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If You Had $1 Trillion to Help the Poor…


2014 is the last year for which the books tracking federal expenditures on poverty programs are closed out. Then, the federal government spent over $680 billion fighting poverty, with state and local governments adding another $300 billion. That works out to a little over $3,000 per person living in the United States. Looking at it another way, in a simplistic model excluding considerations like bureaucrats who would lose their jobs with the elimination of programs; if only half of Americans were self-sufficient, then the government’s welfare spending could equate to $24,000 per family of four. What’s more, the totals don’t even include “more universal social welfare programs or social insurance programs such as unemployment insurance, Medicare, or Social Security.” There’s got to be, borrowing from Speaker Paul Ryan (R-WI), a better way.

In its first fifty years, the War on Poverty has cost taxpayers over $23 trillion. Now that annual spending in inflation-adjusted dollars is five times what it was when President Lyndon Johnson first declared war, the poverty rate has zig-zagged upward, from about 12 percent to 14 percent. While the definition of poverty has enough variables to render it subjective, even the models reflecting most optimistically on the war show the rate upticking or leveling off since about 2000. Perhaps apocryphally, Einstein is reputed to have defined government as doing the same thing over and over and expecting different results. If leaders really wanted to lift people out of poverty, they would stop throwing money and work on reforming the tax structure, schools, industry regulations, the criminal justice system and other manmade poverty-reinforcing constructs.

But in the near-term, something might be done to streamline the bureaucracy. As the Cato report describes, “The magnitude of the current welfare system, with its multitude of overlapping programs – often with contradictory eligibility requirements, differing rules, mixed oversight, and divided management – is a bureaucratic nightmare. … Many existing programs have become little more than fiefs for special interests, providing a bureaucratic roadblock to reform.” The report doesn’t talk about all of the federal government’s proactive welfare recruiting efforts; programs now have navigators who, like salesmen, suggest pairings and upsell. It does, however, mention how many recipients who aren’t that bad off become complacent, comfortable, and then dependent on the system. Benefits accrue not to the neediest, but to those with an angle on what’s happening behind the stacks of self-contradicting legalese and clueless administrators.

The report points out that government programs assume a paternalistic relationship with the poor, based on the assumption that all poor people got that way through runaway vice. Cato policy analysts argue the poor would be better off if they could decide if their government supplement would buy milk and arugula or pay for a place out of the neighborhood where the landlord has to accept Section 8 vouchers because nobody wants their kids going to those miserable schools. “And, by taking the money away from the special interests that support the welfare industry, it would break up the coalitions that inevitably push for greater spending. (For example, increased food stamp spending is inevitably backed by a coalition of liberal Democrats and farm state Republicans.)”

Another reform suggested is for the federal government to get out of the business of making welfare payments and leave safety nets in the hands of the states. “Given the failure of more than 50 years of federal welfare policy to significantly reduce poverty or increase economic mobility, it should be apparent that the federal government does not know best. … Five decades of failure should have taught us to be modest.” If the federal government insists on helping the poor, it should give states block grants with as few strings as possible so local experts can tinker with the system to make it work in context. Should a state prove effective in wiping out poverty, it would be allowed to spend its allotment on highways or education so as not to be punished for getting rid of one of those problems government loves to perpetuate.

Both Ryan and Senator Marco Rubio (R-FL) proposed block granting reforms in 2016, but this time it was Rubio who had the better way. While both plans would have streamlined federal welfare, Rubio’s Flex Funds would have done so with less broad-brush micromanagement.

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