More About Arloc Sherman

Arloc Sherman

Sherman is a Senior Researcher focusing on family income trends, income support policies, and the causes and consequences of poverty.

Full bio and recent public appearances | Research archive at CBPP.org


Debunking the “Entitlement Society” Myth

February 10, 2012 at 11:44 am

Contrary to claims that government benefit programs are creating a dependent class of Americans who are losing the desire to work and would rather collect government benefits than find a job, a major report we issued today finds that these programs’ benefits go overwhelmingly to people who are elderly, disabled, or members of working households.

As it states:

Contrary to "Entitlement Society" Rhetoric, Over Nine-Tenths of Entitlement Benefits Go to Elderly, Disabled, or Working Households

Some conservative critics of federal social programs, including leading presidential candidates, are sounding an alarm that the United States is rapidly becoming an “entitlement society” in which social programs are undermining the work ethic and creating a large class of Americans who prefer to depend on government benefits rather than work.  A new CBPP analysis of budget and Census data, however, shows that more than 90 percent of the benefit dollars that entitlement and other mandatory programs spend go to assist people who are elderly, seriously disabled, or members of working households — not to able-bodied, working-age Americans who choose not to work.  This figure has changed little in the past few years.

In a December 2011 op-ed, former Massachusetts Governor Mitt Romney warned ominously of the dangers that the nation faces from the encroachment of the “Entitlement Society,” predicting that in a few years, “we will have created a society that contains a sizable contingent of long-term jobless, dependent on government benefits for survival.”  “Government dependency,” he wrote, “can only foster passivity and sloth.”  Similarly, former senator Rick Santorum said that recent expansions in the “reach of government” and the spending behind them are “systematically destroying the work ethic.” . . .

Such beliefs are starkly at odds with the basic facts regarding social programs, the analysis finds.

Our analysis covers Social Security, Medicare, Medicaid, unemployment insurance, SNAP (formerly known as the Food Stamp Program), SSI, Temporary Assistance for Needy Families (TANF), the school lunch program, the Children’s Health Insurance Program (CHIP), the Earned Income Tax Credit, and the refundable component of the Child Tax Credit.

The only major entitlement programs that are not included are veterans’ programs and military and civil service retirement, which critics presumably do not have in mind when they warn of the dangers of the “entitlement society” in fomenting dependency and sloth.  In any event, including these programs doesn’t change the above 91 percent figure.

The data dispel several other common misperceptions.  For example:

  • Contrary to claims that entitlements take heavily from the middle class to give to people at the bottom or shower benefits on the very wealthy, the middle 60 percent of the population receives close to 60 percent of the entitlement benefits, while the top 5 percent of the population receives about 3 percent of the benefits.
  • Non-Hispanic whites receive slightly more than their proportionate share of entitlement benefits.  They accounted for 64 percent of the population in 2010 and received 69 percent of the entitlement benefits.

Click here for the full report.

Taking Stock of the Safety Net, Part 1: Overview

December 14, 2011 at 5:16 pm

We will issue a series of posts in the coming days that will look back at some of the major programs that helped struggling families during the year — their goals, impact, and issues facing policymakers in 2012.  Today, we’ll begin by setting the context.

For America’s low- and moderate-income families, 2011 was another very bad year, as the Great Recession of 2007-2009 continued to have a large and lingering impact.  Unemployment and long-term unemployment remained very high, as did the percentage Americans without health insurance.

Yet things aren’t nearly as bad as they could have been.  The safety net is helping to hold the line against poverty and hardship, as the latest available figures in several areas show.

  • Without government assistance programs, the poverty rate would have been nearly twice as high in 2010:  an estimated 28.6 percent, compared with the actual figure of 15.5 percent, based on a measure of poverty that includes the impact of programs like food stamps and housing assistance and tax credits (including the Earned Income Tax Credit).   If the safety net hadn’t existed, another 40 million people would have been poor.
  • Just one part of the safety net — six temporary federal initiatives enacted in 2009 and 2010 to bolster the economy by lifting consumers’ incomes and purchases — kept an estimated 7 million people out of poverty in 2010.
  • The number of young adults with private health coverage has risen by roughly 2.5 million since an Affordable Care Act provision took effect last year requiring insurance companies to allow young adults to stay on their parents’ insurance plans through age 26.
  • Up to 2 million more people are employed in the fourth quarter of 2011 because of the 2009 Recovery Act, according to the Congressional Budget Office.  The law’s impact on employment peaked in the third quarter of 2010, when as many as 3.6 million people owed their jobs to the Recovery Act; large parts of that Act have since expired.

These silver linings come with a big cloud, however.  The temporary initiatives either have expired or are set to expire, and the Budget Control Act enacted in August calls for roughly $2 trillion in spending reductions; some in Congress want to cut even deeper.

