Myth # 1 (of 4)
It's election season, and immigration "reform" and raising the minimum wage are two topics that continue to grace the headlines. Likewise, the same, tired arguments are also circulating. Welfare, poverty, and the foreign-born all get rolled-up into some sort of Republican talking-point orgy. In fact, I have recently heard a great deal of discussion regarding the economic drain the undocumented immigrant population is to the US economy: those vile, dirty, law breakers who come to this country and apply for all sorts of government handouts they don't deserve. Why, the masses question, should our hard-earned tax dollars go to support those people? Welfare entitlements are, after all, perverse incentives to have more babies, leave stable unemployment, and remain single. While the most recent rhetoric implicates undocumented immigrants as those responsible for the growing welfare rolls, the larger questions surrounding government means-tested programs have been around since the the inception of said programs.
The attitudes that fuel public opinion about welfare are well-grounded in statistical information and amplified by personal observations and experiences. How many, for example, have stood behind a woman in a grocery store who purchases her necessities (potato chips, root beer, cheese) with food stamps? How many welfare moms appear to have never gone hungry? Isn't it that most of them are really lazy, and in the process of successfully bestowing their many children with this and other less-desirable character flaws? Those who seek to disband welfare programs believe not only that welfare is wasteful, but that it has unsuccessfully addressed poverty in the United States. It has become, they would argue, too large, too lavish, and too attractive.
Frankly, I am tired of this recurrent theme. To that end, I present:
The Myth of the Out of Control Welfare State
The picture of an overgrown welfare state is usually based on statistical information highlighting the amount of money the government spends annually on social welfare programs. What the government calls social welfare expenditures grew from $24 billion in 1950 to nearly $1 trillion in the beginning of the 1990's (US Census Bureau). This amount of money is considered by most to be an accurate measure of the numbers of people who "live off the system." The more the government spends on social welfare programs, the more people are being dragged into the welfare safety net, or so some reason. These numbers are also considered to be indicative of the failure of America's self-proclaimed "war on poverty." After all, if we are spending so much money on the poor, why has poverty remained such a persistent problem in this country?
The answer to this question lies, in part, in what is meant by social welfare expenditures. The term social welfare expenditures is a huge, encompassing umbrella under which exist several levels. One of these, called social insurance programs, includes such things as Social Security, unemployment insurance, retirement systems for public employees and railroad workers, and workers' compensation for people injured on the job. Government spending for schools also falls into the social welfare expenditures category. Combined with the social insurance programs, these two categories alone accounted for nearly 75 percent of all "welfare" spending in 1992.
How much of the $1 trillion is left for the poor then? According to the 1990 Congressional Budget Office's Special Analysis of the Budget, less than 10 percent of the annual welfare budget is earmarked for low-income persons. This is what the government calls "public aid" and includes, among others, Aid to Families with Dependent Children, the food stamp and Medicaid programs, and the Supplemental Social Security Income (SSI) program for low-income people who are aged, disabled, or blind.
The question of why poverty persists despite apparently enormous welfare expenditures can be answered not only by understanding more clearly how much (or little) of welfare actually goes to the poor, but also by examining how poverty is defined. The government decides who is poor and who isn't based upon a 1950s US Department of Agriculture estimate of the costs of a minimally adequate food budget. The cost of this basic subsistence diet, a so-called thrifty food plan, was then multiplied by three, because surveys at the time indicated that the poor spent approximately one-third of their income on food. Later, the USDA "stressed that the cost of this plan is not a reasonable measure of basic money needs for a good diet." The plan also assumes that "families will bake bread daily and cook all their food from scratch, never buy fast food or eat out, use dried beans and no canned food, be experts in nutrition and have a working refrigerator, freezer, and stove, among other things." The poverty line was $3000 for a family of four in 1964. In 2005, a family of four is considered officially poor if their annual income is $19,874 or less. Anyone reading this knows that you can't raise a family on a gross income of $1650/month.
Since its establishment, the government has not adjusted the poverty level to reflect the changing dynamics of spending patterns. It simply takes the previous year's figure and adjusts for inflation. However, because of the rising costs of other necessities such as child care, transportation, and health care, it is unrealistic to assume that poor families still spend one-third of their budget on food. Several studies have shown that the official poverty level is less than two-thirds of what is necessary to buy those goods and services which the federal government defines as essential to the maintenance of adequate nutrition, housing, safety and health. The official poverty rate in 2004 was one in seven.
In essence, then, the amount of money that the United States government spends on entitlement programs is grossly over-estimated. In 1993, for example, AFDC spending consumed only 0.35 percent of the gross domestic product (Twentieth Century Fund, 1996). At the same time, the numbers of poor people in America are grossly under-estimated by the official standard. This said, it should be recognized that most poor people do not receive welfare. Only one-third of poor families receive public assistance payments and only about 40 percent receive any non -cash benefits such as food stamps, free or reduced school lunches, public housing or Medicaid. One-fourth of families that are poor by the official standard do not receive any public assistance of any kind, cash or non-cash.
