5 trillion

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Myth: The U.S. has wasted over $5 trillion on the war on poverty as of 1994, by Steve Kangas

Fact: The U.S. had spent about $700 billion on the war on poverty as of that date.

Since the war on poverty was declared in the early 60s, the U.S. has spent only $700 billion on AFDC and welfare, the two largest welfare programs for the poor by far. The inflated $5 trillion figure includes many middle class entitlement programs like student loans, school lunches, job training, etc. Although this is indeed social spending, it is not spent on the poor, and therefore can't be used to argue against the war on poverty.

Argument

In a 1994 congressional hearing, conservative think-tanker Robert Rector invented one of the catchiest sound bites of the 90s:

"Since the onset of the War on Poverty, the United States has spent over $5.3 trillion on welfare. But during the same period, the official poverty rate has remained virtually unchanged." (1)

Like many sound bites, this one is completely false. When President Johnson declared war on poverty in 1964, the poverty rate was 19 percent.

By 1973, this was cut to 11.1 percent, approximately where it stayed for the rest of the decade. Poverty only began growing again during the sharp cutbacks in welfare benefits that occurred during the Reagan years. (See appendix A below for historical poverty rates.)

Nor has the U.S. spent anything close to $5.3 trillion on the war on poverty. Between 1964 and 1994, the U.S. spent less than $500 billion on Aid to Families with Dependent Children (AFDC), the program normally referred to as "welfare."; (2) Between 1962 and 1994, the U.S. spent about $218 billion on the bonus value of food stamps. (3) These are by far the two largest welfare programs for the poor. There are others, but their expenditures are minuscule in comparison, and they were also added much later in the war on poverty.

But let's put everything in perspective: the Pentagon spent this much in the last three years alone. And today, AFDC and food stamps each comprise about 1 percent of the federal budget.

Rector's figure of $5.3 trillion is extremely disingenuous. He cited this figure in reference to the "War on Poverty," but to arrive at such an inflated figure, he had to include solidly middle-class entitlement programs like student loans, school lunches, job training, and Medicaid.

Medicaid is by far the largest item in this figure, but three-fourths of all Medicaid goes to the elderly, blind and otherwise disabled. Furthermore, Medicaid represents windfall profits for hospitals and doctors, and can hardly be described an "anti-poverty" program. In fact, a distinguished panel from the National Academy of Sciences has concluded that Medicaid, like any private insurance, should not be counted as annual income for its recipients, especially since the payments go directly to hospitals and doctors. (4)

The inclusion of middle-class entitlements in a figure intended to discredit the "War on Poverty" is a direct reflection on the statistical trustworthiness of conservative think tanks.

Notes

1. Robert Rector, Heritage Foundation, testimony before the House Subcommittee on Human Resources, August 9, 1994.

2. "What Do We Spend on 'Welfare'?," Center for Budget and Policy Priorities.

3. U.S. Department of Agriculture, Food and Nutrition Service, in Social Security Bulletin, Annual Statistical Supplement, 1995.

4. Center on Budget and Policy Priorities, "The Cato Institute Report On Welfare Benefits: Do Cato's California Numbers Add Up?" (Washington: March 7, 1996).

Poverty Rate: 1959 to 1993

Poverty Rate (7)

1959 22.4%
1960 22.2 < recession year
1961 21.9
1962 21.0
1963 19.5
1964 19.0 < Johnson’s Great Society begins
1965 17.3
1966 14.7
1967 14.2
1968 12.8
1969 12.1
1970 12.6 < recession year
1971 12.5
1972 11.9
1973 11.1
1974 11.2 < recession year
1975 12.3 < recession year
1976 11.8 < individual benefits level off, decline
1977 11.6
1978 11.4
1979 11.7
1980 13.0 < recession year
1981 14.0 < Reagan-era cuts in individual benefits
1982 15.0 < recession year
1983 15.2
1984 14.4
1985 14.0
1986 13.6
1987 13.4
1988 13.0
1989 12.8
1990 13.5 < recession year
1991 14.2 < recession year
1992 14.8
1993 15.1

Source: U.S. Bureau of the Census, Current Population Reports, P-60 series.

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This page was last modified 14:27, 6 July 2006 by Chad Lupkes. Based on work by dKosopedia user(s) PatriotismOverProfits. Content is available under the terms of the GNU Free Documentation License.