The Ron Haskins at the Washington Post reports on a piece of economic news so literally uplifting, it's a wonder the messengers weren't shot and buried behind the barn.
According to a Congressional Budget Office (CBO) study released this month, the bottom fifth of families with children, whose average income in 2005 was $16,800, enjoyed a larger percentage increase in income from 1991 to 2005 than all other groups except the top fifth. Despite the recession of 2001, the bottom fifth had a 35 percent increase in income (adjusted for inflation), compared with around 20 percent for the second, third and fourth fifths. (The top fifth had about a 50 percent increase.)
Even more impressive, the CBO found that households in the bottom fifth increased their incomes so much because they worked longer and earned more money in 2005 than in 1991 -- not because they received higher welfare payments. In fact, their earnings increased more in percentage terms than incomes of any of the other groups: The bottom fifth increased its earnings by 80 percent, compared with around 50 percent for the highest-income group and around 20 percent for each of the other three groups.
It's not easy to imagine a better piece of economic news: the worse off families improve their lot by a process of integration into the productive economy. In France that would be against the law. Haskins points out that both ends of the political spectrum can find some joy in this story.
My rendition of the CBO findings to this point should make Republicans happy: Low-income families with children increased their work effort, many of them in response to the 1996 welfare reform law that was designed to produce exactly this effect. These families not only increased their earnings but also slashed their dependency on cash welfare. In 1991, more than 30 percent of their income was from cash welfare payments; by 2005, it was 4 percent. Earnings up, welfare down -- that's the definition of reducing welfare dependency in America.
But now consider that the next-biggest increase in income for the bottom group was from the earned-income tax credit (EITC), a program that, in effect, supplements the wages of parents with low incomes. In addition, most of the children in these families had Medicaid coverage and received free school lunches and other traditional social benefits. In other words, this success story is one of greater efforts to work more and earn more backed by government benefits to improve living standards and, as President Bill Clinton used to say, "make work pay."
I find it interesting that, when the poor make advances through their own energy and genius, this is presumed to make Republicans happy. Haskins does not quite say, but quite clearly means, that when the poor advance through gifts from government, this makes Democrats happy.
This does support my long-standing contention that President Clinton's welfare reform was one of the most successful pieces of social legislation in the history of welfare policy.
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