Federal welfare continues to expand in cost and coverage
February 21, 2013 at 11:42 am in News by Dustin Siggins 7 Comments
When it comes to the federal budget, corporate welfare is often blamed as a major culprit by the overspending crowd. And it’s true that corporate welfare, an immoral and economically inefficient use of taxpayer dollars, costs taxpayers around $100 billion annually.
Yet it is undeniable that the greatest amount of federal welfare goes to those the government defines as poor. According to the Congressional Budget Office (CBO) in a report on February 11, about one-sixth of federal spending went to “means-tested welfare” in 2011 through 10 major programs.
Interestingly, the largest program in this report is Medicaid, and the second-largest is the food stamp program. By 2023, though, CBO expects Obamacare subsidies for “low-and-moderate-income people” will be the second-largest program:
Medicaid accounted for more than 40 percent of the federal spending on those programs in 2012, followed in size by SNAP. A decade from now, Medicaid will account for an even larger share of spending on those programs, CBO projects. A new means-tested program—federal subsidies to help low- and moderate-income people buy health insurance through insurance exchanges, which will begin in 2014—will be the second-largest means-tested program in 2023, CBO estimates.
The growth of this spending has been tremendous. CBO’s infographic on the report (republished below) shows these specific areas of means-tested welfare (defined as “limited to people with specific amounts of income or assets”) have gone from $55 billion in 1972 to $588 billion in 2011, not accounting for inflation.
Why is the growth so large? CBO has the answer:
Two broad factors were responsible for the growth of spending on means-tested programs and tax credits between 1972 and 2011: increases in the number of people participating in those programs and increases in spending per participant….Both of those increases were themselves the result of multiple factors. For example, the rise in participation stemmed from three important causes:
Population growth (the U.S. population increased by almost 50 percent during that period),
- Population growth (the U.S. population increased by almost 50 percent during that period),
- Changes in economic conditions (particularly the recession that occurred from 2007 to 2009 and the weak recovery that followed it), and
- Actions by lawmakers to create new means-tested programs and tax credits and to expand eligibility for some existing ones.
Increases in spending per participant resulted mainly from two factors:
- Growth in the cost of providing assistance (such as rising costs for medical care), and
- Actions by lawmakers to provide more generous benefits (such as increases in SNAP benefits).
That’s right – one of the major factors in the growth of these forms of means-tested welfare is the kindness Congress shows low-income Americans with your tax dollars and deficit spending. This has expanded both the number of people receiving money and tax credits as well as the amount spent per person. Yet President Obama and his allies often say we need more money for the poor.
Public policy should not ignore the poor. But as Heritage scholars Robert Rector and Rachel Sheffield pointed out in 2011, most poor Americans aren’t hungry, live in decent housing, and have TVs, computers, video game consoles, etc. American poverty is not what the media depicts.
Corporate welfare and means-tested welfare alike cost taxpayers over $1 trillion (over $3,000 per American) annually, yet Congress tends to shy away from addressing this major budgetary problem. As 2013 progresses, let’s make sure to hold Congress accountable for these programs, which along with Social Security, Medicare, and interest payments threaten to bankrupt the nation.
There are also over 1.8 million charities in the USA alone, so there are plenty of private sector businesses and nonprofit charities helping out the poor too not mentioned in any reports on TV or otherwise.
Put money back into the private sector, not take more and regulate more. Get people working again in the private sector, and decrease the amount of poor overall that need any gov assistance. Simple, and logical really. day1charitydonation
if you have a friend in the Military or Border Patrol you need to make sure they understand this: There is no actual sequester and there are zero real spending cuts planned. Here is proof. Look at the table at the top of page 3 of the Congressional Budget Office document that the national sequester discussion is stemming from, “THE BUDGET AND ECONOMIC OUTLOOK: FISCAL YEARS 2013 TO 2023″. The document is available online at: http://www.cbo.gov/sites/default/files/cbofiles/attachments/43907-BudgetOutlook.pdf. Notice that even with the “sequester”, the total revenue is forecast to go up each and every year and total spending is forecast to do the same. There aren’t really cuts! Also notice that at the end of 10 years we plan on having borrowed an additional 7 Trillion dollars on top of our current debt. What is being called the sequester is that we had planned on borrowing an additional 8.2 Trillion dollars, not merely 7 Trillion. Even though we plan on borrowing 7 Trillion dollars more than we take in, because we are not borrowing 8.2 Trillion dollars, the 1.2 Trillion dollar difference is being called a “sequester”. But the numbers speak for themselves. There are no income cuts or spending cuts in the next 10 years. What does this mean? It means that if you are in the Military or Border Patrol and your salary is being reduced, it’s not because of a spending cut or “sequester”. It’s because your area of the budget is not a priority and the current administration is defunding it so they can move those funds to other budget items. Doing this and then purposely trying to sell it to the American people as a “cut” or a “sequester” is morally repugnant. It irresponsible and dishonest.
