Study: More Than Half a Trillion Dollars Spent on Welfare But Poverty Levels Unaffected

“The vast majority of current programs are focused on making poverty more comfortable … rather than giving people the tools that will help them escape poverty.”

(CNSNews.com) – The federal government is not making much headway reducing poverty despite spending hundreds of billions of dollars, according to a study by the libertarian Cato Institute.

Despite an unprecedented increase in federal anti-poverty spending, the national poverty rate has not declined, the study finds.

“[S]ince President Obama took office [in January 2009], federal welfare spending has increased by 41 percent, more than $193 billion per year,” the study says.

Federal welfare spending in fiscal year 2011 totaled $668 billion, spread out over 126 programs, while the poverty rate that remains high at 15.1 percent, roughly where it was in 1965, when President Johnson declared a federal War on Poverty.

In 1966, the first year after Johnson declared war on poverty, the national poverty rate was 14.7 percent, according to Census Bureau figures. Over time, the poverty rate has fluctuated in a narrow range between 11 and 15 percent, only falling into the 11 percent range for a few years in the late 1970’s.

The federal poverty rate is the percentage of the population below the federal poverty threshold, which varies based on family size.

While the study concedes that some of the increased spending under Obama is a result of the recession and the counter-cyclical nature of anti-poverty programs, it also finds that some of the increase is deliberate, with the government having expanded eligibility for welfare programs.

In fiscal year 2008, anti-poverty spending was $475 billion. In fiscal year 2009, when Obama took office, it had risen to $590 billion.

“But the dramatically larger increase also suggests that part of the program’s growth is due to conscious policy choices by this administration to ease eligibility rules and expand caseloads,” the Cato report says. “For example, income limits for eligibility have risen twice as fast as inflation since 2007 and are now roughly 10 percent higher than they were when Obama took office.”

In fact, the study points out that according to the administration’s own projections, federal welfare spending is unlikely to decline even after the economy recovers – further evidence that not all of the increase in spending is recession-related.

“All this spending has not bought an appreciable reduction in poverty,” the study says. “[T]he poverty rate has remained relatively constant since 1965, despite rising welfare spending.”

The study counts as a welfare program any federal program that is means-tested and provides some kind of cash or in-kind benefit. Means-tested programs are federal programs that only make benefits available to people at or below a certain income level. In-kind benefits are things like healthcare, housing, or other non-cash benefits that are given in lieu of money.

Included in this expanded definition of welfare spending are traditional welfare programs such as food stamps and cash welfare benefits, as well as in-kind, means tested programs like Medicaid, energy assistance grants for low-income people, and the refundable portions of the Earned Income Tax Credit.

The study faults the way poverty programs are designed, saying that the increase in spending and largely unchanged poverty rate showed that the issue is not a matter of money, but a matter of what the programs aim to achieve.

“The vast majority of current programs are focused on making poverty more comfortable – giving poor people more food, better shelter, health care, and so forth – rather than giving people the tools that will help them escape poverty.”

Instead, the study recommends refocusing anti-poverty efforts on keeping people in school, discouraging out-of-wedlock births, and encouraging people to get a job – even if that job is a low-wage one.

“It would make sense therefore to shift our anti-poverty efforts from government programs that simply provide money or goods and services to those who are living in poverty to efforts to create the conditions and incentives that will make it easier for people to escape poverty.

As of early 2011, 15% of people lived in a household that received food stamps, 26% had someone enrolled in Medicaid and 2% had a member receiving unemployment benefits. The Census data show that 16% of the population lives in a household where at least one member receives Social Security and 15% receive or live with someone who gets Medicare. There is likely a lot of overlap. http://blogs.wsj.com/economics/2012/05/26/number-of-the-week-half-of-u-s-lives-in-household-getting-benefits/

During February 2010, 1 in 8 Americans were enrolled for food stamps, an increase of 260,000. Since reaching 31.78 million in December 2008, enrollment in Supplemental Nutrition Assistance Program (SNAP) has set a record each month. USDA estimates enrollment for fiscal year 2010, which ends Sept 30, is expected to average 40.5 million people, at a cost of up to $59 billion. Average enrollment for fiscal 2011 is predicted to be 43.3 million people. Reuters, “Food-stamp tally nears 40 million, sets record,” May 7, 2010

