Spending for 'Anti-Poverty' Programs: Restoring a True Safety Net

Abstract

Federal spending increases for what used to be known as “anti-poverty” programs — food, health insurance, housing, and income support — have become staggering. These programs grew by $100 billion during the eight years of the Bush administration (adjusting for inflation), but they grew by another $150 billion in just the first two years of the Obama administration. Total spending for these four safety net programs stood at $666 billion in 2010, a total larger than Medicare and just slightly smaller than Social Security and national defense. Some of these increases are justified by the deep recession that began in late 2007, due to higher rates of unemployment and poverty. But average benefits per person in poverty increased from $7500 during the early 1990s recession compared to $14,600 for the recent one (correcting for inflation). If all these monies and services were going to the poor, our question would be why the safety net became more costly. Most remarkable, however, and rarely discussed, is that much of the cost increase is explained by benefits going to persons who are above the official poverty line. Today, at least half of the benefits for food programs, Medicaid, and most income assistance programs are going to people who are above the poverty line as defined by the U.S. Census. Federal food program expenditures for 2010 totaled $95 billion, up from just $57 billion in 2007. Most of these expenditures were for food stamps ($68 billion). Of the 40.3 million persons receiving food stamps in 2010, slightly more than half, or 20.4 million, were above the official poverty line as measured by the U.S. Census. Of the 43.8 million non-disabled persons receiving Medicaid and CHIP benefits, fully 25 million are above the official poverty line. More than half of the recipients of Earned Income Tax Credits (EITC) and traditional welfare (TANF) are above the official poverty line. Of the major programs we reviewed, only the federal housing assistance program did not have a majority of recipients above the poverty line. Nevertheless, four out of ten persons receiving housing subsidies are over the line. The debate over federal budget deficits focuses unduly on Medicare and Social Security. The combined spending on anti-poverty programs, and their rate of growth, offers an alternative for reduced federal spending. While anti-poverty programs should clearly help those who are poor, the general public (and perhaps many in Congress) may not be aware that we are giving billions in benefits to persons above the poverty line. By bringing these programs into line with their original purposes, a safety net for the poor, we can save up to $200 billion per year — without reducing benefits for the truly needy.