The Paradox of Poverty: How We Spent $3.5 Trillion Without Changing the Poverty Rate

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The Paradox of Poverty: How We Spent $3.5 Trillion Without Changing the Poverty Rate

September 3, 1992 25 min read Download Report
Robert Rector
Senior Research Fellow
Robert is a leading authority on poverty, welfare programs and immigration in America.

(Archived document, may contain errors)



The Paradox of Poverty: How We Spent $3.5 Trillion Without Changing the PovertyRate.

By Robert Rector The U.S. Census Bureau has released its 1992 ieport on income and poverty. Ile report shows that the current prolonged recession-caused largely by Congress's insistence on raising taxes at the beginning of an economic downturn-has thrown m illions out of work. This unemployment and the suffering it causes am real. Expansion of welfare programs, however, will not truly help the un- employed. What they need are jobs and economic growth. Bigger government and higher taxes do not produce jobs a nd growth. Let me begin with seven basic facts:

1) The level of welfare spending in the United States is enormous and Vowing rapidly. In 1990, the latest year for which complete data an available, welfare spending reached a record high of $226 billion, or 4.1 percent of GNP. Contrary to po- litical claims, welfare spending increased during the 1980s, the Reagan era, after adjusting for inflation. Nor was the recent increase restricted to medical aid; in con- stant dollars, cash, food, and housing aid also i ncreased more rapidly than the growth in the population. 2) Total welfare spending is more than sufficient to raise the incomes of all persons defined as "pooe' by the Census Bureau above the poverty income levels. Part of the $226 billion dollars in welf a re spending goes to persons in nursing homes and other institutions who are not included in the annual Census Bureau population and poverty counL But $184 billion was spent on the general non-institutional population in 1990. This sum was roughly two and a half times the amount needed to eliminate poverty. Welfare cash, food, and housing aid alone were more than enough to elimi- nate Poverty. 3) The Census Bureau ignores most welfare assistance when calculating the standard of living of the "poor:' Of a to t al of $184 billion in welfare spending on non-institu- tionalized persons, only $32.5 billion was counted as income by the Census Bureau. The missing funds, which were spent on low-income persons but not counted by the Census Bureau, equalled 2.8 percent o f GNP. The non-counted cash, food, and hous- ing aid alone was more than what was needed to raise all persons' incomes above the poverty level. 4) Few of the people defined as "poor"' by the Census Bureau are "poor" in the sense understood by the general p ublic. Nearly all of the 30 million-plus people identified as "poor" by the, Census Bureau am reasonably well housed. Most are well fed-, there are few nutritional differences between"poor" and middle-class; Americans. 5) The War on Poverty did not succee d. While there may be little material poverty left, this does not mean that the War on Poverty was a success. The recent expansion of the


Robert Rector is a Senior Policy Analyst at 7be Heritage Fotmdation. 7bis kcture is udwn fiwn his testimony to the Congms Joint Economic Committm on September 3,1992. ISSN 0272-1155.0 1992 by Mw Heritage Foundation

welfare state has not really raised incomes of less affluent Americans. Instead it has largely replaced work and earnings with dependence. And by undermini ng family structure, welfare has greatly contributed to the increase in single mothers who have difficulties supporting their families. 6) The real problem in low-income communities is behavioral poverty. "Behavioral poverty" refers to a breakdown in the v alues and conduct that lead to the formation of healthy families, stable personalities, and self-sufficiency. Behavioral poverty is a clus- ter of social pathologies including: dependency and eroded work ethic, lack of ' educational aspiration and achieve ment, inability or unwillingness to control one's children, increased single parenthood and illegitimacy, criminal activity, and drug and alcohol abuse.

So while there may be little material poverty in the United States, behavioral poverty is abundant and growing. For example, the black illegitimacy rate was around 25 per- cent when the War on Poverty began; today two out of three black children are born out of wedlock. A similar increase is occurring among low-income whites. Likewise, crime and dependency rates exploded as welfare spending increased. 7) The central dilemma, of the welfare state is that nearly all of -the cash, food, housing, and medical programs designed to alleviate material poverty have the harmful side effect of profoundly increasing be h avioral poverty. Ile current welfare sys- tem fosters dependency and family disintegration. The erosion of the work ethic and family structure in turn demolishes the real-fife prospects of low-income Americans, greatly contributing to crime, school failur e, and other problems.

