Charles Murray, my colleague at the American Enterprise Institute, notes that the most remarkable drop in the poverty rate didn't come after President Lyndon B. Johnson declared war on poverty but when President Eisenhower ignored it. Over a mere 12 years, from 1949 to 1961, the poverty rate was cut in half.Well, I tried to do a little fact-checking by going to Charles Murray's blog where he actually makes this claim. He cites the US Census Bureau, but I couldn't find the data online to corroborate his claim. But let's say it's true, that poverty rates dropped from 41 percent to 21 percent during that time. What was going on in the nation during this time? GDP increased an average of 3.67% from the start of Truman's second term to the start of Kennedy's term. That would explain things somewhat. Decent GDP growth means more money flowing through the system, probably more people working. Unemployment rates dropped during Truman's second term to 2.9% from 4.3%, but during Eisenhower's two terms, unemployment actually rose all the way to 6.6%! That's an unemployment increase of 128%. (Incidentally, the rate during Obama's first three years, on the tail end of the worst recession in US history, rose from 7.8% to 9.1%, an increase of 17%.). On top of this, there were three recessions during the Eisenhower administration, lasting a total 28 months, during which unemployment rose to over 7.5%. So, while Eisenhower ignored the poor, as Murray states, more people were out of work. Think about how the economy might have fared had steps been taken to put the unemployed to work or to support the poor by helping them have more money to spend.
So then I took a look at the Johnson administration, from December 1963 to January 1969. During this time, the poverty rate started at about 17% and ended at about 12.5%. Not a 50% reduction, as during the Einsenhower administration, but still respectable. Let's look at some underlying data here. The growth rate of GDP averaged over 5.1% during that time, which is phenomenal. There were no recessions, and unemployment dropped from 5.5% to 3.4%. So, in a stronger economy, did Johnson make all that much of a difference spending billions on fighting poverty, if during the 1950s povery levels fell dramatically during worse economic times? The answer might be in the rate of inflation during these respective times. During the 12 years Murray cites, inflation rose at an average of 2% per year. During the Kennedy years leading up to Johnson, inflation rose only During the five years of the Johnson administration, it rose 3% per year, an increase of 50%. I'm not an economist but it seems to me that a higher rate of inflation means prices rising faster. That would make it more difficult for people to keep up with rising prices, which would have an effect on poverty.
Bottom line, however, I kinda disagree that Eisenhower ignored the poor. It was Einsenhower who continued all major New Deal programs, especially Social Security. It was Eisenhower who rolled Social Security into a newly-created cabinet level agency, the Department of Health, Education and Welfare, while extending benefits to 10 million more workers. It's that last part that suggests to me that the plight of America's poor was not absent from his mind.