Our View: Welfare, in its many forms, mushrooms
The United States spent $61,000-plus last year supporting welfare programs for each household in poverty, according to US Census, Office of Management and Budget and Congressional Research Services data.
If the money had been handed directly to those families, they would have arrived in the middle class, their poverty eradicated, at least until they spent the money. Instead, hundreds of billions of dollars were passed through costly, inefficient and, apparently, ineffective government channels.
"According to the Census Bureau's American Community Survey, the number of households with incomes below the poverty line in 2011 was 16,807,795," the Senate Budget Committee recently noted. "If you divide total federal and state spending by the number of households with incomes below the poverty line, the average spending per household in poverty was $61,194 in 2011."
That amount is more than twice the annual income a typical poverty household lives on, the federal poverty threshold being $22,350 for a family of four.
The $61,194 isn't spent solely on households below the poverty line. Some recipients above the poverty level also benefit from social welfare programs and aid, such as Pell grants for college and other wealth transfers.
What can we conclude? Welfare spending as we know it isn't getting people off welfare. It is inflating the number receiving welfare in one form or another, many of them not traditionally what have been deemed to be "poor."
The Republicans on the Senate Budget Committee point out the United States now spends more on means-tested welfare than any other budget item, including Social Security, Medicare and national defense. Federal spending on more than 80 welfare programs increased 32 percent in three years. When state spending for the federal poverty programs is included, the total spent in 2011 was about $1 trillion.
Vast welfare expansion adds to the looming fiscal catastrophe posed by general entitlement spending. According to Merrill Matthews, of the Institute for Policy Innovation, and Mark E. Litow, chairman of the Social Insurance Public Finance Section of the Society of Actuaries, "the coming entitlements cliff" is substantially greater than the end-of-the-year fiscal cliff, a combination of expiring Bush-era tax cuts and automatic spending cuts.
The US Census Bureau says 108 million Americans live in households where at least one person participates in a means-tested program. The number has grown rapidly under the Obama administration. Food stamp recipients now number 47 million, up from 32 million four years ago. The USDA aggressively has campaigned to boost enrollment further. Also, Medicaid has grown from 60 million enrollees to 70 million, more than one American in five. Disability beneficiaries are up from 7.5 million to 8.8 million during the Obama administration.
Moreover, each day, about 10,000 people retire. As 77 million baby boomers retire and take more from the system than they contribute, the funding stream will further diminish, even as demands increase.
Matthews and Litow suggest three obvious solutions: Trim entitlement spending to realistic levels for those who need it most, eliminating incentives to remain on welfare. Enact policies to encourage economic growth. And switch to prefunded retirement programs with personal accounts and defined contributions, rather than defined-benefit plans, to eliminate long-term unfunded liabilities for companies and government agencies.
The solutions may be obvious, but to date not politically palatable.