K the Census Bureau's methods were corrected to measure accurately the assets, cash income, and welfare benefits of low-income households, the result would show far fewer persons in material poverty than claimed by current official s tatistics. But even the corrected figure still would conceal the red tragedy of America's welfare system: millions of children growing up without fathers, mil- Hons of parents lacking the work ethic and dignity, and entire generations being robbed of real dreams and hopes for the future. By creating a false picture of chronic, pervasive material poverty, the Census Bureau report harms both ft taxpayers and the poor. The false picture of pervasive material poverty has led to the increased spending on welfar e programs which fuel behavioral poverty. It distracts attention from, and makes mom difficult, serious discussions of welfare reforms which -am needed truly to help the disadvanap& p>

Living Standards of the Poor For many years the U.S. Census Bureau has re ported that over 30 million Americans are 96 poor. 99 For most Americans the word "poverty" suggests destitution, an inability to provide a family with sufficient food, clothing, and reasonable shelter. Only a small fraction of the persons identified as " p oor" by the Census Bureau fits that description, however. The actual living standard of most per- sons defined as poor by the Census Bureau is far higher than the public imagines. In fact, numerous government reports indicate that most "poor"Americans tod a y am better housed, better fed, and own more personal property than average U.S. citizens throughout most of this century. In 1990, after adjusting for inflation, the per capita expenditures of the lowest income one-fifth of the U.S. population exceeded t he per capita income of the median American household in 1960.



The following are facts about persons defined as "poor"by the Census Bureau. Data are taken from various government reports: * In 1989 nearly 40 percent of all "poor" households actually ow ned their own homes. Ile average home owned by persons classified as "poor" by the Census Bureau is a three-bedroom house with a garage and porch or patio. Contrary to popular im- pressions, the majority of "poor"persons who own their own homes are not el d erly. # One million"poor"persons own homes worth over $80,000; 75,000"poor"persons own homes worth over $300,000. * Only 8 percent of "poor" households are overcrowded. Nearly two-thirds have more than two rooms per person. # The average"poor" American ha s twice as much living space as the average Japan- ese and four times as much living space as the average Russian. (Note: These comparisons are to the average citizens in these countries, not to those classified as poor.) * 62 percent of "poor" households o wn a car, 14 percent own two or more cars; a third own microwave ovens. * "Poor"Americans live in larger houses or apartments, eat more meat, and are more likely to own cars and dishwashers than is the general population in Western Eu- rope. * About 53 pe r cent of "pooel households, renters as well as owners, have air condi- tioning. By contrast, just twenty years ago only 36 percent of the entire population enjoyed air conditioning. # The average consumption of protein, vitamins, and minerals is virtually t he same for poor and middle-class children, and in most cases is well above recommended norms. Poor children today are in fact supernourished, growing up to be on average one inch taller and ton pounds heavier that the GIs who stormed the beaches of Nor- m andy in World War II. * Family structure and personal behavior are the most important factors in determin- ing a family's economic well-being. In 1990 the Census Bureau found that only 3 percent of married couples with children and a full-time worker were "poor." By contrast, 67 percent of single mothers who did not work were "poor."

What's Going On? Over 25 years have passed since President Lyndon Johnson declared his "Unconditional War on Poverty." Johnson declared that this war was to be a great "investment! which would return its cost to society manyfold. Since then, welfare spend i ng in constant dollars has increased fivefold. Total welfare spending since the onset of the War on Poverty has amounted to $3.5 trillion in constant 1990 dollars-more than the full cost of World War H after adjusting for inflation. In other words, the av e rage American household has paid around $50,000 fighting the War on Poverty. I think that taxpayers are justified in asking what return they have gotten on their "investment." The official picture is bleak. As the following chart shows, before the War on P overty began, when welfare spending was low, the poverty rate was declining dramatically. It plummeted from 32 percent in 1950 to 14.7 percent in 1966 when the War on Poverty was just beginning. After 1966, welfare Vending began to explode; annual cash, f ood, and housing expenditures alone increased by $70 billion by 1990. But as the chart also shows, coincident with this spending explosion, the pov-