I think you’re missing the point here. Even if the government implements NO new spending programs it necessarily incurs higher costs, every year, for a variety of reasons:
1. Population growth. More Americans means more people applying for passports, visiting national parks, filing tax returns, driving on interstate highways, flying on planes that need air traffic control, eating more meat that requires inspection, committing more federal crimes that must be prosecuted, etc. As the country grows, the cost of providing basic government services grows too.
2. Changing demographics. Our population is aging, making more people eligible for Social Security and Medicare.
3. Inflation.
4. Economic growth. More businesses require more tax filings to audit, more inspectors to insure compliance with Federal laws, etc.
The tea-bagger response to this fundamental truth is that, well, all those programs are worthless or worse, so let them wither by making actual cuts, not just reductions in the rate of growth of the budget. And everyone loves this idea until their grandma get food poisoning or they can’t get a new passport in time for their next vacation or the national park is closed when they show up or Cousin Bobby is required by his employer to use unsafe equipment and paralyzes himself or your Social Security payment doesn’t show up on time or your Aunt is killed in a mid-air collision. Then you’ll whine like a baby that the damn government isn’t doing its job.
“…most poor Americans aren’t hungry, live in decent housing, and have TVs, computers, video game consoles, etc.”
Thank you; I found this information to be a real eye-opener. If most poor Americans aren’t hungry then obviously we should cut all poverty-assistance programs until they darn well ARE hungry. Preventing childhood malnutrition is a waste of my hard-earned money; let the little beggars starve. If the parents of a young family subsisting below the poverty level are somehow able to scrimp and save to get together a few bucks to provide their kids with the enrichment of a TV or a computer or – horrors! – maybe a video game…instead of allowing them to just wander the streets in search of other amusements, as God intended…then we should inform the authorities, cut them off from all public assistance, and take away their computers. If the endless miles of dilapidated crumbling flats I drive by every day on my way from the suburbs into work in the city are actually “decent” inside then clearly poor people in my city are committing fraud on a massive scale by disguising their fine homes as hovels. This is shocking!!!
How disingenuous of our President! How do we get him to stop lying to us?
I too feel the goverment spending is out of control, but I am a poor person. I live in pain everyday (even with medication) because I believe in hard work. but I had a job which was to heavy for my size. my daughter like wise has a job that is too heavy for her size and is already living with pain. cutting SS# and health care is not the answer. Cutting some of the goverment offices retirement programes could help a lot. They get $150,000.00 a year retirement while I live on $18,000.00. what the goverment needs to do is. give the budget to a housewife like myself who has never had any money and I’ll show you where to make the cuts. also legalize marijuana, tax and control it the same as liquor. The people that smoke it now will be helping to pay the goverment. What is the cause of so many school shootings and such is also simple. The low to middle class no longer have any hope of a better life. Prices are so high that the common man can’t even take his kid to a ball game. I am not saying the low and middle class should have things handed to them but they need to have jobs to support their familys and get ahead with out a college education. not everyone is meant for college. We need good jobs with a trade school education. even a GED and can work their way to a good wage.
Any one making more then $20,000. a year should have to live one year on a $20,000. a year income. BRING GOOD PAYING FACTORY JOBS BACK TO THE STATES.
end corporate welfare..it is unconstitutional. Make the corporate tyrants pay a living wage so that people can afford to buy their own food. Why should tax payers have to subsidize greed?