Report

American Enterprise Institute

Key Points

A common view among policymakers, the media, and the general public is that the US has high child poverty rates and a weak social safety net to address it, but neither is true based on objective analysis of the data.

Spending on low-income children in America has increased 17-fold since the 1960s (in constant dollars) and is comparable to other countries, which helps explain why US child poverty rates are at historic lows.

Nonetheless, any American child in poverty is one too many, but increased spending cannot be the sole answer.

Combating child poverty in the US requires well-targeted policies, structured in a way that limits negative program aspects that undermine the very things that lift families permanently out of poverty.

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Introduction

In the September 2019 Democratic presidential debate, Sen. Bernie Sanders (I-VT) said, “The U.S. has the highest child poverty rate of almost any country on Earth.”1 Such a claim is typical for a presidential candidate known for hyperbole, but the media has perpetuated the same misguided message for years. “Child Poverty in the US Is Among the Worst in the Developed World,” read a 2014 Washington Post headline.2 And a 2018 feature article in New York Times Magazine questioned: “How can a country with such a high poverty rate—higher than those in Latvia, Greece, Poland, Ireland and all other member countries of the Organization for Economic Cooperation and Development—lay claim to being the greatest on earth?”3

The narrative portraying this unwanted American exceptionalism has become common. But objective analysis shows that characterizations of America as a high-poverty country with a small safety net are not true. An honest assessment shows dramatic declines in child poverty for American children over at least the past 50 years, with child poverty rates in absolute terms comparable to other developed countries. Contrary to conventional wisdom, safety-net programs funded by US taxpayers have increased dramatically in recent years, and this, combined with a strong economy of late, has produced some of the lowest US child poverty rates on record.

Progress on US child poverty can be attributed to a number of factors, and government policy is certainly one of them.4 Over the years, federal lawmakers from both parties introduced and expanded federal programs specifically targeting children in poor households. On one hand, program expansions led to reductions in poverty for many families, demonstrating the benefits of government intervention. On the other hand, there is no way of knowing the trade-offs related to this increased spending, such as program work and marriage disincentives or the unnecessary costs taxpayers bear when programs are poorly targeted or inefficiently administered.

This is why further expansions to safety-net programs cannot be the primary solution to US child poverty. Instead, we need well-targeted government assistance programs, combined with incentives and expectations for parents to pursue their own prosperity through work, family, and community.

This report compiles data from three sources to show America as the antithesis of a high-poverty country with a limited social safety net. It summarizes federal spending on low-income children in the US, related trends in child poverty, and how the US compares to international peers. The three sources include:

The National Academies of Science, Engineering and Medicine’s (NAS) Roadmap to Reducing Child Poverty in 2019, which is rich with data on US child poverty and poverty in the international context;

The Urban Institute’s Kids’ Share Report, which analyzes federal expenditures on children in the United States and allows for comparisons of federal spending on means-tested programs from 1960 through 2018; and

The Organisation for Economic Co-operation and Development (OECD), which compiles data across countries on various spending categories, including public spending at all levels of government on social supports, education, and health. (However, the quality of the data varies across countries, particularly with respect to local government spending.)5

Results show that US child poverty, using two different but equally credible measures of poverty, has declined by 30 to 50 percent since the 1960s. When compared to children in other developed countries, US children are no more likely to be poor. The findings also show that US spending on poor children has increased 17-fold since the 1960s, and in recent years, the government has spent more on children per capita than many other developed countries when considering three major categories of spending: cash support and tax breaks for families, primary and secondary education, and health.

This international comparison considers federal and local funding, noting that US education is primarily locally financed. The US lags in other child-related spending categories such as family services and early care and education, with the US leaving those expenditures largely to the private sector.

Using these data sources, the following pages detail five key data points on child-related spending and poverty in the US that run counter to conventional wisdom that the US has high levels of child poverty and a small safety net. Understanding these points can support debate over policy efforts to further reduce child poverty and the proper role for government assistance programs.

Read the full report.

Notes

1. Rachel E. Greenspan et al., “Fact-Checking the Candidates from the Third Democratic Presidential Debate,” Time, September 13, 2019, https://time.com/5676791/democratic-debate-fact-check-houston/.

2. Christopher Ingram, “Child Poverty in the US Is Among the Worst in the Developed World,” Washington Post, July 31, 2014, https://www.washingtonpost.com/news/wonk/wp/2014/10/29/child-poverty-in-the-u-s-is-among-the-worst-in-the-developed-world/.

3. Matthew Desmond, “Americans Want to Believe Jobs Are the Solution to Poverty: They’re Not,” New York Times Magazine, September 11, 2018, https://www.nytimes.com/2018/09/11/magazine/americans-jobs-poverty-homeless.html.

4. For a full discussion of the negative consequences, see Jeffrey Miron, “The Negative Consequences of Government Expenditure” (working paper, Mercatus Center, Arlington, VA, September 2010), https://www.mercatus.org/system/files/Negative-consequences-of-government-expenditure. Miron.9.14.10.pdf; and Daniel Mitchell, “The Impact of Government Spending on Economic Growth,” Heritage Foundation, March 15, 2005, https://www.heritage.org/budget-and-spending/report/the-impact-government-spending-economic-growth.

5. See explanation in Organisation for Economic Co-operation and Development, “Social Expenditure Update 2019: Public Social Spending Is High in Many OECD Countries,” January 2019, https://www.oecd.org/social/soc/OECD2019-Social-Expenditure-Update.pdf.