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Why Not Abolish the Welfare State?

Are We Taxpayers Getting Our Money's Worth From the Welfare System?

A casual look at the evidence suggests that we are not. The poverty rate dropped precipitously after World War II, declining from 32 percent in 1950 to 14.7 percent in 1966, when the War on Poverty was getting under way. In the late 1960s, the poverty rate stopped declining and remained at 12 to 13 percent from 1968 to 1978.

In the late 1970s, the poverty rate started increasing. From 1978 to 1987, the rate jumped from 11.4 percent to 15.2 percent, an increase of one-third, and it has remained close to that level ever since. In 1993, the last year for which official data are available, the poverty rate was 15.1 percent -- higher than the poverty rate in 1966. [See Figure II.]

How Much Poverty Would We Have Today If There Had Never Been a Welfare State? Suppose we had never had Aid to Families With Dependent Children (AFDC), food stamps or any other federal welfare program. How much poverty would there be today? That calculation by the President's Council of Economic Advisers was published in the Economic Report of the President in 1989. The report concluded that:10

  • Economic growth alone naturally raises more and more people out of poverty.
  • Without welfare, economic growth would have produced a poverty rate about the same as, or a little lower than, the one we have today.

Are the Poor Really Poor? A little-known fact is that there is a welfare-poverty industry with a self-interest in expanding welfare spending and increasing the number of poor who furnish the rationale for that spending. How is it possible to spend larger and larger sums and still increase the amount of poverty? Official measurements of poverty count only money income and ignore in-kind (noncash) benefits such as medical care, food stamps and public housing. By spending ever-increasing amounts on in-kind benefits, the welfare establishment has managed to make welfare increasingly attractive without disqualifying recipients by endangering their status as "poor." 11

  • Between 1972 and 1993, total cash transfers to the poor barely changed at all in real terms. 12
  • Over the same period, total welfare spending in real terms almost tripled. 13

America's poor do not live lavishly, but few households are destitute. The average "poor" American lives in a larger house or apartment, is more likely to own a car and is more likely to have basic amenities such as an indoor toilet than the general population of Western Europe. In addition: 14

  • 53 percent of poor households have air conditioning;
  • 91 percent own a color TV and 29 percent own two or more color TVs;
  • 64 percent own a car and 14 percent own two or more cars;
  • 56 percent own a microwave oven; and
  • 40 percent own their home, with 71,000 owning homes worth more than $300,000.

Are Poor People Going Hungry? Poverty-induced malnutrition is almost nonexistent in the U.S. Those living below the poverty line have essentially the same level of nutritional intake as the middle class. In fact, the major nutrition problem of the poor is not hunger but obesity; they have a higher rate of obesity than the general population. 15

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 eive no means-tested benefit of any kind from government; yet more than 50 percent of all families who receive at least one means-tested benefit are not poor.