The True Cost of Welfare

By Clark Barrow

July 24, 2012

Despite a 1,600 percent increase in welfare program spending, the number of poverty stricken Americans is approaching a record high. Truckloads of additional spending intended to help the poor have done little to lift them up. This brings the obvious question: Are these welfare programs actually reducing poverty?

A recent survey of economic experts by the Associated Press found that the official poverty rate for 2011 will significantly increase from the previous year, reaching as high as 15.7 percent. If these predictions prove true, it means one in six Americans, or 47 million people, lived at or below the poverty line!  But that is only half the problem.

In 2011, total spending on federal and state welfare programs was more than $900 billion with more than 46 million people living in poverty. But in 1964, the year the Great Society programs began, the total welfare spending consisted of $54.6 billion in 2008 dollars. The poverty rate in 1964 was 19 percent or 36 million people.

Since the original programs were implemented, new welfare programs have been added and hundreds of billions in new spending. Yet, the U.S. poverty rate remains in the upper teens, only marginally down from the rate in the 1960s.

The 2011 rate is not a strange anomaly – it is only a slight increase.  The national poverty rate has remained at or near 15 percent since these programs began. It seems that President Lyndon B. Johnson’s Great Society goal of eliminating poverty has failed and those programs have sustained it instead.

It is important to note that even the poorest Americans have a luxurious lifestyle when compared many to parts of the world.  Our welfare recipients are known to have TV’s, air conditioning, one or even two vehicles, but in order to receive these benefits, a single individual must earn less than $11,000!  While taxpayers pay a tremendous price for these programs, each welfare recipient receives a few crumbs and a guarantee that they do not need a job to get a check.

The best way to reduce poverty is through economic growth. Countless studies have shown that reducing tax rates, especially for higher incomes, produces economic growth, especially for lower income earners. This is not a theory, it is a reality.

According to the U.S. Treasury, 86 percent of individuals who were in the lowest income bracket in 1979 moved to a higher bracket by 1988 and 15 percent of them had moved all the way to the top! Why did this happen? Because President Ronald Reagan drastically cut tax rates, which released millions of new dollars into the economy.  It put people to work!

President’s Bill Clinton and George W. Bush also enjoyed strong economic growth after they both slashed the capital
gains rate.  In fact, 50 percent of the lowest income earners in 1996 moved to a higher group by 2005.

These are the kind of opportunities that welfare checks can’t buy – literally.

Read More: www.ClarkBarrow.com

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