More Welfare, More Poverty
News that the poverty rate remained at 12.6 percent last year, statistically unchanged from the year before, has set off a predictable round of calls for increased government spending on social welfare programs. From the New York Times to the Democratic Leadership, we hear familiar complaints about how George W. Bush and congressional Republicans have “slashed” anti‐poverty programs.
Yet, last year, the federal government spent more than $477 billion on some 50 different programs to fight poverty. That amounts to $12,892 for every poor man, woman, and child in this country. And it does not even begin to count welfare spending by state and local governments. For all the talk about Republican budget cuts, spending on these social programs has increased an inflation‐adjusted 22 percent since President Bush took office.
Despite this government largesse, 37 million Americans continue to live in poverty. In fact, despite nearly $9 trillion in total welfare spending since Lyndon Johnson declared War on Poverty in 1964, the poverty rate is perilously close to where it was when we began, more than 40 years ago.
Clearly we are doing something wrong. Throwing money at the problem has neither reduced poverty nor made the poor self‐sufficient. But government welfare programs have torn at the social fabric of the country and been a significant factor in increasing out‐of‐wedlock births with all of their attendant problems. They have weakened the work ethic and contributed to rising crime rates. Most tragically of all, the pathologies they engender have been passed on from parent to child, from generation to generation.
Welfare reform was supposed to fix all that. And, indeed, it has had some positive effects. Welfare rolls are down. Since 1996, roughly 2.5 million families have left the program, a 57 percent decline. Critics predicted that welfare reform would throw millions into greater poverty. Instead, it led to modest reductions in poverty, particularly for children, black children, and single‐mother households. Most of those who left welfare found work, and of them, the vast majority work full‐time. As you would expect, studies show that as former welfare recipients gain work experience, their earnings and benefits increase.
But whatever successes welfare reform has brought, more can be done. And if we have learned anything by now, it is that there are limits to what government programs—even reformed ones—can do to address the root causes of poverty.
Observers have known for a long time that the surest ways to stay out of poverty are to finish school; not get pregnant outside marriage; and get a job, any job, and stick with it. That means that if we wish to fight poverty, we must end those government policies—high taxes and regulatory excess—that inhibit growth and job creation. We must protect capital investment and give people the opportunity to start new businesses. We must reform our failed government school system to encourage competition and choice. We must encourage the poor to save and invest.
More importantly, the real work of fighting poverty must come not from the government, but from the engines of civil society. An enormous amount of evidence and experience shows that private charities are far more effective than government welfare programs. While welfare provides incentives for counterproductive behavior, private charities can use their aid to encourage self‐sufficiency, self‐improvement, and independence. Private charities can individualize their approaches and target the specific problems that are holding people in poverty.
One definition of insanity is doing the same thing over and over and expecting different results. Perhaps that’s something to keep in mind the next time we hear a call for more welfare spending.
