Social Programs

EPIC EXPLAINER: The $1 Trillion Welfare Bureaucracy

The federal government spends more than $1 trillion per year on 80+ welfare programs.

Social Programs EPIC Explainers ResourceApril 9, 2024 By Matthew Dickerson

Introduction

The federal government spends more than $1 trillion per year on 80+ welfare programs. The welfare bureaucracy often fails to achieve positive outcomes for those in need.

The Welfare Bureaucracy Is Full of Bad Incentives

Senator Joe Biden said when voting for the 1996 welfare reform law that, “The culture of welfare must be replaced with the culture of work. The culture of dependence must be replaced with the culture of self-sufficiency and personal responsibility." Welfare reform made many improvements, but the welfare bureaucracy is broken, making it more difficult for millions of people to achieve the American Dream. Encourages Long-Term Dependency. It is demeaning to believe that many Americans are simply unable to be successful and should be relegated to a life of dependence on perpetual government subsidization of their basic needs. Welfare programs should serve as safety nets during genuine need while also fostering opportunity for sustainable success. Discourages Work. Work is an essential American value that fosters personal dignity. Unfortunately, the welfare bureaucracy undermines and discourages employment. Only 18% of able-bodied adults receiving Food Stamps, who are expected to meet work requirements, actually work 20 hours or more per week. Offering a hand up and not just a handout would ensure better results for everyone: recipients who are put on a path towards self-sufficiency, the truly needy for whom a safety net is safeguarded, and the taxpayers whose funds are used more efficiently and effectively. Penalizes Marriage. Many welfare programs undermine the institution of the family — and the benefits brought by stable two-parent households — by including marriage penalties. Displaces Civil Society and Federalism. As the welfare bureaucracy has grown, it has displaced the institutions of society that are best able to understand and address the problems faced by the most vulnerable. The principle of subsidiarity dictates that the independent sector, communities, and local and state governments should be empowered rather than the distant and bureaucratic central government.

The Welfare Bureaucracy Is Duplicative and Confusing

The federal government funds more than 80 different welfare programs. As this flow chart of the benefits and services for low- income people from the House Committee on Ways and Means shows, the welfare bureaucracy is a tangled web of bureaucracy. Those who need assistance have to deal with multiple federal and state agencies. Welfare Chart

The welfare bureaucracy is also filled with duplication and overlapping programs. According to the Congressional Research Service, there are 15 different food aid, 13 housing, 12 health care, and five cash aid programs.

The Welfare Bureaucracy Covers Millions of Americans

After the 1996 welfare reform, the Temporary Assistance for Needy Families (TANF) rolls fell significantly compared to the old Aid to Families with Dependent Children (AFDC) program. Fewer than 2 million individuals received TANF in 2023. However, overall welfare receipt has increased since welfare reform, as other programs have expanded and become more generous. In FY 2022, 94 million Americans received Medicaid coverage, more than double the number from just 20 years prior. More than 28% of the population was on Medicaid in 2022. In fiscal year 2023, 42.1 million Americans received Food Stamps, 2.4 times the number who were enrolled in 2001. About 12.6% of Americans were on Food Stamps in 2023. In 2022, 22.6 million individuals received the Earned Income Tax Credit (EITC), about 6.8% of the population. Statistics from the U.S. Department of Health and Human Services and the Census Bureau reveal that many recipients receive welfare for extended durations.

The Welfare Bureaucracy Is Costly

Welfare is one of the largest categories of the federal budget, comprising about 20% of annual spending. The federal government spent $955 billion on 83 different programs for low-income individuals in 2019, according to the Congressional Research Service. Since the COVID-19 pandemic and President Biden's spending spree, welfare spending has only grown.

The Welfare Bureaucracy Is Generous

In 2019, the federal government spent more than $28,100 per person in poverty — providing benefits $15,000 above the poverty threshold for individuals. According to the Heritage Foundation, "The average poor family with children already receives $65,200 in cash, food, housing, medical care, and educational support from the taxpayer each year." Data from the Federal Reserve Bank of Atlanta shows that a single mother with two children at the poverty threshold is eligible for more than $42,000 in welfare benefits from Medicaid, Children's Health Insurance Program (CHIP), Food Stamps, TANF, the EITC, and Child Tax Credit payments. Housing, childcare subsidies, and other programs can add tens of thousands in additional benefit payments.

Author

Matthew D. Dickerson

Director of Budget Policy

Matthew D. Dickerson is Director of Budget Policy at the Economic Policy Innovation Center (EPIC). Dickerson is recognized as an expert on fiscal policy issues, including the budget, appropriations, and entitlement reform. His articles have been featured in the Wall Street Journal , the Miami Herald , National Review , the Sacramento Bee , the Washington Times , the Baltimore Sun , The Hill , the Washington Examiner , and other outlets. Prior to joining EPIC, Dickerson served as Senior Policy Advisor on the staff of the House Budget Committee, where he helped lead development of the fiscal year 2024 budget resolution. He has a dozen years of experience on Capitol Hill, including as a senior staffer with the Republican Study Committee (RSC), the caucus of conservatives in the House of Representatives. Under four different RSC chairmen, Dickerson held senior level roles including Policy Director and Senior Policy Staff. Additionally, he served as Legislative Director and other policy positions for the late Congressman C.W. Bill Young (R-FL), a former Chairman of the powerful House Appropriations Committee. During his tenure at The Heritage Foundation, Dickerson was Director of the Grover M. Hermann Center for the Federal Budget. In this capacity, he oversaw a team of budget analysts and economists researching diverse subjects including spending, entitlements, budget process, tax, labor, pensions, and infrastructure issues. He has also been a Policy Manager at Americans for Prosperity, where he supervised a team of fellows and analysts covering a variety of federal and state policy issues. Dickerson is a graduate of the College of William and Mary in Virginia and holds a Bachelor of Arts in Government and History.