March 7, 2001
Means-Tested Welfare Spending: Past and Future Growth
by Robert E. Rector
Testimony
Introduction
The U.S. welfare system may be defined as the total set of government programs—federal and state—that are designed explicitly to assist poor and low-income Americans.
Nearly all welfare programs are individually means-tested.1 Means-tested programs restrict eligibility for benefits to persons with non-welfare income below a certain level. Individuals with non-welfare income above a specified cutoff level may not receive aid. Thus, Food Stamp and Temporary Assistance to Needy Families (TANF) benefits are means-tested and constitute welfare, but Social Security benefits are not.
The current welfare system is highly complex, involving six departments: HHS, Agriculture, HUD, Labor, Treasury, and Education. It is not unusual for a single poor family to receive benefits from four different departments through as many as six or seven overlapping programs. For example, a family might simultaneously receive benefits from: TANF, Medicaid, Food Stamps, Public Housing, WIC, Head Start, and the Social Service Block Grant. It is therefore important to examine welfare holistically. Examination of a single program or department in isolation is invariably misleading.
The Cost of the Welfare System
The federal government currently runs over 70 major interrelated, means-tested welfare programs, through the six departments mentioned above. State governments contribute to many federal programs, and some states operate small independent programs as well. Most state welfare spending is actually required by the federal government and thus should considered as an adjunct to the federal system. Therefore, to understand the size of the welfare state, federal and state spending must be considered together. (A list of individual welfare programs is provided in Appendix B.)
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