Everyone from Ronald Reagan to Bill Clinton seems to agree that the welfare system is a disaster. Currently, we are spending more than $350 billion a year on 79 means-tested federal welfare programs. That's more than we spend on national defense. Theoretically, we could take that money and give $8,939 to every poor person in America, or $35,756 to a family of four.

How can we spend so much and achieve so little? One reason is that most of the money we spend goes to people who work in the welfare-poverty industry, instead of to poor people. That explains why the real value of cash benefits to welfare mothers has changed little in the past 20 years, even though the welfare state has mushroomed.

Scholarly studies show that the welfare system discourages work and encourages dependency, single motherhood and the breakup of families. The underclass - replete with crime and other antisocial behavior - is subsidized and sustained by the welfare state. Even when the welfare system achieves good results, it does so incompetently. One of the most astonishing and little-known facts about the welfare state is what a miserable job it does in getting aid first to people who need it most. According to a government report:

• Only 41 percent of all poor families receive food stamps, but 28 percent of food-stamp families have incomes above the poverty level.

• Only 23 percent of all poor families live in public housing or receive housing subsidies, but almost half of the families receiving housing benefits are not poor.

• Only 40 percent of all poor families are covered by Medicaid, but 40 percent of all Medicaid beneficiaries are not poor.

• Amazingly, 41 percent of all poor families receive no means-tested benefit of any kind from government, but more than 50 percent of all families who receive at least one means-tested benefit are not poor.

The War on Poverty was started to create a social safety net - to help people who failed to get help from the private sector. Yet it is becoming increasingly obvious that today the private sector provides the real social safety net - by helping people that government programs simply do not reach.

• Ninety-four percent of all shelters for the homeless in the U.S. are operated by private sector organizations.

• Studies show that as many as 80 percent of low-income people turn to the private sector first when facing a crisis.

Compare the dismal performance of the public sector with some of our best private charities. Under welfare, applicants do not have to explain how they plan to change their behavior in the future or even to show a willingness to change. By contrast, our best private charities may reduce the level of assistance or withdraw it altogether if recipients do not change their behavior. Overall, the private sector has shown that only hands-on management - coupled with good judgment - assures relief without at the same time encouraging dependency.

There is mounting evidence that the private sector does a better job of getting prompt aid to those who need it most, encouraging self-sufficiency and self-reliance, preserving the family unit and using resources efficiently. Yet the federal government has a monopoly on welfare tax dollars. It is time to end this monopoly by allowing private citizens to decide how our welfare tax dollars are spent.

Under one proposal, government would continue to force people to give their "fair share" through the income tax system and to determine the total national welfare budget. However, individual taxpayers would be free to allocate their welfare tax dollars to any qualified charity - public or private.

Moreover, for each dollar taxpayers allocated to a private charity, government welfare programs would lose a dollar. In this way, private charities would compete equally with government welfare programs for the portion of the federal budget that is allocated to poverty programs.

Under this proposal, a welfare program would be able to attract contributions only by making a persuasive case to the public. No longer would inefficient, wasteful programs have uncontested access to taxpayer dollars. The individual givers would have direct control over how their share of welfare dollars was spent.

Source: John C. Goodman, Gerald W. Reed and Peter S. Ferrara, "Why Not Abolish the Welfare State?" NCPA Policy Report No. 187, October 1994, National Center for Policy Analysis, 12770 Coit Rd., Suite 800, Dallas, TX 75251, (972) 386-6272.