Government Supports Would Grow to $76,400 per Poor Family

The partisan Build Back better Act will be up for a vote in the House of Representatives this week. If passed, this legislation would result in the largest increase in welfare spending that has been means-tested in American history. 

The House leadership allegedly reduced the bill’s 10-year costs by half. But these “savings” are almost entirely due to the gimmick of terminating or curtailing the bill’s enormous spending initiatives halfway through the 10-year budget window or sooner. 

Have you ever seen the federal government shut down a welfare program after just five years?

In the first five years, new means-tested spending will cost more than $800 billion. The total cost of all this new spending would exceed $2.5 Trillion if it was fully funded in the entire 10-year budget window.

This spending would be added to the existing means-tested welfare system, which already spends $1.16 trillion annually on cash, food and housing for low- and moderate-income people. 

In 2018, prior to the COVID-19 epidemic, the average family with kids that was considered poor received $20,700 in cash and food benefits, $17,000 in health care, and $5,000 in social services. 

Taxpayers also spent $22,500 on non-means-tested public education for the family’s children. The annual total government resources were $65,200 per family. 

An average poor family also had $18,100 worth of earnings and other resources. This combined with the government assistance made the average family’s total resources $83,300. Even if you exclude earnings, private resources, food, and housing, the average family’s total resources would be close to $40,000, much higher than the $26,400 poverty threshold.

How can the government decide that a family with $83,300 annually in resources is poor? It ignores almost all the resources and benefits that the family actually has. 

The government reduces earnings of low-income families by about a third. In order to calculate its official measures of inequality and poverty, the government intentionally excludes almost all of the 89 current means-tested welfare programs. Washington only counts $3,125 income out of $65,200 in government support and benefits received by the average poor family. 

By excluding almost all of the welfare state from the poverty measure, it creates the misperception the U.S. has a poor welfare system. This misperception is used by the Biden administration to demand the largest expansion in means-tested welfare in American history. 

The Build Back Better Act would provide $11,300 more in annual benefits for the average family of poor families, bringing total government support up to $76,400 per family.

The annual total government and private resources (including education and other services) would increase from $83,300 to $94,600. The average annual cost of private resources, plus food, housing, and cash from the government, would be $48,200, which is nearly twice the official poverty level for these families.

Ironically, not one penny of this new spending would be counted as income for the purposes of the government’s official poverty measure. The measure of poverty would not change or worsen if marriage and work decline as is likely. 

The system is rigged. The taxpayer is trapped in a spinning wheel like a hamster. No matter how fast the hamster runs he never moves. Official poverty will not change no matter how much welfare money is spent.

Even worse are the negative incentives included in the legislation. The bill increases the rewards for teenage pregnancy and childbirth, and increases the penalties for marrying. It overturns the Clinton-era welfare reform which required all able-bodied recipients to work, or prepare for work, in exchange for cash benefits. Instead, the bill reinstates the long-defunct policy of not paying families to work. 

This legislation would have a negative impact on society, taxpayers, and the poor. Instead, policymakers should provide a precise count of welfare spending, benefits received, maintain work conditions, and decrease, rather than increase, the penalties for marriage. 

Original publication: The Washington Times publishedThis article.

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