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FORUMS General Discussions Politics Limiting welfare to the truly needy
TOPIC: Limiting welfare to the truly needy
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Some people say that the "safety net" should be there only for people who are making an effort, and not for those who don't work. An interesting article (partially copied below) points out that during the first three years of the recession, $150 billion of extra spending went mostly to the working poor above the basic poverty level. (The official "poverty level" is about $11,000 for a single person and about twice that for a family of four). 

The article goes on to say that we could save about $265 billion annually if we just restricted the major safety net programs (TANF, food stamps, Medicaid, earned income tax credits, and subsidized housing) to those at or below the poverty level. 

Presumably a fair amount of that spending will recede on its own as we recover from the recession and employment/wages begin to grow again more strongly. But the question remains. 

Should the lower middle class (the working poor) be cut out? Would doing so be a disincentive for people moving from welfare to work? Would taking that money out of the economy diminish aggregate demand to the extent it would adversely impact the economy?

Here's the first section of the article:

Restoring a True Safety Net DAVID J. ARMOR and SONIA SOUSA

The Obama years have seen unprecedented growth in spending on what used to be known as the federal "anti-poverty" or "welfare" programs: means-tested initiatives to provide food, health insurance, housing benefits, and income support to the poor. These programs certainly grew during the Bush administration, with spending increasing by a total of about $100 billion over that eight-year period ($12.5 billion per year in 2010 dollars). But that spending increased another $150 billion in just the first two years of the Obama administration.  

The scale of these increases is staggering. In three years, from 2008 through 2010, total annual spending on welfare programs (in 2010 dollars) increased from $475 billion to $666 billion — a 40% increase after accounting for inflation. At a combined annual cost of two-thirds of a trillion dollars, these programs are now on the same scale as the defense budget ($693 billion), Social Security ($700 billion), and Medicare ($551 billion).

Some of these spending increases were justified by the deep recession that began in December 2007. Indeed, the American Recovery and Reinvestment Act (ARRA), or the stimulus program, specifically targeted poverty programs for greatly expanded funding. And, as in the recessions of the early 1980s and early '90s, the poverty rate climbed during the 2008 recession — to 15% from an average of about 12.5% during the mid-2000s. But this rise in poverty does not explain most of the recent increases in spending on anti-poverty programs.

Rather, it is the dramatic expansion of eligibility for these programs — spreading their benefits well into the middle class — that has driven the explosion of spending. Today, more than half of the benefits allocated through programs we think of as "anti-poverty" efforts actually go to people above the poverty line as defined by the U.S. Census Bureau. As a result, our poverty programs — once justified and defended as a safety net for Americans truly in need — exist, increasingly, to make life more comfortable for the middle class. --------------- Here's a link to the chart of proposed savings if these benefits were limited to the official poverty level or to alternative percentages above it:

nationalaffairs. com/imgLib/20120921_Armor_Table4LARGE. jpg

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TOPIC: Limiting welfare to the truly needy