erty rate leveled off and, with a few modest dips and peaks, re- The Poverty Paradox: mained largely unchanged for the Massive Govemment Spending Shows No Results next 23 years. Mareover, during the same period that welfare spending soared, "behmioral $260 Billions of 1990 Dollars Poverty Rate 35% poverty" began a dramatic in- crease. For America's taxpa y ers, federal policy makers, and mem- $20 0......... ----------- --- ....................A ...... ... .... 28% bers of Congress in particular, this raises some basic questions: ..................... ............. .......... X.: $150 ....... 21% How is it p o ssible for total wel- fare spending in constant dollars :.x:@:M $100 ----------------------- ............ ....... 14% to have quintupled over the last g 25 years while die poverty rate re- N 7% mained almost unchanged? $60 .......... ........... ......... . . ...... X.-M-52'. X How is it possible for constant X::. -11111111.1111@11.f ............. . ::Z::: IN dollar welfare spending on cash, X. r. food, and housing to have nearly 1930 1940 1950 1960 1970 1980 IM quadrupled over twenty years while the poverty rate remained almost unchanged? Total Note and Federal Welfare Spending Poverty Rate How is it possible to spend (AdJustod for Inflation) $226 billion per year on welfare, more than twice the arnount Hato: Accurate poverty data prior to 1947 are unavailab l e. needed to elWnate aH poverty in '*u'*** Various U.S government reports. Heritage DataChart the United States, and still have over 30 million poor people? The answer, of course, is that it is not possible. Not even the federal government can spend $226 billion per year on low-income people without having a significant effect on living standards. The simple fact is that the Census Bureau counts little of this welfare assistance in calculating the num- ber of poor Americans.

The Politics of Poverty: Busine ss As Usual There is a political bunko game going on in Washington. The elements of this game are as fol- lows: First, the Census Bureau defines as'jx)&'any household which has an income below the poverty threshold, which was $13,942 for a family of four i n 1991. Assets are ignored. Second, the taxpayers are told that there are over 30 million poor Americans. Greater welfare spending is urged. Third, welfare spending is increased. Fourth, quietly, behind the scenes -in Washington, efforts are undertaken to assure that cash earnings of low-income people are undercounted and that virtually no welfare spending is counted as income when determining if a family is poor. Fifth, the next year the public is again told that there are over 30 million poor people and g reater spending is again needed. The cycle continues. As long as nobody checks the numbers, welfare advocates can play the game year after year. As the following table shows, total welfare spending equalled $226 billion in 1990, the last year for which da t a am available. Out of this total $184 billion was spent on the non-institutionalized population covered in the annual Census Bureau income and poverty reports. But the Census Bu- reau counted only $32 billion of this spending as income. The funds which w ere spent on



Missing Welfare Spending:: 1990

Assistance $55.1 $50.3 $32.5 $17.8 Meenefteted Non4asli 25.26 25.26 0.0 25.26 Food Assistance Means-tested Non-Cash Housing and 22.65 22.65 0.0 22.65 Energy Assistance Medicaid and other Medical 97.6 60.7 0.0 60.7 Benefits Urban 3.1 3.1 0.0 3.1 Development social Services and 23.24 23.24 0.0 23.24

S oumo:VeeBurke Cash and Non-Cash Beneft for Persons wfth Limited Income: Efighfifty Rules, P@rt1c*" and Expenditure DataL W 1W8- 1990 (Washington, D.C.: Cort -h S o - of Con .qressional Researc !ry gross), to- 991. BA f! Material on Programs Within the Jurisdiction of the Commit" on ways and' Means. 18'nPptu6bn1Vh;J data pro=:uth the Department of Health and Human Services and other government agencies.

low-income Americans but not counted by the Census Bureau amount to 2.8 percent of GNP. hfiss- ing cash, food, and housing spending alone was around $70 billion, more than enough to raise the incomes of all poor people above the poverty level.


The Liberal Defense W elfare advocates in Washington have criticized my analysis of welfare and poverty. These criti- cisms are offered as a defense of the Census Bureau estimates and as an attempt to keep alive the myth of widespread destitution among America's poor. In effec t they are a defense of Washington's annual poverty game. Among these criticisms: O=g

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L iberal Defonse #1: In addition to its widely publicized official poverty measure that counts only cash income, the Census Bureau also has alternative poverty measures which count non-cash welfare benefits. These alternative measures still show high rates of poverty.


