Know the Facts before Spouting off About Welfare
Know the Facts before Spouting off about Welfare
- People on welfare are moochers who don’t want to work
- Welfare is a drain on the economy and on society
- Welfare is fraught with fraud
- People on welfare can afford to buy things that you cannot afford
- You work hard for your money and you don’t want to support society’s “takers”
- Too many people are on welfare
- Immigrants come here illegally in order to receive welfare benefits
- You don’t believe in wealth or income redistribution
- Welfare is a symptom of a bloated federal government
- The government must live within its means, which means we can’t afford welfare
- The government has no business handing out charity
- Welfare is unconstitutional
- Or any similar argument
- Or even if you support drug testing as a means for eligibility
Such positions tend to treat the subject of welfare as an abstract. Quite frankly, it is easy to form opinions about an abstract concept such as welfare. The implications attached to simplistic statements about welfare as an abstract are far different from the implications attached to remarks made with knowledge of the details of welfare programs. If you care so much about your position on this issue that you take the time to share your opinion with others, then you should at least take a little time to learn the basic facts. At least get the facts straight so that you are not sharing your ignorance.
What is welfare?
Welfare consists of seven primary means-tested programs:
- Temporary Assistance for Needy Families program (TANF)
- Section 8 Housing Choice Voucher program
- Supplemental Nutrition Program for Women, Infants, and Children (WIC)
- Low Income Home Energy Assistance Program (LIHEAP)
- Supplemental Nutrition Assistance Program (SNAP), also known as food stamps
- Earned Income Tax Credit (EITC)
When you are talking about welfare in the United States, whether or not you are talking about cutting welfare, these are the specific programs you are talking about.
Temporary Assistance for Needy Families program (TANF)
For many people, TANF is what people mean when they talk about welfare; let’s look at this program first.
- TANF replaced AFDC as a result of welfare reform in the 1990s.
- TANF programs are designed by each state. Each state decides which specific benefits are involved and the eligibility criteria, within certain guidelines from the federal government.
- TANF is funded through block grants to states in exchange for setting up programs within the guidelines. States must also contribute to funding through “maintenance of effort” (MOE). States have the option of using MOE money for more generous benefits than benefits allowed through federal funds.
- TANF programs must be designed to meet at least one of the following four criteria: 1. Provide assistance to needy families so that children can be cared for in their own homes 2. Reduce the dependency of needy parents by promoting job preparation, work and marriage 3. Prevent and reduce the incidence of out-of-wedlock pregnancies 4. Encourage the formation and maintenance of two-parent families.
- Recipients must be adults who are responsible for raising children. Recipients must meet poverty guidelines. Recipients must be working towards employment or better employment. This may include studies toward a GED. Recipients who fail to meet guidelines are ineligible for benefits.
- Benefits expire no later than 24 months after a recipient becomes eligible. There is a 60-month lifetime limit for benefits for any adult family member. States must stick to these limits for programs financed through federal block grants, but states are not forbidden from extending these limits for programs financed through their own MOE funds.
- Immigrants are not eligible for this program unless they have been in the country legally for at least five years.
- States have broad discretion in terms of denying benefits, but federal guidelines require that only families with children and pregnant women are eligible.
Section 8 Housing Choice Voucher program
- The Section 8 Housing Choice Voucher program was created in the 1970s.
- This program works through vouchers funded by the federal government, but the program is maintained by thousands of state and local housing agencies.
- Congress decides on the formula used to distribute vouchers. 75% of new recipients each year must be at 30% of the poverty level or lower. Everybody else must be at 80% of the poverty level or lower.
- The formula Congress uses gives preference to some specific types of families, such as families with homeless veterans.
- Individuals and families can use their vouchers to obtain housing in the free market. Housing agencies verify that housing meets quality standards and is reasonably priced according to local market standards.
- Individuals who use vouchers for rent assistance must pay at least 30% of their income on rent, or $50, whichever is higher.
- Up to 20% of voucher funding goes towards subsidizing housing projects rather than going to eligible individuals.
- Undocumented immigrants are not eligible.
Supplemental Nutrition Program for Women, Infants, and Children (WIC)
- The WIC program was established in the 1970s. It is administered by individual states through USDA guidelines, and is funded through federal grants.
- Specific benefits are designed for eligible women during each of the following time frames: during pregnancy, during post-pregnancy, during the breastfeeding stage, during the infants’ first year following birth, and during a child’s first 5 years.
- Participants must meet categorical requirements.
- Participants must meet residential requirements.
- Participants must meet income requirements.
- Participants must meet nutrition risk requirements.
- Participants must receive medical check-ups and care.
- The USDA determines which categories of items may be purchased with WIC checks, but states have leeway for determining eligible types and brands within each category.
- WIC checks must be used at WIC-authorized businesses.
- WIC checks must be used within a specified time frame.
- Studies show that WIC reduces the incidence of low birth weight, reduces overall healthcare costs, and reduces federal spending.
