Policy Of Poverty

A new report comes as a punch in the gut for proud Americans: One in seven of us is poor, government data show. Surprised? Don't be. It's what happens when you kill the most productive parts of a country.

An estimated 14.3% of the population, or 43.6 million people, were considered poor in 2009, up from 13.2% the year before, the Census Bureau reports. This is the highest share living in poverty since the government began keeping records half a century ago.

How can this be in the richest nation on Earth?

Since Democrats took power — Congress in 2007, the White House in 2009 — policies that punish the productive private economy have become the norm.

Meanwhile, government wastes massive sums bailing out failed businesses, purchasing bad loans and rewarding those who borrow too much, make bad economic decisions or belong to unions.

Knowing this, no one should express shock that 15 million Americans don't have jobs, and that perhaps another 14 million or so are working only part time when they'd prefer to be working full time.

Persistent unemployment from misbegotten government policies is why we have this poverty. And it leads, inevitably, to dependence on government. As recently as 2006, federal payments to individuals as a share of GDP — a proxy for welfare — stood at 12%. Now it's 16.4%, a 37% rise in three years and the highest level ever.

IBD/TIPP Poll of 908 Americans across the country, taken last week, shows that 39% of all American households and 22% of all individuals today receive some kind of federal aid.

Why? For three years now, the private sector has been systematically punished for the sins of the federal government with higher taxes and greater regulation. Businesses, though sitting on nearly $2 trillion in cash, won't invest in such an environment.

Washington's response? Spend hundreds of billions more on ill-considered "stimulus" plans and consign millions more to unemployment and poverty.

In the past two years we've witnessed a breathtaking expansion of federal government. And it'll only get worse, with a planned $44.8 trillion in spending over the next decade, an 83% rise. This new spending will add $13 trillion to our debt, pushing the total to $23 trillion by 2020 from just $7.5 trillion as recently as 2008.

Contrary to the repeated assertions of our nation's Keynesian elites in the media, Washington and academia, all this spending and debt doesn't create jobs. It kills them. The money siphoned from the economy destroys investment and consumer spending, leading to slower growth, higher joblessness and lower incomes.

Growing government activism has robbed our economy of its dynamism. Cutting spending is therefore the best thing we could do to reduce poverty, joblessness and dependence right now.

A recent major study by Harvard economists Alberto Alesina and Silvia Ardagna confirms this.

Looking at 107 cases of large fiscal adjustments made in 21 wealthy countries from 1970 to 2007, Alesina and Ardagna found that tax cuts were the best way to boost economic growth. They also found that spending cuts without tax hikes reduced deficits and debt more than those that included tax hikes.

Further, "adjustments on the spending side rather than on the tax side are less likely to create recessions" — a fact that pretty much destroys the Keynesian argument for more spending "stimulus" and tax hikes to boost the economy.

The Keynesian orthodoxy hasn't worked in the past, and it isn't working today. It's brought our nation lower output, higher joblessness, soaring poverty rates and increased dependence on government. The only question is, why does one party remain wedded to such a destructive economic philosophy?