Means-tested welfare costs shot above $1 trillion in FY2011

How much spending does the US do on means-tested welfare programs?  According to Senator Jeff Sessions and the non-partisan Congressional Research Service, it’s more than one would imagine.  In FY2011 alone, federal and state spending on means-tested federal entitlement programs rose above $1 trillion — and that doesn’t include non-means-tested programs like Social Security and Medicare:

The government spent approximately $1.03 trillion on 83 means-tested federal welfare programs in fiscal year 2011 alone — a price tag that makes welfare that year the government’s largest expenditure, according to new data released by the Republican side of the Senate Budget Committee.

The total sum taxpayers spent on federal welfare programs was derived from a new Congressional Research Service (CRS) report on federal welfare spending — which topped out at $745.84 billion for fiscal year 2011 — combined with an analysis from the Republican Senate Budget Committee staff of state spending on federal welfare programs (based on “The Oxford Handbook of State and Local Government Finance”), which reached $282.7 billion in fiscal year 2011. …

According to the CRS report, which focused solely on federal spending for federal welfare programs, spending on federal welfare programs increased $563.413 billion in fiscal year 2008 to $745.84 billion in fiscal year 2011 — a 32 percent increase.

Further, spending on the 10 largest federal welfare programs has doubled as a share of the federal budget in the last 30 years: In inflation-adjusted dollars, according to Republican staff on the Senate Budget Committee, the amount spent on these programs has increased 378 percent in that 30 year time frame.

CRS reports that food assistance programs — the third largest welfare category behind health and cash assistance — experienced the greatest increase in spending, with 71 percent more spending in 2011 than in 2008. The agency explained that this spending increase was largely due to the growth in the Supplemental Nutrition Assistance Program, or food stamps.

A few points should be kept in mind.  We had a massive recession and job loss event between FY2008 and FY2011, which dramatically impacted both the accumulated wealth and incomes of middle- and working-class Americans.  Under those conditions, one would expect to see short-term dramatic gains in programs like SNAP and Medicaid.  Furthermore, part of this spending covers unemployment benefits, which Congress continually extended until the end of FY2011, meaning that the normal cycle of benefit payments got a lot longer and more expensive [see update below].

However, those problems should have been short term.  In most economic downturns, jobs and wealth rebound fairly quickly, especially when the federal government acts to streamline regulation, reduce interference with energy costs, and provide long-term stability in tax and monetary policy.  That’s how Ronald Reagan produced the generation-long boom of the 1980s from the double-dip recession that hit the US between 1980-81.

What happens when the federal government does the exact opposite?  You get the worst jobs recovery in post-WWII history:


So what is to be done to get costs back in control?  First, we need to look at the insanity of having 83 federal agencies handling means-tested welfare, and the costs associated with those bureaucracies overlapping and duplicating efforts.  That could save some money, and more to the point, get the aid to where it’s truly needed.  As the chart above shows, and as recent data on the dramatic erosion of median income also demonstrates, the need is not an illusion.

But what we really need to cut costs in these programs is to make them a lot less necessary than they are today for millions of Americans.  That means putting in place the kind of regulatory, monetary, and tax reform necessary to produce a real, sustained recovery that will produce jobs and create wealth again for the working and middle classes.  That means encouraging American energy production to lower energy costs while creating hundreds of thousands of high-paying jobs in oil and gas production and refining. That means that we need to quit worrying about class warfare and start worrying once again about upward mobility and innovation by making it attractive to put capital to work in the US.

Update: A source with knowledge of the data says that unemployment benefits were not included in this spending total — which, on reflection, makes sense, since unemployment is not a means-tested program.

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