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

By Matt Cover

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,” thestudy 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.

In 1966, the first year after Johnson declared war on poverty, the national poverty rate was 14.7 percent, according to Census Bureau figures. Over time, the poverty rate has fluctuated in a narrow range between 11 and 15 percent, only falling into the 11 percent range for a few years in the late 1970’s.

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.

“But the dramat­ically larger increase also suggests that part of the program’s growth is due to conscious policy choices by this administration to ease eligibility rules and expand caseloads,” the Cato report says. “For example, income limits for eligibility have risen twice as fast as inflation since 2007 and are now roughly 10 percent higher than they were when Obama took office.”

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