Based on data from the Congressional Research Service, cumulative spending on means-tested federal welfare programs, if converted into cash, would equal $167.65 per day per household living below the poverty level. By comparison, the median household income in 2011 of $50,054 equals $137.13 per day. Additionally, spending on federal welfare benefits, if converted into cash payments, equals enough to provide $30.60 per hour, 40 hours per week, to each household living below poverty. The median household hourly wage is $25.03. After accounting for federal taxes, the median hourly wage drops to between $21.50 and $23.45, depending on a household’s deductions and filing status. State and local taxes further reduce the median household’s hourly earnings. By contrast, welfare benefits are not taxed.
The universe of means-tested welfare spending refers to programs that provide low-income assistance in the form of direct or indirect financial support—such as food stamps, free housing, child care, etc.—and which the recipient does not pay into (in contrast to Medicare or Social Security). For fiscal year 2011, CRS identified roughly 80 overlapping federal means-tested welfare programs that together represented the single largest budget item in 2011—more than the nation spends on Social Security, Medicare, or national defense. The total amount spent on these federal programs, when taken together with approximately $280 billion in state contributions, amounted to roughly $1 trillion. Nearly 95 percent of these costs come from four categories of spending: medical assistance, cash assistance, food assistance, and social / housing assistance. Under the President’s FY13 budget proposal, means-tested spending would increase an additional 30 percent over the next four years.
The diffuse and overlapping nature of federal welfare spending has led to some confusion regarding the scope and nature of benefits. For instance, Newark Mayor Cory Booker has recently received a great deal of attention for adopting the “food stamp challenge” in which he spends only $30 a week on food (the average individual benefit). The situation Booker presents, however, is not accurate: a low-income individual on food stamps may qualify for $25,000 in various forms of welfare support from the federal government on top of his or her existing income and resources—including access to 15 different food assistance programs. Further, even if one unrealistically assumes that no other welfare benefits are available, the size of the food stamp benefit increases as one’s income decreases, as the benefit is designed as a supplement to existing resources; it is explicitly not intended to be the sole source of funds for purchasing food.