$1 Trillion a Year Fighting Poverty. And Failed!
Earlier this month, the Cato Institute published a policy study (.html version) of America's welfare state, and how America spends "nearly $1 trillion a year fighting poverty -- and fail." (Policy Analysis No. 694, April 1, 2012; requires Adobe). It was written by Michael D. Tanner, Cato's director of health and welfare studies. Below is the executive summary:
"On January 8, 1964, President Lyndon B. Johnson delivered a State of the Union address to Congress in which he declared an "unconditional war on poverty in America." At the time, the poverty rate in America was around 19 percent and falling rapidly. This year, it is reported that the poverty rate is expected to be roughly 15.1 percent and climbing. Between then and now, the federal government spent roughly $12 trillion fighting poverty, and state and local governments added another $3 trillion. Yet the poverty rate never fell below 10.5 percent and is now at the highest level in nearly a decade. Clearly, we have been doing something wrong.
"When most Americans think of welfare, they think of the cash benefit program known as Temporary Assistance to Needy Families (TANF), formerly known as Aid to Families with Dependent Children (AFDC). But in reality TANF is only a tiny portion of a vast array of federal government social welfare programs designed to fight poverty. In fact, if one considers those programs that are means-tested (and therefore obviously targeted to low-income Americans) and programs whose legislative language specifically classifies them as anti-poverty programs, there are currently 126 separate federal government programs designed to fight poverty."
If none of that shocks you, perhaps the following from the Introduction will?
"Indeed, federal welfare spending alone totals more than $14,848 for every poor man, woman, and child in this country. For a typical poor family of three, that amounts to more than $44,500. Combined with state and local spending, government spends $20,610 for every poor person in America, or $61,830 per poor family of three. Given that the poverty line for that family is just $18,530, we should have theoretically wiped out poverty in America many times over . . . ."
Imagine! The country spends the equivalent of $10 per hour ($20,610 divided by 2,080 hours) for every poor person. And be sure to check out the appendix, which provides the cost and number of participants for 126 welfare programs.
Welfare may not be as much of a fiscal problem as the federal entitlement programs such as Social Security, Medicare, and Medicaid, but as Tanner shows in this policy analysis, welfare is a program that must be fixed.