Response: The Census Bureau does have largely unknown alternative poverty measures in some of its publications which include a few noncash benefits. But even the best of these alternative measures still omits most welfare spending. For exa mple, it omits nearly half of cash, food, and housing aid.

Lberal Defense #2: The huge figure of $226 billion in welfare spending includes many prbgrams for the middle class, such as Social Security and Student Loans. Response: This is not true. My calcul ations are based on reports produced by the non-parti- san Congressional Research Service (CRS) of the Library of Congress. These CRS reports count total spending on "means-tested!' assistance - that is, assistance which is distributed to persons below ce r tain specific income levels. True, a few programs which CRS includes, such as student loans, are formally means tested, but the income limits are so high that most beneficiaries are middle class. I have omitted such pro- grams; my calculations are confine d to programs which benefit only low-income persons. I have added to the CRS figures Medicare spending on poor persons and some government aid targeted to economically disadvantaged communities such as Urban Development Action Grants. A list of all the wel fare programs included in my count of welfare spending is included in the appendix.

Lberal Defense A: Welfare spending does not go just to poor persons. Some goes to low-income persons with cash incomes above the poverty level. Response: This is true. But if even a quarter of all means-tested cash, food, and housing aid went to Ganon-poor" persons, the remaining amount would still be enough to raise all poor persons' incomes above the poverty thresholds.

Lberal Defense 84: Nearly all of the increase in wel fare spending in recent years has been for medical care. Response: This is untrue. Cash, food, and housing aid measured in constant dollars in- creased faster than the growth of population during the 1980s. In constant dollars, means tested cash, food, an d housing expenditures increased by 20 percent ftom 1980 to 1990.

Limml Defense #5: It may be true that most of the persons defined as '@pW' by the Census Bureau have actual incomes above the official poverty income thresholds, but the poverty income thres holds should be raised. Response: Ile poverty income thresholds were set in 1963 at the level of funds needed to provide for basic needs. Each year they have been adjusted upward for inflation. There is no evidence that poor families are unable to provide for basicneeds with incomes at the poverty level, at least in most parts of the country. Indeed, in many parts of the country a family can meet basic needs with incomes well below -the poverty level. Critics such as Dr. Patricia Ruggles of the Urban Insti t ute advocate raising the poverty threshold and adopting a relative poverty measure. As the general level of prosperity rises, the definition of what is "poor" would rise proportionately. Dr. Ruggles actually has proposed raising the current poverty income thresholds above the income level of the median American family in the early 1950s, adjusted for inflation. According to Dr. Ruggles, Ozzie and Harriet were poor. If Dr. Ruggles's notions were accepted, the poverty income levels would go up and up each ye ar, far faster than inflation. Within a decade or two, most people with a standard of living today considered middle class would be redefined as poor. This gives new meaning to the Biblical statement: "The poor are always with you."



Of course, these n otions have nothing to do with "poverty." What Dr. Ruggles and her supporters really are interested in is radical income redistribution. If an individual's income falls below a cer- tain level, say 50 percent of the income of the average family, then the a verage family would be taxed and its income redistributed to the person with low income. While the American public has lit- tie interest in government income redistribution per se, it is concerned about "poverty." Hence the effort to camouflage redistribu tionist schemes under the guise of "poverty." It is really just an abuse of the English language for political purposes.

Reforming the Measurement of Material Poverty. Finally, some charge that, while I continually criticize the Census Bureau's poverty me asures, I have not shown how to improve those measures. This is untrue. In my publications I have repeat- edly offered recommendations on improving the government's assessment of material poverty. I will summarize these recommendations.

1) Focus on the nu merous government surveys which assess the actual food consumption, physiological status, and housing conditions of the "poor." Expand these surveys, con- duct them more frequently, and issue their findings periodically in a single integrated reporL Ask q u estions like: How many people lack food-, how many are physiologi- cally malnourished, how many lack reasonably decent housing? The answer will be a small fraction of the 30 million currently defmed as "poor." 2) Integrate and expand the Survey of Income a nd Program Participation (SIPP) and the Consumer Expenditure Survey. Get a very accurate count of welfare benefits and their cost to the taxpayer. Then ask questions like: How many families spend less than the Agriculture Department's Thrifty Food Budget o n food after non-cash benefits are in- cluded? Who an they? In how many families do housing costs represent over 50 percent of total consumption including all welfare aid? Who are they? 3) In all reports on poverty include data and a discussion of behavio ral poverty.


