America's Ever Expanding Welfare Empire


ACRU Staff


April 23, 2011

This column by ACRU General Counsel and Policy Director for the Carleson Center for Public Policy (CCPP) Peter Ferrara was published April 22, 2011 on Forbes website.

A fundamental misconception about America’s welfare state misleads millions of voters to reflexively support ever bigger and more generous government. William Voegeli fingers the attitude in his book, Never Enough: America’s Limitless Welfare State: “no matter how large the welfare state, liberal politicians and writers have accused it of being shamefully small” and “contemptibly austere.”

Barbara Ehrenreich expresses the attitude in her book, Nickled and Dimed: “guilt doesn’t go anywhere near far enough; the appropriate emotion is shame” regarding the stingy miserliness of America’s welfare state. In light of the current budget debate, with House Budget Committee Chairman Paul Ryan putting fundamental entitlement reform on the table, this misconception especially needs to be corrected.

America’s welfare state is not a principality. It is a vast empire bigger than the entire budgets of almost every other country in the world. Just one program, Medicaid, cost the federal government $275 billion in 2010, which is slated to rise to $451 billion by 2018. Counting state Medicaid expenditures, this one program cost taxpayers $425 billion in 2010, soaring to $800 billion by 2018. Under Obamacare, 85 million Americans will soon be on Medicaid, growing to nearly 100 million by 2021, according to the CBO.

But there are 184 additional federal, means-tested welfare programs, most jointly financed and administered with the states. In addition to Medicaid is the Children’s Health Insurance Program (CHIP). Also included is Food Stamps, now officially called the Supplemental Nutrition Assistance Program (SNAP). Nearly 42 million Americans were receiving food stamps in 2010, up by a third since November, 2008. That is why President Obama’s budget projects spending $75 billion on Food Stamps in 2011, double the $36 billion spent in 2008.

But that is not the only federal nutrition program for the needy. There is the Special Supplemental Nutrition Program for Women, Infants and Children (WIC), which targets assistance to pregnant women and mothers with small children. There is the means tested School Breakfast Program and School Lunch Program. There is the Summer Food Service Program for Children. There are the lower income components of the Child and Adult Care Food Program, the Emergency Food Assistance Program, and the Commodity Supplemental Food Program (CSFP). Then there is the Nutrition Program for the Elderly. All in all, literally cradle to grave service. By 2010, Federal spending for Food and Nutrition Assistance overall had climbed to roughly $100 billion a year.

Then there is federal housing assistance, totaling $77 billion in 2010. This includes expenditures for over 1 million public housing units owned by the government. It includes Section 8 rental assistance for nearly another 4 million private housing units. Then there is Rural Rental Assistance, Rural Housing Loans, and Rural Rental Housing Loans. Also included is Home Investment Partnerships (HOME), Community Development Block Grants (CDBG), Housing for Special Populations (Elderly and Disabled), Housing Opportunities for Persons with AIDS (HOPWA), Emergency Shelter Grants, the Supportive Housing program, the Single Room Occupancy program, the Shelter Plus Care program, and the Home Ownership and Opportunity for People Everywhere (HOPE) program, among others.

Besides medical care, food, and housing, the federal government also provides cash. The old New Deal era Aid to Families with Dependent Children (AFDC) is now Temporary Assistance for Needy Families (TANF), which pays cash mostly to single mothers with children. There is the Earned Income Tax Credit (EITC), which sends low income workers checks even though they usually owe no taxes to be credited against. The Child Tax Credit similarly provides cash to families with children. Supplemental Security Income (SSI) provides cash for the low income aged, blind and disabled. In 2010 such income security programs accounted for nearly another $200 billion in federal spending.

The federal government also provides means tested assistance through multiple programs for child care, education, job training, and the Low Income Home Energy Assistance Program (LIHEAP), the Social Services Block Grant, the Community Services Block Grant, and the Legal Services Corporation, among other programs.

The best estimate of the cost of the 185 federal means tested welfare programs for 2010 for the federal government alone is nearly $700 billion, up a third since 2008, according to the Heritage Foundation. Counting state spending, total welfare spending for 2010 reached nearly $900 billion, up nearly one-fourth since 2008 (24.3%).

Yet, by 2008, Robert Rector of Heritage reports that total welfare spending already amounted to $16,800 per person in poverty, 4 times as much as the Census Bureau estimated was necessary to bring all of the poor up to the poverty level, eliminating all poverty in America. That would be $50,400 per poor family of three. Indeed, Charles Murray wrote a whole book, In Our Hands, A Plan to Replace America’s Welfare State explaining that we already spend far more than enough to completely eliminate all poverty in America.

The soaring welfare spending since 2008 is not a temporary increase reflecting the recession, as it is not projected to decline after the economy recovers. By 2013, total annual welfare spending will have grown still more, to nearly $1 trillion. Over the 10 year period from 2009 to 2018, federal and state welfare spending will total $10.3 trillion. This does not include Obamacare’s massive expansion of Medicaid, or the massive new entitlement providing subsidies for families making close to $100,000 per year, and beyond. Together, this abusive entitlement spending will add trillions more.

Even in 2005, government spending on these means tested welfare programs was 25% more than was spent on national defense, and that was at the height of the wars in the Middle East. Government overall, federal, state and local, spends more only on the big entitlements for retirees, Social Security and Medicare, and on education, and total welfare spending may have even shot beyond education by now. Indeed, over the past 2 decades, total welfare spending has been growing faster than Social Security and Medicare, about twice as fast as education, and nearly 3 times as fast as national defense.

Of course, the big picture comprises the entire scope of entitlement programs, including Social Security and Medicare. Social Security spending for 2010 was $721.5 billion, with Medicare spending totaling $457 billion for the year, for a combined total of $1.179 trillion. Adding in federal welfare spending for the year leaves a combined total for entitlement spending of $1.879 trillion. The total federal budget for that year was $3.720 trillion. So entitlement/welfare state spending overall for that year was just over 50% of the entire budget. Not exactly stingy.

The War on Poverty famously began in 1965. From 1965 to 2008, the total spent only on means tested welfare for the poor in 2008 dollars has been nearly $16 trillion, according to the Heritage Foundation. Rector reports that has been more than all spending on all military conflicts from the American Revolution to today, in 2008 dollars.

What have we gotten for all of that spending? Poverty fell sharply after the Depression, before the War on Poverty, declining from 32% in 1950 to 22.4% in 1959 to 12.1% in 1969, soon after the War on Poverty programs became effective. Progress against poverty as measured by the poverty rate then abruptly stopped.

Ryan’s budget only slows
the growth of this welfare/entitlement empire. All of those commentators weeping, wailing and gnashing their teeth over Ryan’s budget are not living in the real world.



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