The U.S. Social Safety Net and Poverty: Lessons Learned and Promising Approaches

President Lyndon Johnson declared War on Poverty in 1964 with the goal of eliminating income poverty. Although his key economic advisors expected this goal to be achieved by 1980, progress against poverty slowed dramatically after the early 1970s. The official poverty rate in the U.S. was about the same in 2003, 12.5 percent of all persons, as it had been 30 years earlier. In this chapter, we reflect on the rise and fall of antipoverty policy as a national priority, highlighting key changes in welfare policies for families with children over the past four decades. Antipoverty programs reduce market-generated poverty to a greater extent today than they did when the War on Poverty was launched. However, most of the increase in the antipoverty effect of the social safety net is due to programs and policies that were enacted and/or expanded in one decade, 1965 to 1975. The main exception is the Earned Income Tax Credit that grew into the most effective antipoverty policy for families with children by the mid-1990s. Today, only the elderly have an extensive social safety net that protects them from the fluctuations of the business cycle and the secular economic changes that have led to declining real wages for many workers and high poverty rates for families with children. For the nonelderly, U.S. antipoverty programs are no more effective now than they were 25 years ago, and they are much less-effective than those in other advanced industrialized economies. Since 1980, there has been relatively little political or public interest in launching a major antipoverty initiative in the U.S. However, the lessons learned from the U.S. experience were influential in Prime Minister Blair’s 1999 declaration of “war on child poverty” in the United Kingdom. We conclude by offering some thoughts on the implications of the U.S. experience for the choices of antipoverty policies in Mexico.