Rethiniting the Issue: Material Poverty versus Behavioral Poverty For the general public the real problem with welfare is not merely the rapidly expanding cost -- which now absorbs over 4 percent of the entire national economy. It is also the sense that w e lfare actually harms, rather dm helps, the poor. The key dilemma of the welfare state is that the prolific spendifig intended to alleviate material poverty has led to a dramatic increase in "behavioral poverty." The War on Poverty may have raised the mate r ial standard of living of some Americans, but at the cost of creating whole communities where traditional two-parent families have vanished, work is rare or non-existent, and multiple gen- erations have grown up dependent on government transfers. Our curr e nt welfare system may best be conceptualized as a system which offers each single mother a "paychecle' worth an average of between $8,500 and $15,000, depending on the state. The mother has a contract with the government: She will continue to receive her "paychecle' as long as she fulfills two conditions:

1) She must not work; and

2) She must not marry an employed male.



The current welfare system has made marriage economically irrational for most low-income par- ents. Welfare has converted the low-in come working husband from a necessary breadwinner into a net financial handicap. It has transformed marriage from a legal institution designed to protect and nurture children into an institution which financially penalizes nearly all low-income parents wh o enter into it Across the nation. the current welfare system has all but destroyed family structure in the inner city. Welfare establishes strong financial disincentives which effectively block the formation of in- tact, two-parent families. Example: Supp o se a young man in the inner city has fathered a child out of wedlock with his girlfriend. If this young father abandons his responsibilities to the mother and child, government will step in and support the mother and child with welfare. If the mother has a second child out of wedlock, as is common, average combined benefits will reach around $13,000 per year. If, on the other hand, the young man does what society believes is morally correct (i.e., marries the mother and takes a job to support the family), g overnment policy takes the opposite course. Wel- fare benefits would be almost completely eliminated. If the young father makes more than $4.50 per hour, the federal government actually begins taking away his income through taxes. The federal wel- fare re f orm act of 1988 will permit the young father to marry the mother and join the family to re- ceive welfare, but only as long as he does not work. Once he takes a full-time job to support his family, the welfare benefits are quickly eliminated and the fathe r 's earnings are subject to taxation. Ile onset of the War on Poverty directly coincided with the disintegration of the low-income fam- ily-the black family in particular. At the outset of the Second World War, the black illegitimate birth rate was slightl y less than 19 percent. Between 1955 and 1965 it rose slowly, from 22 percent in 1955 to 28 percent in 1965. Beginning in the late 1960s, however, the relatively slow growth in black illegitimate births skyrocketed-reaching 49 percent in 1975 and 65 percen t in 1989. If cur- rent trends continue, the black illegitimate birth rate will reach 75 percent in ten years. Similar trends are occurring among low-income whites. Generous welfare benefits to single mothers directly contributed to the rise in illegitimat e births. Recent research by Dr. C.R. Winegarden of the University of Toledo in Toledo, Ohio, found that half of the increase in black illegitimacy in recent decades could be attributed to the effects of wel- fare. Research by Shelley Lundberg and Robert D . Plotnick of the University of Washington shows that an increase of roughly $200 per month in welfare benefits per family causes the teenage illegiti- mate birth rate in a state to increase by 150 percent. Similarly, high benefits discourage single moth- e rs ftom remarrying. Research by Dr. Robert Hutchens of Cornell University shows that a 10 percent increase in AFDC benefits in a state will cause a decrease in the marriage rate of all single mothers in the state by 8 percent. Thus welfare programs discou r age young men and women from marrying and promote the disintegration of existing two-parent families. Penalizing Work. Among the poor, another devastating legacy of the past 25 years has been the dramatic reduction in work effort. For a growing number of p oor Americans, the existence of gener- ous welfare programs makes not working a reasonable alternative to long-term employment. During the late 1960s and early 1970s, social scientists at the Office of Economic Opportunity (0EO) con- ducted a series of co n trolled experiments to examine the effect of welfare benefits on work effort. The longest running and most comprehensive of these experiments was conducted between 1971 and 1978 in Seattle and Denver, and became know as the Seattle/Denver Income Maintenan c e Ex- periment, or Advocates of expanding welfare had hoped that SIMFJDDAE and similar experiments conducted in other cities, would prove that generous welfare benefits did not adversely affect "work effort." In- stead, the SRAE)DIME experiment found that every $1.00 of extra welfare given to low-income per@- sons reduced labor and earnings by $0.80. The results of the SIMFJDIME study are directly



