Study: More Than Half a Trillion Dollars Spent on Welfare But Poverty Levels Unaffected

Matt Cover, CNS News, June 25, 2012

The federal government is not making much headway reducing poverty despite spending hundreds of billions of dollars, according to a study by the libertarian Cato Institute.

Despite an unprecedented increase in federal anti-poverty spending, the national poverty rate has not declined, the study finds.

“[S]ince President Obama took office [in January 2009], federal welfare spending has increased by 41 percent, more than $193 billion per year,” the study says.

Federal welfare spending in fiscal year 2011 totaled $668 billion, spread out over 126 programs, while the poverty rate that remains high at 15.1 percent, roughly where it was in 1965, when President Johnson declared a federal War on Poverty.


The federal poverty rate is the percentage of the population below the federal poverty threshold, which varies based on family size.

While the study concedes that some of the increased spending under Obama is a result of the recession and the counter-cyclical nature of anti-poverty programs, it also finds that some of the increase is deliberate, with the government having expanded eligibility for welfare programs.

In fiscal year 2008, anti-poverty spending was $475 billion. In fiscal year 2009, when Obama took office, it had risen to $590 billion.


In fact, the study points out that according to the administration’s own projections, federal welfare spending is unlikely to decline even after the economy recovers—further evidence that not all of the increase in spending is recession-related.

“All this spending has not bought an ap­preciable reduction in poverty,” the study says.  “[T]he poverty rate has remained relatively constant since 1965, despite rising welfare spending.”


The study faults the way poverty programs are designed, saying that the increase in spending and largely unchanged poverty rate showed that the issue is not a matter of money, but a matter of what the programs aim to achieve.

“The vast majority of current programs are focused on making poverty more comfortable—giv­ing poor people more food, better shelter, health care, and so forth—rather than giving people the tools that will help them escape poverty.”

Instead, the study recommends refocusing anti-poverty efforts on keeping people in school, discouraging out-of-wedlock births, and encouraging people to get a job—even if that job is a low-wage one.


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