It's election season, and immigration "reform" and raising the minimum wage are two topics that continue to grace the headlines. Likewise, the same, tired arguments are also circulating. Welfare, poverty, and the foreign-born all get rolled-up into some sort of Republican talking-point orgy. In fact, I have recently heard a great deal of discussion regarding the economic drain the undocumented immigrant population is to the US economy: those vile, dirty, law breakers who come to this country and apply for all sorts of government handouts they don't deserve. Why, the masses question, should our hard-earned tax dollars go to support those people? Welfare entitlements are, after all, perverse incentives to have more babies, leave stable unemployment, and remain single. While the most recent rhetoric implicates undocumented immigrants as those responsible for the growing welfare rolls, the larger questions surrounding government means-tested programs have been around since the the inception of said programs.
The attitudes that fuel public opinion about welfare are well-grounded in statistical information and amplified by personal observations and experiences. How many, for example, have stood behind a woman in a grocery store who purchases her necessities (potato chips, root beer, cheese) with food stamps? How many welfare moms appear to have never gone hungry? Isn't it that most of them are really lazy, and in the process of successfully bestowing their many children with this and other less-desirable character flaws? Those who seek to disband welfare programs believe not only that welfare is wasteful, but that it has unsuccessfully addressed poverty in the United States. It has become, they would argue, too large, too lavish, and too attractive.
Frankly, I am tired of this recurrent theme. To that end, I present:
The Myth of the Out of Control Welfare State
The picture of an overgrown welfare state is usually based on statistical information highlighting the amount of money the government spends annually on social welfare programs. What the government calls social welfare expenditures grew from $24 billion in 1950 to nearly $1 trillion in the beginning of the 1990's (US Census Bureau). This amount of money is considered by most to be an accurate measure of the numbers of people who "live off the system." The more the government spends on social welfare programs, the more people are being dragged into the welfare safety net, or so some reason. These numbers are also considered to be indicative of the failure of America's self-proclaimed "war on poverty." After all, if we are spending so much money on the poor, why has poverty remained such a persistent problem in this country?
The answer to this question lies, in part, in what is meant by social welfare expenditures. The term social welfare expenditures is a huge, encompassing umbrella under which exist several levels. One of these, called social insurance programs, includes such things as Social Security, unemployment insurance, retirement systems for public employees and railroad workers, and workers' compensation for people injured on the job. Government spending for schools also falls into the social welfare expenditures category. Combined with the social insurance programs, these two categories alone accounted for nearly 75 percent of all "welfare" spending in 1992.
How much of the $1 trillion is left for the poor then? According to the 1990 Congressional Budget Office's Special Analysis of the Budget, less than 10 percent of the annual welfare budget is earmarked for low-income persons. This is what the government calls "public aid" and includes, among others, Aid to Families with Dependent Children, the food stamp and Medicaid programs, and the Supplemental Social Security Income (SSI) program for low-income people who are aged, disabled, or blind.
The question of why poverty persists despite apparently enormous welfare expenditures can be answered not only by understanding more clearly how much (or little) of welfare actually goes to the poor, but also by examining how poverty is defined. The government decides who is poor and who isn't based upon a 1950s US Department of Agriculture estimate of the costs of a minimally adequate food budget. The cost of this basic subsistence diet, a so-called thrifty food plan, was then multiplied by three, because surveys at the time indicated that the poor spent approximately one-third of their income on food. Later, the USDA "stressed that the cost of this plan is not a reasonable measure of basic money needs for a good diet." The plan also assumes that "families will bake bread daily and cook all their food from scratch, never buy fast food or eat out, use dried beans and no canned food, be experts in nutrition and have a working refrigerator, freezer, and stove, among other things." The poverty line was $3000 for a family of four in 1964. In 2005, a family of four is considered officially poor if their annual income is $19,874 or less. Anyone reading this knows that you can't raise a family on a gross income of $1650/month.
Since its establishment, the government has not adjusted the poverty level to reflect the changing dynamics of spending patterns. It simply takes the previous year's figure and adjusts for inflation. However, because of the rising costs of other necessities such as child care, transportation, and health care, it is unrealistic to assume that poor families still spend one-third of their budget on food. Several studies have shown that the official poverty level is less than two-thirds of what is necessary to buy those goods and services which the federal government defines as essential to the maintenance of adequate nutrition, housing, safety and health. The official poverty rate in 2004 was one in seven.
In essence, then, the amount of money that the United States government spends on entitlement programs is grossly over-estimated. In 1993, for example, AFDC spending consumed only 0.35 percent of the gross domestic product (Twentieth Century Fund, 1996). At the same time, the numbers of poor people in America are grossly under-estimated by the official standard. This said, it should be recognized that most poor people do not receive welfare. Only one-third of poor families receive public assistance payments and only about 40 percent receive any non -cash benefits such as food stamps, free or reduced school lunches, public housing or Medicaid. One-fourth of families that are poor by the official standard do not receive any public assistance of any kind, cash or non-cash.
To be continued.
