The Journal of Public Policy

Why the War on Poverty Failed

Source: http://www.slate.com

By Nicolas Duquette, University of Southern California

Fifty years ago this year, the central piece of Lyndon Johnson’s War on Poverty — the Economic Opportunity Act of 1964 (EOA) — was passed. This law was unusual both in its ambition to eliminate US poverty and in its implementation. Instead of directing funds to state anti-poverty programs, the Johnson administration had the power and discretion to make grants directly to community organizations with minimal oversight from state or local governments or from Congress. The outgrowth of this federal-local collaboration, the Community Action Program, engendered several enduring and popular anti-poverty programs, including Head Start and Community Health Centers. Yet, the popular memory of Johnson’s efforts is one of overwhelming failure. President Reagan joked in his 1988 State of the Union Address, to hearty laughter, that, “the federal government fought the war on poverty, and poverty won,” a feeling shared by critics of Johnson on the political left and the right.

The belief that the War on Poverty was a wasteful boondoggle has led anti-poverty forces to more modest goals or to give up altogether. Yet, a growing body of retrospective research finds that the conventional wisdom is incorrect: War on Poverty programs were often highly effective at alleviating poverty within certain subgroups. Between 1964 and 1973, the official poverty rate plummeted from 19% to reach its historic low of around 11%. A growing economic literature has found that people exposed to many of the Great Society programs saw their lives meaningfully improved for years afterward.

My research (with Martha J. Bailey) explores the reasons for the disconnect between the now well-documented effects of many War on Poverty programs and popular opinion. Our findings suggest that the implementation of the program was very important. President Johnson’s War on Poverty is remembered as a failure because it directed resources to the poor and to African Americans, largely to the exclusion of political concerns.

THE ECONOMIC OPPORTUNITY ACT’S SPENDING PATTERNS

The Economic Opportunity Act placed only modest geographic restrictions on the Johnson administration’s spending decisions. The law mandated that 80% of the funds be spent among the states according to an index of poverty severity, and the administration had the right to waive even that loose requirement at the discretion of the director of the Office of Economic Opportunity. Within states, the EOA gave total discretion to allocate spending wherever the administration saw fit.

Figure 1 maps the wide variability in per capita spending patterns by US county under the Community Action Program.

Figure 1: Map of Spending By County (Click for larger image.)

Our analysis examines the Johnson Administration’s spending decisions by correlating funding with a variety of factors: demographics (poverty and race included), political concerns (such as powerful Democratic politicians or “swing” voting districts), economic factors (changes in the racialized labor system of Southern agriculture), or other hot button issues (such as high Vietnam War mobilization rates, or intensity of urban rioting). Of these variables, poverty and the share of nonwhites in the population are the only variables with significant explanatory power. That is, the Johnson administration spent funds where poor and nonwhite people lived. Despite Johnson’s reputation as the consummate politician, we find no evidence that the Johnson administration used politics to allocate funding.

This stands in striking contrast to the New Deal, which is remembered as a more successful economic program and used political concerns to target funding. Roosevelt advisor Harry Hopkins’s plan to “tax and tax and spend and spend and elect and elect” resulted in political variables explaining a great deal of the state and county-level variation in New Deal spending (Fishback, Kantor and Wallis 2003). The War on Poverty and New Deal differed in other important ways: the New Deal was implemented in the depths of an economic depression, while 1964 was a moment of widespread economic growth. Yet, it seems that the perceived success of the programs is also explained by their political engagement more than their actual focus on the poor.

POLICY CONCLUSIONS

Even though presidents are generally held accountable for changes in economic outcomes occurring during their administrations (regardless of whether they caused them), Johnson did not get credit for the 30% drop in the poverty rate from 1964 to 1968. Our analysis of average changes in voter turnout and Democratic vote share shows that OEO spending boosted voter turnout and support of the Democrats in poor areas. However, nonwhite vote share is associated with significantly fewer votes for Democrats in the 1966 and 1968 elections. The rising turnout in more nonwhite counties, therefore, reflected increases in votes for Republicans. The evidence points to strong backlash voting and the growing disillusionment with the War on Poverty and Democrats.

One interpretation of our findings would be that politics trumps policy — that enduring social programs are those that reward political power brokers, not those that aggressively relieve need. The EOA not only gave the Johnson administration discretion over the geographic allocation of funds, but also power to make grants to private community nonprofits without significant input from state or local politicians. In many places, local elites were viewed as indifferent to (or hostile toward) poor and minority populations, and this power was actively used by the Johnson administration to further its Civil Rights goals as well as its anti-poverty agenda.

But, an alternative interpretation is that the Johnson administration promised too much relative to the resources they committed to the cause. In real terms, the EOA spent just $88 per capita over fiscal years 1965-1968 (in 2013 dollars). While recent research has found that War on Poverty programs were effective, they lacked the scale to reach all poor Americans. The War on Poverty therefore managed to anger conservatives and segregationists, while at the same time leaving poor and minority populations disappointed at the modest resources actually allocated to programs.

The politics of the Affordable Care Act (i.e., “Obamacare”) has followed a similar pattern — because the implementation of the portion of the law that subsidized and mandated health insurance for lower-income households was delayed, there has been an extended period of popular controversy about the law without any evidence about its effectiveness to meet its primary purposes (decreasing uninsured rates for lower-income households and slowing health cost inflation). Policymakers designing ambitious social policies need to pay attention not only to implementation details that will make programs effective, but also to details that will allow voters to judge that effectiveness for themselves and to vote accordingly.

REFERENCES

Martha J. Bailey and Nicolas J. Duquette. (2014). “How Johnson Fought the War on Poverty: The Politics and Economics of Funding at the Office of Economic Opportunity.” Journal of Economic History 74(2): 351–88.

Fishback, Price, Shawn Kantor, and John Wallis. (2003). “Can the New Deal’s Three R’s Be Rehabilitated? A Program-by-Program, County-by-County Analysis.” Explorations in Economic History 40(3): 278–307.