Welfare and the War on Poverty

I recently read a blog post from Director Blue about a couple in Brooklyn who scammed the Federal Government out of over $100,000 in Food Stamps and Medicaid while owning luxury automobiles.

“Rivka Baror, 51, and her husband Avraham Baror, 64, have been living pretty high on the hog — aside from owning not one but three BMWs, the couple also owns a Lexus, a comfortable two-bedroom home in Brooklyn, and drops a lot of cash at places like Victoria’s Secret and Home Depot. Oh, yeah — they also collect a welfare check and have bilked taxpayers out of more than $100,000 in government assistance money over the last six years.”

And unless you think this is an isolated instance, you can check out this link which shows the GAO coming to the realization that improper payments are made from Medicare/Medicaid to the tune of almost $50 billion annually.

That’s the conclusion of a Government Accountability Office report released Wednesday. The report, issued at the request of a House subcommittee investigating Medicare and Medicaid fraud, estimates that the federal government is losing $48 billion on the improper payments – a significant amount for a program that “is fiscally unsustainable in the long term” unless action is taken.”

Just imagine the amount of money that will be wasted once Obamacare kicks in and these same agencies will be dolling out payments at a much higher rate. 

This recent discovery of fraudulent Welfare payments got me to thinking if Welfare is attacking the root problem that it was designed to fix – Poverty Rate.   Let’s see how the government’s Welfare program is doing against the War on Poverty.

The best way to grade Welfare’s job on fighting the War on Poverty is to compare Welfare spending with poverty rates in the US.  To do this, I obtained annual Welfare spending data from this site and annual poverty rate from this site.  The graph is shown below (Poverty Rate is on the left Y-axis and Welfare Spending as a percent of GDP is on the right Y-axis).

In addition to the graph above, let’s also look at a complete history of Welfare spending as a percent of GDP and this graph is shown below.

So what do these two graphs tell us? 

For the past 30 years Welfare spending as a percent of GDP has tracked with poverty rates.  As poverty rates go up, Welfare spending goes up.  When poverty rates go down, Welfare spending goes down.  But during these 30 years, the average poverty rate has remained around 11% so we haven’t decreased the percentage of American families living in poverty.  Is the goal of Welfare to keep 11% of American families in poverty?  It appears so because that is exactly what we’ve done!

And look at the Welfare spending as a percent of GDP during the Obama years (the last few dots on each graph).  It’s the highest we’ve seen in the past 90 years (which includes the Great Depression)!   

It is clear from these two graphs that Welfare is not only LOSING the War on Poverty but it has caused the war to devolve into trench warfare – nothing is gained and nothing is lost.  In scientific terms, if an input to a system is not causing a change in the output then it is discarded and the engineer must choose another lever to turn in an attempt to change the system output.  When an input is proven to be inconsequential in the output of the system then that relationship is not causal.

Imagine that you are a doctor and you have a patient that has a bleeding problem.  When the patient experiences major hemorrhaging you employ a large amount of bandages but when the patient has only minor bleeding you still use bandages but don’t use as much.  For months and years, the amount of bandages you use goes up and down with the amount of bleeding.  Does the doctor continue to think that the solution to the problem is related to more bandages or does he look at the underlying problem and attack that instead of focusing on the bandages?

If Leftists continue to push for Welfare spending to remain unchanged then they are either guilty of not understanding this basic causality relationship or they are content on keeping 11% of Americans in poverty and dependent on government assistance.   

Addendum and Further Reading – Leftists will continue to ignore the root problems and avoid the difficult decisions but for a history of Welfare and my suggestions to improve it, you can go to a previous post.

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5 Responses to Welfare and the War on Poverty

  1. You do an invaluable service with the graphs. It’s a travesty that so much hard-earned taxpayer money is burnt extending the failed War on Poverty. If only the lesson could be more firmly embedded in the public consciousness.

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