The Census Bureau reported Tuesday that almost 1 in 6 Americans was living below the federal poverty line in 2010, the highest percentage since 1993 and the largest number in at least five decades. The same day, the head of the Congressional Budget Office told a newly created deficit-reduction committee that the federal government couldn’t sustain the services it had been providing for decades without major reductions in other spending, significant increases in taxes or both.

As distressing as those presentations were, they merely reinforced what is already common knowledge: The economy is in terrible shape, and the federal government can’t afford to do much to help. Even if it could, the efforts by the Bush and Obama administrations since 2008 show how hard it is for Washington to revive an economy stalled by a financial crisis, even if it is willing to spend billions of dollars trying. The best one can say is that things would have been worse had Washington not pumped cash into banks and credit markets, state and local governments, and taxpayers’ wallets. Just because government officials can’t wave a magic wand over the economy to fix it, however, policymakers shouldn’t use that as an excuse to make things worse.

One lesson from the Census Bureau’s report is how important the federal safety net is during a downturn. Unemployment insurance, food stamps and tax credits for the working poor lifted the incomes of 3 million to 5 million U.S. households above the poverty line in 2010. These programs are embattled because they’re costly, but they’re also proving their worth as a buffer against the ravages of the downturn.

Another lesson is that the recession amplified some disturbing trends that had emerged long before the subprime mortgage meltdown. The rapid rise in poverty from 2008 through 2010 is emblematic of how much worse those at the lower end of the income scale have fared than those at the upper end, in bad times or good. Over the long term, more of the country’s income and assets have been steadily concentrated in fewer hands. Folks in the middle saw disproportionate losses too. Median household income fell more than $1,100 in 2010, and is down 7% from its peak in 1999.


The data provide the context for lawmakers as they evaluate President Obama’s jobs proposal and the mandate in the recent debt-ceiling deal to slash spending by at least $2.4 trillion over the coming decade. The problem goes beyond the current downturn; it’s meek, bubble-fueled growth that stretches back for years. No matter who has been in power, the government’s attempts to spur growth haven’t translated into a sustainable improvement in the lives of most Americans. That’s the real challenge posed by the Census Bureau’s numbers.