The USDA dedicated $5 million in 2011 to “improve access to and increase participation in the Supplemental Nutrition Assistance Program [SNAP] .” http://www.judicialwatch.org/blog/2011/04/usda-spends-5-mil-to-recruit-food-stamp-recipients/

The Congressional Budget Office said Thursday that 45 million people in 2011 received SNAP benefits, a 70% increase from 2007. The CBO projected that one in seven U.S. residents received food stamps last year. http://blogs.wsj.com/economics/2012/04/19/food-stamp-rolls-to-grow-through-2014-cbo-says/?mod=e2tw

2012. Around 5.3 percent of the population between the ages of 25 and 64 is currently collecting federal disability payments, a jump from 4.5 percent since the economy slid into a recession. Mental-illness claims, in particular, are surging. During the recent economic boom, only 33 percent of applicants were claiming mental illness, but that figure has jumped to 43 percent, says Rutledge, citing preliminary results from his latest research. NY. Post., Jobless disability claims soar to record $200B as of January, February 19, 2012,

In just the first four months of 2012, 539,000 joined the disability rolls and more than 725,000 put in applications. As a result, by April there were a total of 10.8 million people on disability, [SSI and SSDI?] according to Social Security Administration data, a 53% increase from a decade ago, after accounting for all those who've left the program (about 700,000 drop out each year, mainly because they reached retirement age or died). http://news.investors.com/article/608418/201204200802/ssdi-disability-rolls-skyrocket-under-obama.htm?p=full Also see http://www.akdart.com/poverty.html

A record 5.4 million workers and their dependents have signed up to collect federal disability checks since President Obama took office, according to the latest official government data, as discouraged workers increasingly give up looking for jobs and take advantage of the federal program. From June 2009, the number of new enrollees to Social Security’s disability insurance [SSDI, financed with Social Security taxes paid] program is twice the job growth figure. ^

SSDI now accounts for more than 16% of Social Security's budget and more than 15% of Medicare's (SSDI enrollees can qualify for Medicare after two years.) ^

The amount of money the federal government hands out in direct payments increased 32% during first three years of Mr. Obama's Presidency. http://patriotupdate.com/17823/food-stamps-up-45-federal-handouts-up-32

In 1988, there were 4.46 million SSI [Supplemental Security Income, financed through general revenues from taxes, meaning benefits are not based on your prior work history] recipients, 6 million in 1993 and in 2011 there were 8 million. http://www.cato.org/pubs/pas/pa-224.html; http://www.socialsecurity-disability.org/disability-benefits

The top 10 States with the highest percentage of non-poor residents of each state signed up for government assistance were Vermont, Mississippi, Maine, New York, Massachusetts, Alaska, Rhode Island, Hawaii, Connecticut, Arkansas. http://www.cato-at-liberty.org/the-moocher-index/

Much more

Bingo.

Save for a small percentage of true charity cases, it’s a matter of will.

Money is not value. Value is not money. Neither are durable.
“He who does not work, neither shall he eat.”

One must produce more value (wealth) than he consumes. If not, poverty ensues.
Money is just a convenient token representing value; acquiring it without trading for value produced does not end poverty, it just forestalls it - while that money gets routed back to those who do create value.

I can make a hamburger and sell it for $1.
Needing food and lacking $1, the gov’t could give you a dollar.
You give me the dollar, I give you the burger, I’m $1 richer, you’re satiated for a couple hours.
This doesn’t help your situation. A couple hours later, you’re hungry again and don’t have a dollar.
The feds could declare war on the problem, print a lot of dollars, even take a lot of dollars from me, but the problem remains. So long as I create things with inherent value, I’ll attract money; so long as you don’t, you won’t. Lots of currency gets injected into the system, existing currency gets devalued, producers get annoyed, and the non-producers remain poor.
Go figure.

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