applicable to existing welfare programs: Nearly all have strong anti-work effects as those studied in th e SHAFVDMM experiment. The effects of welfare in undermining the work ethic are readily apparent. In the mid- 1950s nearly one-third of poor households were headed by an adult who worked full time throughout the year. Today, with greater welfare benefits a vailable, only 16.4 percent of poor families are headed by a full-time working adulL Inter-Generational Dependence. Of the 3.8 million families currently receiving assistance through Aid to Families with Dependent Children (AFDC), well over half will rema i n dependent for over ten years, many for fifteen years or longer. Welfare dependency also appears to spread fi=n one generation to another. Children raised in families that receive welfare assistance are them- selves three times more likely to be on welfa re than other children when they become adults. This inter-generational dependency is a clear indication that the welfare system is failing in its goal to lift the poor from poverty to self-sufficiency.

Eff eceft of Fa -mily Disintegration The collapse of family structure in turn has crippling effects on the health, emotional stability, ed- ucational achievements, and life prospects of low-income children. Children raised in single-parent families, when compared to those in intact families, are one-third m ore likely to exhibit behavioral problems such as hyperactivity, antisocial behavior, and anxiety. In regard to more extreme disor- ders, children deprived of a two-parent home are two to three times more likely to need psychiatric care than those in two- p arent families. And they are more likely to commit suicide as teenagers. Ab- sence of a father also increases the probability that a child will use drugs and engage in criminal ac- tivity. Recent research by Dr. June O'Neill of Ban, h College in New York C ity shows that young black men raised in single-parent families are twice as likely to engage in crime activity when com- pared to young black men raised in two-parent families, even after holding constant a wide range of variables such as family income, u rban residence, neighborhood environment, and parents' educa- don. Because the father plays a key role in a child's cognitive development, children in single-parent families score lower on IQ tests and other tests of mental ability. Children in single-par e nt families are three times as likely to fail and repeat a year in grade school than are children in two-parent fam- ilies. In all respects, the differences between children raised in single-parent homes and those raised in intact homes are profound, and s uch differences persist even if single-parent homes are compared to two-parent homes of exactly the same income level and educational standing. But the greatest tragedy is that children from broken homes, when grown to adulthood, will pass the same proble m s on to their own children. Weakened in their own development, children from sin- gle-parent homes are markedly less likely to be able to establish a stable married life when they be- come adults. Young white women raised in single-parent families are 164 percent more likely to bear children out of wedlock themselves and I I I percent more likely to have children as teenagers. If these women do marry, their marriages are 92 percent more likely to end in divorce than are the marriages of women raised in two -parent families. Family instability and its attendant problems are passed on to future generations. And being raised in a single-parent family also triples the probabil- ity that a child will become a welfare recipient as an adult.


Conclusion: How to Help Low-Income Americans The key to helping low-income Americans is not to throw added billions into conventional wel- fare programs to combat a problem of material poverty which is either greatly exaggerated or non- existent Rather, we must help low-inc o me Americans form stable families and become self-sufficient. First, we must convert welfare from a one-way handout into a system -of mutual obligation. We must convert welfare from a system which rewards non-work and single parenthood into one which rewa r ds work and marriage. Key to doing this is to require most welfare recipients to perform com- munity service in exchange for the benefits they receive.* SeWnd, we must make low4ncome neighborhoods secure from crime, and that means locking up the felons wh o prey on the poor and keeping them locked up. Third, we must improve the education of low-income children through competition in education. Let's empower low-income parents to choose the schools their children will attend through vouch- ers. If Jesse Jack s on can send his kids to private school, why shouldn't a poor parent have the same choice? We also must strengthen the church in the inner city community and across the country. Re- ligious belief is the strongest single factor in determining whether or no t a poor child will finish school and escape from poverty. We must give poor parents with strong religious beliefs the right to reinforce that belief in the children God has given them; they should be given education vouchers and the right to use those vou c hers to send their children to a religious school if they so choose. Fourth, there must be moral renewal within low-income communities. Moral authorities who win be heard and respected within those communities must reanimate the ethical principles which a r e the foundation of successful society. Ile upcoming generation must be taught again: a love of learn- ing, the dignity of all labor, and the sanctity of marriage. The young must learn that out-of-wedlock 9 is not an acceptable "alternative life style." Y o ung men must learn that indiscrimi- nately fathering children whom they have no intention of supporting is not morally correct. Young men and women must both grow to recognize that having children when one is too young to have any real prospects of suppor t ing a family harms the parent, the child, and the community. Fkally, we must all be reminded that the most disadvantaged American has economic opportuni- ties beyond the dreams of most of the world's population. The rules for escaping frcxn poverty in Ame r ica are simple: 1) finish high school; 2) get a job, any job, and stick with it; 3) do not have children outside of marriage. Those who abide by these rules of middle-class existence will not be chronically poor in the U.S. Leaders who ignore personal res p onsibility and moral principles and who falsely belittle the op- portunities available - or pretend they do not exist - do great harm to low-income Americans. By falsely narrowing hopes, they engender a climate of indifference or even hostility to learnin g, work, and marriage among the young. In so doing, they turn youth away from the face of opportunity and into the arms of anger and despair.

