How Johnson Fought the War on Poverty: The Economics and Politics of Funding at the Office of Economic Opportunity

Abstract

This article presents a quantitative analysis of the geographic distribution of spending through the 1964 Economic Opportunity Act (EOA). Using newly assembled state-and county-level data, the results show that the Johnson administration directed funding in ways consistent with the War on Poverty's rhetoric of fighting poverty and racial discrimination: poorer areas and those with a greater share of nonwhite residents received systematically more funding. In contrast to New Deal spending, political variables explain very little of the variation in EOA funding. The smaller role of politics may help explain the strong backlash against the War on Poverty's programs.In his first State of the Union address in January 1964, President Lyndon B. Johnson asked Congress to declare an "unconditional war on poverty" and to aim "not only to relieve the symptom of poverty, but to cure it and, above all, to prevent it" (1965). Over the next five years, Congress passed legislation that transformed American schools, launched Medicare and Medicaid, and expanded housing subsidies, urban development programs, employment and training programs, food stamps, and Social Security and welfare benefits. These programs more than tripled real federal expenditures on health, education, and welfare, which grew to over 15 percent of the federal budget by 1970 (Ginzberg andSolow 1974).Using the volumes of oral histories, taped conversations, and archival documents, historians have pieced together competing (but not mutually exclusive) narratives of this decade's political economy (Gettleman and Mermelstein 1966;Levitan 1969;Ginzberg and Solow 1974;Davies 1996;Gillette 1996;O'Connor 2001;Germany 2007;Orleck and Hazirjian 2011;Caro 1982Caro , 2002Caro , 2012. Economic historians attribute the policy shift in the 1960s to a long-term decline in Southern planters' demand for cheap agricultural workers and accompanying decline in plantation paternalism Ferrie 1993, 1999). Relative to the large literature that examines the political economy of the New Deal, little quantitative research has considered the political economy of the War on Poverty: how and why it © The Economic History Association. All rights reserved. 2 This centerpiece legislation created the Office of Economic Opportunity (OEO) to coordinate federal antipoverty initiatives and empower the poor to transform their own communities. The EOA also contained two radical provisions that facilitate our analysis. First, the EOA apportioned funding across states according to an index, but it imposed no requirements on how and where to spend money within states. Second, the EOA enabled the federal government to fund local private and nonprofit organizations directly, rather than funneling money through state or local governments. This provision encouraged the development of customized programs to combat the root causes of local poverty and also allowed the federal government to work around widespread de jure racial segregation, which had restricted the political participation of Africa...

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