Low Income Home Energy Assistance Program (LIHEAP)
- LIHEAP was established in 1981 and is a part of the U.S. Department of Health and Human Services.
- LIHEAP provides assistance for home heating bills to low-income households, with emphasis on households with disabled persons, elderly persons, and preschool-aged children.
- This program is funded through federal block grants and other sources, but is administered entirely by various state agencies.
- The formula for determining the amount of funding that goes to each agency is based on climate, economic, and demographic factors. Congress provides additional funding each year to be released during emergency situations, at the President’s discretion.
- The various state agencies set specific eligibility rules and determine how the funds get distributed to individual households, within broad federal guidelines.
- LIHEAP is often operated on a first come, first served basis. When funds run out, state legislatures do have the option of providing additional funding.
- SNAP, commonly known as food stamps, is a program of the U.S. Department of Agriculture. Funding is authorized by Congress every five years as part of the Farm Bill.
- Funding for SNAP benefits is provided by the federal government. The program is administered through various state agencies. Federal and state governments share in the administration costs of the program.
- SNAP provides nutrition assistance to eligible low-income individuals and families.
- SNAP benefits and eligibility rules have been changed numerous times – as part of welfare reform and whenever a new Farm Bill is authorized.
- USDA specifically lists the following food items as being eligible: fruits and vegetables; breads and cereals; dairy products; meats, fish and poultry; and plants and seeds which are fit for household consumption.
- USDA specifically lists the following items as ineligible: wine, beer, and liquor; cigarettes or tobacco; soaps; paper products; household supplies; pet foods; hot foods; food items that are consumable in the store; vitamins; and medicines.
- In order to receive benefits, households must meet eligibility requirements regarding ownership of valuable assets.
- Households must meet income requirements.
- Maximum benefits for each household are based on the assumption that beneficiaries will spend 30% of their income on food items. The formula that is used to determine benefits includes a built-in work incentive.
- Applicants must meet face-to-face with a caseworker and document that they meet income, expenses, and other eligibility requirements. State agencies are responsible for verifying all documented information. Click here for a list of eligibility requirements and maximum benefits, including a worksheet for the income requirement.
- Households with at least one able-bodied member of working age cannot receive SNAP benefits for more than three months in any 36-month period, unless the able-bodied household members are working or participating in a workfare employment and training program. They must accept any suitable employment that is offered to them.
- Undocumented immigrants are not eligible for SNAP benefits. Also ineligible are workers out on strike, most college students, and legal immigrants with less than five years of residency, unless they have children in the household. Non-citizens in the country on temporary visas are not eligible.
- 75% of SNAP participants are in households with children. More than 25% are in households with elderly or disabled persons.
- SNAP participation is highest during recessions and periods of high unemployment. SNAP is one of the most effective economic stimulus programs. Economic studies show that it generates $1.70 in economic activity for every dollar spent.
- Grocery stores rely heavily on revenue from SNAP participants, and overwhelmingly oppose cuts in benefits.
- Studies show that SNAP keeps millions of children out of poverty. Studies also show that SNAP reduces extreme poverty.
- 90% of SNAP benefits are spent on fruits & vegetables, grain products, meat, and dairy products.
- According to the Government Accountability Office, the payment error rate is under 5%, with 2/3 of the errors being made by caseworkers and not by participants.
- The EITC is a once-a-year, means-tested tax credit that qualified low-income workers can claim on their income tax returns. Only people who work yet receive poverty wages qualify.
- This credit is refundable, meaning that it can reduce a taxpayer’s total income tax to below zero, providing a refund even if no taxes are owed. People who receive the EITC still must pay payroll taxes (Social Security, Medicare).
- Many states have a similar credit on state income tax returns.
- The EITC provides an incentive for low-income adults to work. The amount of the EITC increases when a qualified worker earns more money from working. Tax filers do not qualify for this credit unless they have income from working.
- The EITC increases business activity and income for local businesses.
- Fraudulent claims will result in taxpayers being barred from claiming this credit in future years.
- The EITC began in 1975, but has been expanded several times since then. Historically, it has had broad bipartisan support. Even tax reforms designed to lower taxes, eliminate tax credits, or simplify tax returns (including the widely-publicized Tax Reform Act of 1986) have included an expansion of the EITC.
- The EITC does little to help taxpayers who have no minor children. It is designed to help lift children out of poverty.
- The EITC subsidizes the profits of companies by supplementing the incomes of workers who work for poverty wages, instead of requiring the employers to pay a living wage. When workers make a living wage, they do not qualify for EITC.
- Studies show that the EITC is one of the most effective measures for moving children out of poverty. Studies also show that children fare better when they become adults if they have spent their childhood out of poverty.
- Undocumented workers do not qualify for this tax credit.
- Medicaid as we know it began in the 1980s when the federal government provided states with waivers to design managed-care programs.
