Katrina casts light on the other poor

The 1960s' war on poverty, the last time the federal government dramatically boosted spending on the poor in a concerted bid to reduce their ranks, may hold lessons for today about what does and doesn't work. Indeed, programs and policies dating from the Lyndon Johnson administration are being reexamined - by those on both sides of the political aisle - as analysts and the general public consider anew how to break the cycle of poverty.

In those years, an influx of federal dollars created educational opportunities for the disadvantaged such as Head Start for preschoolers and Upward Bound, exposing minorities to college life. Work training and job programs increased, as did healthcare initiatives and supplemental income programs such as the Earned Income Tax Credit. Poverty rates also dropped.

But later in the decade, the nation's interests shifted from domestic programs to the Vietnam War. A succession of Republican presidents (Richard Nixon, Gerald Ford, Ronald Reagan) was interrupted by a single one-term Democrat (Jimmy Carter), whose administration was largely hamstrung by recession. The result: a two-decade tilt toward bolstering national defense, winning the cold war, and fighting crime.

"After the early successes of the Great Society, there was a backlash in much of the country in which it was felt that the war on poverty was spending too much that could be spent on more pressing matters," says David Canton, a historian at Connecticut College in New London. The growing wealth gap of today, say Professor Canton and others, is the result of that shift, combined with another phenomenon, famously tagged as "Reaganomics" but known also as "supply side" or "trickle down" economics. That is the theory that tax cuts fuel the economy and create more jobs, and jobs help the poor.

"Any way you look at it, the evidence is in," says Jared Bernstein, chief economist for the Economic Policy Institute, a liberal think tank in Washington. "There is no way to connect any dots between trickle-down economics and poverty reduction. The arguments and evidence seem to lead heavily in the other direction."

There's been one exception since 1973, some experts say - the late '90s, when the booming dotcom economy was creating low-wage jobs at record rates. Over 4 million people left the poverty rolls in the last half of the decade, and both ends of the political spectrum were quick to explain why in their own terms.

Conservatives do not concede that Reaganomics failed to improve the lot of the poor, and they argue that the US should foster more of the kind of growth that occurred in the 1990s. Cutting taxes on business to encourage more hiring is more effective than government programs, they say, which often just helped the poor become more comfortable in poverty rather than taking them out of it.

"I don't think poverty is the problem; I think people are the problem," says Tom Donlan, editor of Barron's National Business and Financial Weekly. "An economy that is growing rapidly and provides more jobs is the way people get out of poverty."

Since 2001, however, the US has lost 2.7 million manufacturing jobs and seen millions of workers stuck in low-wage positions.

"The challenge in addressing poverty is that of building self-reliance ... how to produce a situation in which a greater number of our citizens can qualify for and hold jobs that pay family-sustaining wage levels," says Steve Mangum, associate dean of Ohio State University's Fisher College of Business. "Part of the answer rests with individuals themselves, part with the structure of labor markets, part with our social and economic policies as a country. Each needs attention. If there were easy, inexpensive answers to the challenges, the challenges would be behind us. They are not."

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