*For discussion of welhire reform, see Robed Rector. "Requiem for the War on Poverty: Rethinking Welfin After the LA. Riots"PoUcy Review, Summer 1992.

1 0





CASH AID 01 Aid to Families with Dependent Children 02 Supplemental Security Income 03 Pensions for Needy Veterans, their Dependents, and Survivors 04 General Assistance (cash component) 05 Earned Income Tax Credit (EITC)

06 Foster Care 07 Assistance to R efugees and Cuban/Haitian Entrants (cash component) 08 Emergency Assistance (EA) to Needy Families with Children 09 Adoption Assistance 10 Dependency and Indemnity Cornpensation (DIC) and Death Compensation for Parents of Veterans

11 General Assistance to Indians

DEVELOPMENT AID 01 Community Development Block Grant* 02 UDAG-Urban Development Block Grant* 03 Economic Development Administration* 04 Appalachian Regional Development* 09 Legalization Impact Aid


ENERGY AID 01 Low-Income Home Energy Assistance Program (LJHEA.P) 02 Weatherization Assistance


01 Poll Grants

02 Head Start 03 Tide One Grants to Local Education Authorities for Educationally Deprived Children, Elementary and Secondary Education Act*



EDUCATION AID (cont.) 04 College Work-Study Program 05 Supplemental Educational Opportunity Grants 06 Vocational Educational Opportunities, Disadvantaged Activities 07 Chapter I b4igrant Education Program 08 Special Programs for Students from Disadvantage d Backgrounds (TRIO Programs) 09 State Student Incentive Grants 10 Fellowships for Graduate and Professional Study I I FollowThrough 12 Nursing Loans and Grants* 13 Health Professions Student Loans and Scholarships

14 Even Start*


FOOD AID 01 Food Stamps 02 School Lunch Program (Free and Reduced Price Segments) 03 Special Supplemental Food Program forW(men, Infants, and Children (WIC) 04 Tonporary Emergency Food Assistance Program (TEFAP) 05 Nutrition Program for the Elderly 06 School Breakfast Program (F ree and Reduced Price Segments) M Child Care Food Program 08 Summer Food Service Program for Children 09 Food Program for Needy Indian Families 10 Commodity Supplemental Food Program (CSFP) I I Special Milk Program (free segment)

HOUSING AID 01 Section 8 Lower Income Housing Assistance 02 Low-Rent Public Housing 03 Section 502 Rural Housing Loans 04 Section 236 Interest Reduction Payments 05 Section 515 Rural Rental Housing Loans


HOUSING AID (cont) 06 Section 521 Rural Rental Assistance Payments 07 S ection 235 Homeownership Assistance for Low-Income Families 08 Section 101 Rent Supplements 09 Indian Housing Improvement Grants 10 Section 504 Rural Housing Repair Loans and Grants I I Section 514 Farm Labor Housing Loans 12 Section 523 Rural Housing Sel f-Help Technical Assistance Grants and Loans 13 Section 524 Rural Housing Site Loans 14 Section 516 Fann Labor Housing Grants 15 Section 533 Rural Housing Preservation Grants 16 Public Housing Expenditures by State Goverments*


