NCPA - National Center for Policy Analysis

Welfare Spending Shattering All-Time Highs

October 19, 2012

Given the recent history following the financial crisis, the United States is confronted with the harsh realities of making more parsimonious decisions to rein in spending while maintaining its fundamental responsibilities to its citizens. Welfare is a central topic in this dialogue, says Robert Rector of the Heritage Foundation.

A new investigation by the nonpartisan Congressional Research Service (CRS) exposes the pressing reality of the "growing welfare state." Welfare expenditure is fast approaching the $1 trillion mark.

  • Around 100 million people, one-third of the nation's population, are receiving aid from at least one of 80-plus means-tested aid program each month. That is around $9,000 per recipient.
  • If converted to cash, means-tested welfare spending is more than five times the amount needed to eliminate all poverty in the United States.

Conventional wisdom seems to dictate that this is a reasonable, temporary response to the recession. However, President Obama pursues a permanent increase of the welfare state.

  • According to the president's budget plans for fiscal year 2013, means-tested welfare will continue to grow swiftly for the next decade, projecting costs of $12.7 trillion.
  • Welfare spending has long passed the amount spent on defense: Since 1993, the ratio of welfare to defense expenditure averages $1.33 to $1. By 2022, this will be $2.33 of welfare to every $1 spent on defense.

One issue contributing to the sudden explosion in the number of welfare recipients is the dismantling of the screening system. Initially four of the programs had work requirements, but now the administration has suspended the work requirement for two of them. The recipient pool doubled. According to the report:

  • At the federal level, $746 billion in means-tested spending exceeded spending on Medicare ($480 billion), Social Security ($725 billion) or the defense budget ($540 billion).
  • At the state level, in 2011, state contributions to federal welfare programs came to $201 billion, and independent state programs contributed around $9 billion.
  • Overall, means-tested welfare spending from federal and state sources reached from all sources reached $956 billion.

An important step is to return the welfare spending to prerecession levels. Along the same lines, it is important to reintegrate the work requirement measures in order to undo the signal that "able-bodied recipient rarely are required to work or prepare for work to receive aid."

Source: Robert Rector, "Morning Bell: Welfare Spending Shattering All-Time Highs," Heritage Foundation, October 18, 2012. "Spending for Federal Benefits and Services for People with Low Income, FY2008-FY2011: An Update of Table B-1 from CRS Report R41625, Modified to Remove Programs for Veterans," Congressional Research Service, October 16, 2012.


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