Wealth and Poverty Review

Trump Calls for a Reform of Perverse Welfare System. Media (Mostly) Ignore It

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Trump Calls for a Reform of Perverse Welfare System. Media (Mostly) Ignore It

The Stream

On Tuesday, President Trump issued an executive order calling on secretaries in eight federal departments to work on reforming their bloated welfare bureaucracies. They are to spend the next month looking for ways to fix the programs under their charge, and report back.

You can be forgiven if you didn’t hear about this. Insofar as the media covered it, they mostly painted Trump as a mean old rich guy who doesn’t care about the poor. Check out this “explainer” piece at Vox for one example.

In truth, this move is Trump at his best.

Reversing Obama

But what can he do by way of executive order? Quite a lot as it turns out. President Obama spent his two terms gutting the Welfare Reform Act of 1996. Obama didn’t have the votes to undo it, so he kept waiving its work requirements.

Whatever case could be made for doing that in a recession, unemployment is now at record lows. That means these waivers are encouraging millions of Americans not to move, not to seek work, and not to improve their lives. This is a perverse form of compassion.

And most Americans have no idea how huge the welfare state has become.

The Welfare State Monster

Federal, state, and local governments in the United States today spend gobs of money on means-tested welfare programs. How much? If we just cut checks to the 40 million poorest Americans, each and every one of them would get roughly $20,000 a year: $20,000 for each poor person, $40,000 for every impoverished couple, and $80,000 for every family of four in this group. If handing out money is really the way to solve poverty, then why don’t we just do that?

When President Johnson championed a “War on Poverty” as part of his Great Society in the mid-1960s, he pledged to eliminate domestic poverty. Today, over 80 means-tested welfare programs are providing cash, food, housing, medical care, and targeted social services for poor and low-income Americans. And this does not include Social Security, Medicare, unemployment insurance, and veterans’ benefits. Let that sink in.

By 1970, the government was already spending over $175 billion a year (in fiscal year 2015 dollars) on such programs. With few exceptions, welfare spending has gone up every year, no matter who is in the White House. In the decade from 2005 to 2015 alone, spending on those 80 welfare programs went up $288 billion (in 2015 dollars). Federal, state, and local spending now totals more than $1 trillion ever year.

We Fought Poverty, and Poverty (Mostly) Won

If poverty had disappeared as a result, debates about the cost of welfare programs might be left to the accountants. But the percentage of the population that the government deems below the poverty line  —  which today is roughly 15 percent — has barely budged in 50 years. Worse, the poverty rate was dropping steadily in America until the war on poverty ramped up in earnest.

Why such a high poverty rate? One reason is that the government doesn’t count most welfare benefits in the way it calculates poverty. Another factor is that the welfare system has failed to promote self-sufficiency. Our sprawling welfare state has often discouraged work. That’s the normal way people have emerged from poverty. Less than 3 percent of Americans who work full-time meet the government’s definition of poverty. Surely, welfare programs should encourage recipients to find work rather than to become government dependents. However, most of these programs fail to promote work. Trump’s executive order can help change that.

Welfare Reform Act of 1996

The Welfare Reform Act of 1996 managed to reform one program — Aid to Families with Dependent Children (AFDC) — by adding a work requirement. Opponents cried that it would create an epidemic of homelessness and poverty among single women and their children. In fact, recipients did not become homeless. They found jobs, dignity, and a way out of poverty. Under President Obama, even that modest reform was undone.

Besides creating perverse incentives, the welfare system fed bad behavior. From long-term unemployment and dependence on government to substance abuse and unwed births — these have trapped millions in a cycle of poverty. An intact family with a married mother and father may be the best way to prevent childhood poverty in the U.S. So, any rational welfare program should promote marriage for parents, not undermine it. Yet the welfare system is rife with marriage penalties.

More Spending Won’t Help

Too often, debates over welfare spending assume that if we spend enough, it can vanquish poverty. Materially speaking, government could spread the wealth to raise living standards. But that’s not the same as increasing self-sufficiency. That should be the goal of welfare policy. Yet, if many of these policies make people dependent, then increases in spending are doubly bad. They waste precious tax resources and harm recipients.

This is why simply cutting fat checks to 40 million Americans would not solve the poverty problem either. The war on poverty would become, in essence, a more lavish delivery vehicle for a cultural toxin.

Most Americans want a social safety net that helps those who cannot help themselves. And they want to help the poor and unemployed find meaningful work. It does not follow, however, that a massive welfare state controlled by the federal government is the best way to do that. The evidence of the past half-century shows just the opposite.

It’s almost always a bad idea to pay people not to work. At the very least, we could be subsidizing work, not non-work. Boosting the earned-income tax credit is one way to do that.

In any case, the time has come to debate what to do with the nation’s safety net. It’s less a springy net than it is a massive, sticky spider’s web. President Trump’s executive order is a nice start. Let’s not let the Democrat’s media accomplices neglect it or kill it.

What You Can Do: Study the poverty and dependence section of the 2017 Index of Culture and Opportunity, and encourage your representatives to support welfare reform.

Cross Published from The Stream