How Many Trillions Must We Waste on the War on Poverty?

Heritage Foundation

Which American politician said the following? “The lessons of history, confirmed by the evidence immediately before me, show conclusively that continued dependence upon relief induces a spiritual and moral disintegration fundamentally destructive to the national fibre. To dole out relief in this way is to administer a narcotic, a subtle destroyer of the human spirit.” Had to be a mean-spirited Tea Party conservative, right? Wrong. President Franklin Roosevelt included these words in his 1935 State of the Union Address.

Twenty-nine years later, the American welfare state was still relatively small, consuming only 1.2 percent of U.S. gross domestic product (GDP). The American family was also still intact, with 93 percent of children born into stable families. But then President Lyndon B. Johnson’s War on Poverty happened. Forty-five years and $16 trillion later, thanks to big government, poverty is winning. Thanks to over $900 billion a year (over 5 percent of GDP) of spending on over 70 means-tested welfare programs spread over 13 government agencies, more than 40 million Americans currently receive food stamps, poverty is higher today than it was in the 1970s, and 40 percent of all children are born outside of marriage. Since he moved into the White House, President Barack Obama has only doubled down on the War on Poverty’s failure. His fiscal year (FY) 2011 budget would have increased spending on programs for the poor 42 percent above FY 2008 levels. Looking past the current recession, President Obama’s budget would spend over $10.3 trillion on means-tested welfare programs over the next 10 years.

But didn’t we already “end welfare as we know it” in the ’90s? No. As successful as the 1996 welfare reform law was (and it did decrease welfare roles and child poverty rates), it reformed only one of the more than 70 federal anti-poverty programs. Worse, President Obama’s failed economic stimulus bill completely gutted the 1996 welfare reforms. If conservatives are serious about reducing federal spending in a way that protects families and encourages self-reliance, it is high time they turned their attention back to welfare reform. A common-sense approach to reform would include:

* Account for welfare spending. Congress should require the President’s annual budget to detail current and future aggregate federal means-tested welfare spending. The budget should also provide estimates of state contributions to federal welfare programs.
* Get costs under control. The next step in welfare reform is to control the explosive growth in spending. Once the current recession ends (when unemployment reaches 6.5 percent), aggregate welfare funding should be capped at pre-recession (FY 2007) levels plus inflation. This could save Congress $1.4 trillion over the next 10 years.
* Promote work, not government dependence. Building on the successful 1996 model, welfare reform today must continue to promote personal responsibility by encouraging work. For example, food stamps, one of the largest means-tested programs, should be restructured to require recipients to work or prepare for work to be eligible to receive benefits.

Today the chairman of the Republican Study Committee Representative Jim Jordan (R–OH) will introduce a bill that incorporates many of these principles. Among other items, it would require disclosure of total means-tested welfare spending, place an aggregate cap on welfare spending, and extend work requirements to the Food Stamps program. If we want to avoid becoming a European-style welfare state, we must abandon President Obama’s War on Poverty surge and return to the type of common-sense welfare reform that proved so successful in the ’90s.

Quick Hits:

* Almost 30 months after TARP’s birth, more than 550 banks, AIG, GM, Chrysler, and others still owe taxpayers more than $160 billion.
* U.S. banking regulators have paid out nearly $9 billion to cover losses on loans and other assets at 165 failed institutions that were sold to stronger companies during the financial crisis.
* The House on Wednesday passed legislation that would terminate $1 billion in slush funds for local government real estate speculating.
* Union thugs are ripping up recall petitions and threatening arson in Wisconsin.
* The headquarters for the Washington, D.C. Republican National Committee was shot up early Wednesday morning.