NCPA - National Center for Policy Analysis

Fewer Americans Draw on Federal Relief Programs

June 5, 2012

Three years after the recession officially ended, most of the nation's safety-net programs finally are serving fewer people, says USA Today.

  • The downward trend that started with unemployment insurance in 2010 and welfare benefits in 2011 has reached food stamps, which have seen a two-month dip -- the first time that's happened under President Obama.
  • Only Medicaid, the federal-state health care program for the poor, remains at its peak, due to the slow recovery, the erosion of employer-sponsored insurance and federal rules that prohibit states from slashing eligibility.

The trend could mean a slight dip in poverty, which rose in 2009-2010.  The three-year lag between the recession ending and a reduction in government aid, on the other hand, shows how hard the post-recession period has been on low-income families, including people with part-time or low-wage jobs.

In most cases, the levels are starting to wane:

  • States are phasing out extended jobless benefits that in some cases enabled people to collect for 99 weeks. The number of people receiving benefits in April was the lowest since December 2008.
  • Tough welfare rules established when the program was overhauled in 1997, such as sanctions and time limits, made welfare less responsive to this recession than others. Caseloads grew 20 percent from the middle of 2008 to the end of 2010 but have declined 5 percent since then.
  • The food stamp program grew by 47 percent over three years, but by February, the latest month available, it had dropped slightly.
  • Medicaid has yet to decline in key states such as Florida, Texas and New York, but it's beginning to level off.

The falling caseloads are beginning to reduce federal spending, but not by much.  Spending on jobless benefits, which rose from $43 billion in 2008 to $157 billion in 2009, has dipped to about $105 billion.  Welfare spending is back to its prerecession, $25 billion level.  Food stamp spending doubled in four years to $106 billion and has yet to abate.  Medicaid costs the federal government more than all the others combined -- an estimated $255 billion.

Source: Richard Wolf, "Fewer Americans Draw on Federal Relief Programs," USA Today, May 29, 2012.

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