NCPA - National Center for Policy Analysis

Examining the Means-Tested Welfare State

May 29, 2012

A significant portion of the government safety net consists of antipoverty or means-tested welfare programs.  Seventy-nine federal programs provide cash, food, housing, medical care, social services, training and targeted education aid to poor and low-income Americans.  These programs are unique in that they are not paid for by their recipients, says Robert Rector, a Heritage Foundation senior research fellow.

Most Americans are aware of the existence of these programs.  They are, however, largely unaware of their financial scope and budgetary impact.

  • In fiscal year 2011, federal spending on means-tested welfare came to $717 billion.
  • With state contributions to federal programs adding another $201 billion and independent state programs contributing around $9 billion, total welfare spending comes to $927 billion.
  • Roughly half of means-tested spending is for medical care, another 40 percent goes to cash, food and housing aid, and the remaining 10 to 12 percent goes to what might be called "enabling" programs, which help low-income individuals become more self-sufficient.

On an individual basis, this funding is enormous in scale, and is technically more than enough to raise every impoverished American out of poverty.

  • One way to think about the $927 billion figure is that it amounts to $19,082 for each American defined as "poor" by the Census Bureau.
  • However, since some means-tested assistance goes to individuals who are low-income but not poor, a more meaningful figure is that total means-tested aid equals $9,040 for each lower-income American (in the lowest-income third of the population).
  • With the income of low-income individuals, means-tested welfare spending is sufficient to bring the income of every lower-income American to 200 percent of the federal poverty level.

Despite their ineffectiveness at reducing poverty, these programs are the fastest growing portion of the federal government's budget.

  • Adjusting for inflation and population growth, the country now spends 50 percent more on means-tested cash, food and housing than it did in 1991.
  • Furthermore, President Obama's budgetary outlays will allow further unsustainable growth in these programs over the next decade.

Source: Robert Rector, "Examining the Means-Tested Welfare State: 79 Programs and $927 Billion in Annual Spending," Heritage Foundation, May 3, 2012.

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