More Links to Poverty and Hunger

Sweet Charity? Ch. 3

This chapter, much like the article discussed in my last post also explains the correlation between poverty and hunger. The recession in the 1980s tossed hundreds and thousands of people from their jobs and homes, forcing them into poverty and possible hunger. People were forced to go to soup kitchens and food pantries. The poverty rate rose about four percent from the 1970s to the early 1980s. Meanwhile, in 1981 the Reagan administration passed the Omnibus Budget Reconciliation Act, which reduced poverty programs such as Medicaid, unemployment compensation, and food assistance; it totaled to a reduction of one hundred ten billion dollars in government spending over a three year period. The people losing from this act were referred to as the "New Poor." They went to the soup kitchens and food pantries which were seeing exponential increases in numbers during this time; free meals and food baskets increased fifty percent in one year. The clients of these establishments changed from alcoholics and the homeless to mothers and their children. At the time, the Reagan administration said that they were not the cause of theses problems, even though it is evident that the OBRA reductions were clearly the underlying cause.

Whether speaking of the past, present, or future, poverty and hunger will forever be linked. I find it hard to believe that the Reagan administration made a budget cut during a recession. Government spending is a direct determinant of aggregate demand. When aggregate demand increases, GDP also increases and helps to bring a country out of a recession. A reduction in government spending does the complete opposite. I'm not fully familiar with the Reagan administration's plan to get the country out of the recession, but I've heard of Reagonomics and am guessing that he believed increasing government spending doesn't do the trick. Clearly he was wrong. No wonder he was an actor before he was president.

1. What valid evidence did Reagan have against the world renown John Maynard Keynes that disproved his theory of increased government spending leading to increased GDP?

2. Did the advisors and other people in the administration not realize that a cut in the programs that help the impoverished would make the situation worse?