett Graves, a Republican from Louisiana and one of House Speaker Kevin McCarthy’s key negotiators. “I think we’re gonna continue working, whether it’s Approps [Apropriations], Farm Bill or others to keep building on it.”

What drives Gramm and his followers is a firm belief that poor people prefer not to work, and that government assistance only enables their voluntary withdrawal from the workforce. Gramm writes that “there’s nothing unethical about Ebenezer Scrooge,” comparing the miser in Charles Dickens’s timeless fable A Christmas Carol to Warren Buffett: both create jobs and grow prosperity through their investments.

Gramm, of course, overlooks the finding by the CBO that most poor people who do not work cannot do so. A CBO study shows that 70 percent of recipients of funding from Temporary Assistance for Needy Families who do not work are afflicted by barriers to employment like mental or physical health issues, lack of child care, or caring for incapacitated relatives.

Overall, the CBO finds that work requirements don’t lift the average income of family assistance recipients—the increase in incomes for those who find work is negated by the decrease of those who cannot. As a result, the work requirements lead to a greater incidence of deep poverty.

But perhaps that is a fair price to pay, in the view of those who share Gramm’s value system. His hero, Scrooge, said it best. When he is approached for a donation to help those in want, he counters by referring to workhouses for the poor. “Many would rather die” than go to a workhouse, the other gentleman replies. “If they would rather die,” says Scrooge, “they had better do it, and decrease the surplus population.”

That is the world Gramm and his allies would have us return to.

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Brad Swanson

Brad Swanson is a partner in a socially responsible fund management firm, Developing World Markets, and an adjunct finance professor at George Mason University. His opinions here are personal.

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