JOBS AND TRAINING AID 01 Thi ning for Disadvantaged Adults and Youth (JTPA H-A) 02 SummerYouth. Employment Program (JTPA H-B) 03 Job Cmps (JTPA IV) 04 Senior Community Service Employment Program 05 Work Incentive Program (WIN) and Job Opportunity and Basic@ Skills Training (JOBS)- JO BS replaced WIN in 1988 06 Foster Grandparents W Senior Companions 08 Migrant and Seasonal Farmworkers Program* 09 Indian and Native American Employment and Training Program*


01 Medicaid 02 Medical Care for Low Income Veterans Without Service -Connected Disability 03 Generil Assistance (Medical Care Component) 04 Indian Health Services 05 Maternal and Child Health Services Block Grant, Title V of the Social Security Act 06 Community Health Centers 07 Medical Assistance to Refugees and Cuban/Ha itian Entrants 08 Migrant Health Centers 09 Medicare for Poor Persons*



SOCIAL SERVICES 01 Social Services Block Grant (Tide 3M 02 Community Services Block Grant 03 Legal Services 04 Emergency Food and Shelter Program 05 Social Services for Refugees and CubanAWtian Entrants 06 Tide X Family Planning


08 Child Welfare* 09 Tide M Supportive Services, Older Americans Act*

Current Program not included in Congressional Research Service List

1 4




CASH AID 01 Aid to Cuban Refugees 02 Aid to Indochinese Refugees 03 Aid to War Refugees



01 Urban Renewal 02 h4iscellaneous HUD Spending 03 Urban Planning Aid

04 New Communities

05 Technical Self Help

FOOD AID 01 Food Donations to Institutions (not schools) 02 Food Stamps in 1940s

03 Donated Foods to Schools


GENERAL RELIEF 0 1 Reconstruction Finance Corporation 02 Food Emergency Relief Administration 03 Farm Security Admimstration 04 War Refugee Assistance

JOBS AND TRAINING AID 01 CETA Title 6 Counter Cyclic Public Service Employment 02 CETA-IVA Youth Employment Demonstration 03 CETA-H Comprehensive Employment and Training


MEDICAL AID 01 Assistance for Crippled Children

1 5


SERVICES 01 Office of Economic Opporumity Programs

WORK REUEF 01 Civilian Conservation Corps 02 Civil Works Administration 03 Works Project Administration 04 National Youth Administration

05 OtherWork Relief


Chart 1


Welfare Spending Per Low-income Person: Going Up, But Not Reducing Poverty

45% Poverty Rate Welfare Spending Per, Person $3,000

0501 I'M 30% ---------------- -------------- $29000 'M

: iiii.-Ir xl..."'.........'


15% --------------------------- I $19000

........... El

MIR ..... AIF @11

1 940 1950 1960 1970 1980 1990


spending in 1990 Dollars Poverty Rate

H erkige DataChart


Chart 2


Federal, State and Local Welfare

Spending by Program

$250 Billions of 1990 Dollars


$200 ---------------------------------------------

$ 1150 - ----------------------------------

$100 ---------------------------------

. ...... 1.0 $50 - ---------------------------



1940 1950 1960 1970 1980 1990 Cash, Food, Housing 0 Education & Training

services & urban Aid IM Medical Aid Work Relief

H eftge DakCharl


Chart 3


Total Welfare Spending as a Share of GNP

S hare of Gross National Product 6%

5% ----------------------------------------------

- ------------------------------- 4% MR.

3% 'K. ----------------



2% -------------------- -

4 . M... -RX:x: -A X. . ......... -Exi 01 1% . .............. Mn

. . .... .....

1940 1950 1960 1970 1980 1990

H edtage DakOwrt


Chart 4


Welfare Spending per Low Income Person on Cash, Food and Housing Aid

$1,400 Spending per Person in 1990 Dollars

$19200 -------------------------------------------


$1,000 -----------------------------------

@.g g@i .is $800 ----------------------------

$600 ---- --------------------------


........ ... .

. ........................ ------------ $400 x

..... .......... .................. Ok


NX $200

............ .............


1: :x NV.14.3. MY;: 1940 1950 1960 1970 1980 1990

L ow income person means the lowest income third of the nation.

Herkige DataChart

2 0




Robert Rector
Robert Rector

Senior Research Fellow