The American Welfare State: How We Spend Nearly $1 Trillion a Year Fighting Poverty — and Fail

24 Pages Posted: 1 Mar 2013

Date Written: 2012

Abstract

News that the poverty rate has risen to 15.1 percent of Americans, the highest level in nearly a decade, has set off a predictable round of calls for increased government spending on social welfare programs. Yet this year the federal government will spend more than $668 billion on at least 126 different programs to fight poverty. And that does not even begin to count welfare spending by state and local governments, which adds $284 billion to that figure. In total, the United States spends nearly $1 trillion every year to fight poverty. That amounts to $20,610 for every poor person in America, or $61,830 per poor family of three. Welfare spending increased significantly under President George W. Bush and has exploded under President Barack Obama. In fact, since President Obama took office, federal welfare spending has increased by 41 percent, more than $193 billion per year. Despite this government largess, more than 46 million Americans continue to live in poverty. Despite nearly $15 trillion in total welfare spending since Lyndon Johnson declared war on poverty in 1964, the poverty rate is perilously close to where we began more than 40 years ago. Clearly we are doing something wrong. Throwing money at the problem has neither reduced poverty nor made the poor self-sufficient. It is time to reevaluate our approach to fighting poverty. We should focus less on making poverty more comfortable and more on creating the prosperity that will get people out of poverty.

Keywords: federal welfare spending, poverty level in the United States, President Obama and poverty rates, Medicaid, food stamps, US welfare budget, state welfare spending

JEL Classification: H50, H53

Suggested Citation

Tanner, Michael, The American Welfare State: How We Spend Nearly $1 Trillion a Year Fighting Poverty — and Fail (2012). Cato Institute Policy Analysis No. 694, April 2012, Available at SSRN: https://ssrn.com/abstract=2226525

Michael Tanner (Contact Author)

Cato Institute ( email )

1000 Massachusetts Avenue, N.W.
Washington, DC 20001-5403
United States

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