- Medicaid is a collection of many different programs, as determined at the state level.
- Funding for Medicaid is shared among federal, state, and in some cases county levels of government.
- Medicaid is means-tested, but low income is not the only eligibility requirement. States often make membership in certain categories a requirement – low-income children or low income senior citizens, for example.
- Medicaid services and payment rates are different for different states.
- Some states provide lump-sum payments to private insurers for providing services to Medicaid patients (HIPP). Other states pay medical service providers directly on a fee-for-service basis.
- Medicaid programs often pay for services which Medicare does not accept – dental care, for example.
- These programs overwhelmingly are designed to help the most vulnerable among us: our children, elderly, and disabled citizens who live in poverty.
- Many veterans rely on these programs.
- These programs are means-tested, and as such are designed to not only help individuals escape poverty, but also to help the overall economy by reducing poverty rates.
- These programs act as automatic stabilizers for the entire economy. Automatic stabilizers not only decrease the negative macroeconomic consequences of recessions and high unemployment, they also decrease long-term government debt.
- We cannot balance the federal budget through gutting these programs. The math simply is not there.
- Everybody benefits when the overall poverty rate decreases.
- Many businesses, especially local grocery stores, rely heavily on business from people in these programs. Business owners should understand that customers are not the enemy.
- Other government policies – ones with a track record of reducing the effects of recessions, increasing employment, increasing wages, and renovating slum areas – are the most effective measures for reducing the need for welfare. Policies with a track record of benefitting corporations and very rich individuals at the expense of working-class people increase the need for welfare. Be sure you support the right kinds of policies if you truly desire a decrease in welfare.
- Most of these programs are designed to help lift people out of poverty so that they don’t need them in the future. Past welfare reform efforts have eliminated most of the true “welfare queens.” Those on welfare today are not the same individuals as those on welfare in the past. Many people have gone through stages in life when they have fallen on hard times. Welfare helps to provide a safety net for these people, especially those who have no other safety net to fall back on. Millions of people every day are only one setback away from disaster, unless they have a safety net to fall back on.
- People often make poor choices whenever they hit hard times. This is true for most of us, not just the ones who happen to be on today’s welfare rolls. These same people make better choices when their situation doesn’t seem so hopeless. Human decency (along with most religions) tells us to help people in need instead of watching them suffer while we blame them for their plight.
- Making people on welfare pass drug tests – because we want to make them prove that they are “worthy” of our help – is ill-advised. Either we want to help people escape a desperate situation or we want to blame them for being desperate in the first place. Remember, these welfare programs are largely designed to help children. Making their parents “prove” to be worthy of our help will only harm the same children these programs are designed to help. We should not be condemning children because their parents might have made poor choices in a time of desperation.
- These drug tests of welfare recipients have proven to cost many times more than the savings from denial of benefits. States which claim they must cut benefits for cost-effective programs in order to balance the budget are often the same states spending millions for a policy which is anything but cost-effective.
- Children become more productive adults when they don’t have to grow up in poverty.
- Welfare has been reformed many times in the past, and can be reformed again in the future. Simply gutting these programs instead of fixing whatever specific problems exist in them is not a rational approach – this is a fix that doesn’t target the problems. It makes no sense to gut entire programs because somebody somewhere might be receiving benefits improperly. Across-the-board cuts amount to throwing out the baby with the bath water.
- Most of these programs rely on state agencies to verify that welfare money isn’t spent fraudulently. Cutting welfare through cutting the number of caseworkers, such as many states have done, only serves to increase the chances for fraud.
- Undocumented immigrants do not qualify for these programs. Legal immigrants must wait up to five years to qualify for many of these programs.
- Studies show that fraud rates are low for most of these programs. Studies also show that these programs are effective in doing what they are designed to do. This doesn’t mean they cannot be improved.
- The fact that studies show these programs are effective means that they are consistent with the goals set forth in the preamble to the Constitution. They are not charity for some; they benefit all.
- Much of this analysis also applies to unemployment insurance, but I haven’t included unemployment because unemployment compensation is not welfare. It is an entitlement.
Supplemental Nutrition Assistance Program (SNAP)
Earned Income Tax Credit (EITC)
Those are the seven major programs which collectively are “welfare”. In addition to the above summaries of each, here are some general considerations to take into account:
If you know all of this, and you still want to argue for cutting or eliminating welfare, you are free to do so. In order for your arguments to be rational rather than reactionary, they should include knowledge of how these specific programs affect various groups of people, and the overall economy itself. A generic and abstract reference to “welfare” doesn’t qualify as a rational argument.
A version of this essay is included as a chapter in the book Common Misconceptions of Economic Policy by Jerry Wyant. You can purchase this book in paperback form from Amazon and other online book distributors. The list price is $12.99 (only $9.99 using discount code TA9GTK7E when ordering, depending on the distribution channel). Or if you prefer, you can download a digital version on your device (Kindle, Nook, etc.) for $4.99.
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