Robert Waldmann at Angry Bear has reported that the Census Bureau reports for 2009 that the poverty rate in the US rose to 14.3% of the population, while the deep poverty rate, those under half of the poverty line in income, rose to 6.3%. This last number is the highest seen since stats on that began being recorded in 1975. The previous high was 5.9% in 1983 at the end of the Reagan recession, when the overall poverty rate was higher than in 2009 at 15.2%. Waldmann hypothesizes that the difference is the result of the welfare "reform" of the 1990s, which replaced AFDC with TANF. He also notes that few seem to have noticed this. Mark Thoma links to this and some related discussions at http://economistsview.typepad.com/economistsview/2010/09/poverty-and-redistribution.html#comments .
I do not know if Waldmann is right about the source of this increased share of the poor who are very poor or not, although it is reasonable that he is at least partly right. He notes that most observers declared welfare reform a "success" around 2000, and the issue was put to rest. But careful observers then understood that much of that had to do with the booming economy that allowed many of the people being tossed off welfare to get jobs, and that when a serious recession hit, the new hole in the social safety net (can't stay on TANF for more than two years) would show up in increased poverty. Well, that recession is now, and the result should not be all that surprising.
Waldmann wonders about the lack of attention to this development, whatever its cause. I suspect that this lack is due to the focus many have had on the upper end of the income distribution. There we have indeed seen what may seem to be more dramatic developments, a huge surge in the share of national income going to the top one tenth of one percent of the population. This has indeed been the most dramatic shift and is an important matter. But in terms of human suffering, this increased share of the population at the rock bottom of the distribution in the sub-poverty basement may be more important.