U.S. Spending on Social Welfare Programs Is Way Up, But Far Less Of It Goes to the Poorest

Four decades of federal spending priorities, in charts. 

When you adjust for inflation, the U.S. spent 74 percent more on social welfare programs in 2007 than it did in 1975, but the programs that have seen the biggest budget increases aren't helping the poorest Americans. That's according to a study scheduled for publication next year in the academic journal Demographyand which has already been making headlines this month.

The research was conducted by Johns Hopkins University economics professor Robert Moffitt, who presented his findings earlier this month at an annual meeting of the Population Association of America. He found that a family of four earning $11,925 a year in 2014 likely gets less government aid than a same-sized family bringing home $47,700.

Moffitt looked at 15 of the largest social safety net programs over the last 30 years to come to his conclusions, but a significant portion of his research focuses on five "means-tested" welfare programs in the United States.

Those include Aid to Families with Dependent Children/Temporary Assistance for Needy Families (AFDC/TANF), which provides cash assistance to poor families with dependent children; the Supplemental Security Income program (SSI), which pays cash to low-income people 65 and older as well as those with disabilities; the Earned Income Tax Credit (EITC), which provides a tax credit to low-to-middle income families; and the Child Tax Credit (CTC), which gives tax relief for low-to-middle income families with children.

Using the data Moffitt and his researchers put together (all numbers adjusted to inflation) for his study, we were able to chart just how federal funding for these five programs has changed over time.

What we see is a U.S. welfare program that in the 1970s still reflected the spirit of Lyndon Johnson's War on Poverty before eventually taking on a radically different look thanks to Bill Clinton's welfare reforms of the mid 1990s. 

The 1970s continued to see new social welfare programs come into effect, including SSI (1972) and the EITC (1975).

During the 1980s, stories of welfare abuse (like the "Welfare Queen") and Charles Murray's 1984 book Losing Ground helped push the national conversation on poverty away from helping its poorest and toward removing polices that, to the anti-welfare camp, incentivized poor people to stay unemployed and unmarried.

Ronald Reagan, who campaigned on promises to curb welfare spending, was elected President in 1980. AFDC/TANF, SSI and EITC funding, after declining in Reagan's first term, actually picked back up in his second. And welfare spending actually continued to rise through the decade's end. 

The anti-welfare movement culminated in the mid-1990s with significant reforms during the Clinton administration.

In 1996, President Clinton signed the Personal Responsibility and Work Opportunity Reconciliation Act, which fundamentally altered the way the U.S. assists the poor. According to Moffitt, the EITC saw a 274 percent increase in expenditure growth between 1988 and 1998, and the new CTC (passed in 1997) has quickly become a major component of the social safety net. 

The legislation also reduced the number of poor, single-mother families receiving assistance by 63 percent within 10 years.

AFDC became TANF (Temporary Assistance to Needy Families). With the name change came a new, five-year time limit for assistance, as well as work requirements that were mostly aimed at unemployed, single mothers.

The loss of benefits after 1996 came with no significant replacement. Moffitt notes in his research that a single mother with no income who would have qualified for AFDC assistance but can't meet TANF's requirements has to rely on Food Stamps, which provides an average of $5 per person a day.

AFDC/TANF spending basically switched places with the EITC, which by the end of the 1990s had become the most-funded of the welfare programs on our chart. 

Apart from that spike you see in Food Stamp spending (attributed to USDA application reforms in the early 2000s), welfare spending since the turn of the century has, for the most part, stayed on a Clinton-provided course.

Moffitt is working on a separate, post-Recession welfare spending study and tells us that the trends we see in this graph have mostly continued under the Obama administration and since the Great Recession. 

From the findings we see above, Moffitt isn't suggesting the U.S. is spending too much on any group of people, just not enough on the people who need it most, telling the Washington Post, "if you’re trying and not succeeding, the welfare system today gives you basically nothing." 

 

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