All major deficit-reduction agreements of the past 25 years have reflected the principle that deficit reduction should not increase poverty or inequality.  Upholding that bipartisan principle should be a top New Year’s resolution for policymakers in 2012.

The next post in this series will look at Temporary Assistance for Needy Families (TANF).

Extending Payroll Tax Cut Would Keep 1.1 Million People Out of Poverty

December 2, 2011 at 5:15 pm

The goal of a payroll tax holiday is to temporarily shore up consumer spending for working households; no one would mistake it for targeted antipoverty policy.  Yet, it does have the added benefit of reducing poverty.

Using Census Bureau data for 2010, I estimate that the current payroll tax holiday, which expires at the end of the month, would keep roughly 1.1 million low-income workers and their family members above the poverty line next year if Congress extends it.  (A bill by Senator Casey to extend and expand the tax holiday, which the Senate rejected yesterday, would have kept 1.7 million people out of poverty.)

Those figures reflect only the tax cut’s direct impact on workers; they don’t include any effect of the tax cut on preserving jobs in the broader economy by boosting consumer spending— which, after all, is the main point of the tax holiday.

To make this estimate, we can’t use the official poverty measure because that only counts pre-tax, cash income.  Instead, we use a broader measure recommended by the National Academy of Sciences and preferred by many experts; it counts income after taxes and non-cash benefits, subtracts certain medical and work expenses, and uses a slightly modernized poverty line.

The fact that the tax holiday reduces poverty somewhat doesn’t mean that it mostly benefits struggling families — it targets virtually all workers, and only about 7 percent of the money goes to families with cash income below $30,000.  Compare that, for instance, with another credit that targeted virtually all workers:  the President’s Making Work Pay Tax Credit, which expired last year, provided 18 percent of its money to that group.

Still, by extending the payroll tax cut — as well as expanded federal unemployment insurance, which kept more than 3 million people out of poverty last year but expires at the end of the month — Congress can provide critical help to a still-weak economy while fighting poverty at the same time.

Hardship in America, Part 1: Majority of Poor Children Live in Households with Major Hardships

November 21, 2011 at 4:44 pm

Note:  With Thanksgiving right around the corner, the Center thought this was a good time to look at the latest figures on various indicators of hardship. This is the first in a series of posts on this subject that CBPP will do this week.

Poverty rates rose in 2010 under a variety of poverty measures, as the economic downturn continued and long-term unemployment hit record highs.  Lest anyone doubt that this is a serious problem requiring attention, new CBPP analysis finds that more than half (52 percent) of poor children last year lived in households that faced one or more of the following:

  • hunger (what the Agriculture Department now terms “very low food security”),
  • overcrowded living conditions (more than one person per room),
  • failure to pay rent or mortgage on time, or
  • failure to receive needed medical care.

Poor Children's Households Much More Likely to Experience HardshipThat’s three times the 17 percent rate for households with incomes at or above twice the poverty line, as the graph shows.  (Not all of these hardships affect the children; some affect other household members.)

Fortunately, government assistance can make a difference in poverty — and, it is fair to conclude, hardship.

Earlier this month, Census reported that while poverty rose significantly in 2010 under a new poverty measure (the Supplemental Poverty Measure) that takes both cash income and government assistance into account, government assistance kept poverty from being even higher.

Also, a CBPP analysis found that nearly twice as many people would count as poor in 2010 if one leaves out the income they received from assistance programs.  In particular, a handful of government initiatives enacted in 2009 and 2010 kept nearly 7 million people out of poverty in 2010.

Unfortunately, those initiatives are expiring, many states have cut programs that help low-income families, and some budget-cutters in Congress are targeting such programs for further cuts.

Related Posts:

Without the Safety Net, More Than a Quarter of Americans Would Have Been Poor Last Year

November 9, 2011 at 4:28 pm

I pointed out earlier this week that six recession-fighting initiatives enacted in 2009 and 2010 kept nearly 7 million people out of poverty in 2010 — under an alternative measure of poverty that takes into account the impact of government benefit programs and taxes.

Our report also shows that if the government safety net as a whole — these temporary initiatives (all were featured in the 2009 Recovery Act) plus safety-net policies already in place when the recession hit — hadn’t existed in 2010, the poverty rate would have been 28.6 percent, nearly twice the actual 15.5 percent (see graph).

Poverty Rate Would Have Been Nearly Twice as High in 2010 Without the Safety Net

This shows the powerful anti-poverty impact of policies ranging from tax credits like the Earned Income Tax Credit and Child Tax Credit to unemployment insurance, SNAP (food stamps), Social Security, Supplemental Security Income, veterans’ benefits, public assistance (including Temporary Assistance for Needy Families), and housing assistance.

Read more…