The US has wasted over $5 trillion on the war on poverty.

Myth: The U.S. has wasted over $5 trillion on the war on poverty.

Fact: The U.S. has spent about $700 billion on the war on poverty.

Summary

Since the war on poverty was declared in the early 60s, the U.S. has spent only $700 billion on AFDC and welfare, the two largest welfare programs for the poor by far. The inflated $5 trillion figure includes many middle class entitlement programs like student loans, school lunches, job training, etc. Although this is indeed social spending, it is not spent on the poor, and therefore can't be used to argue against the war on poverty.

Argument

In a 1994 congressional hearing, conservative think-tanker Robert Rector invented one of the catchiest sound bites of the 90s:

"Since the onset of the War on Poverty, the United States has spent over $5.3 trillion on welfare. But during the same period, the official poverty rate has remained virtually unchanged." (1) Like many sound bites, this one is completely false. When President Johnson declared war on poverty in 1964, the poverty rate was 19 percent. By 1973, this was cut to 11.1 percent, approximately where it stayed for the rest of the decade. Poverty only began growing again during the sharp cutbacks in welfare benefits that occurred during the Reagan years. (See appendix A below for historical poverty rates.)

Nor has the U.S. spent anything close to $5.3 trillion on the war on poverty. Between 1964 and 1994, the U.S. spent less than $500 billion on Aid to Families with Dependent Children (AFDC), the program normally referred to as "welfare." (2) Between 1962 and 1994, the U.S. spent about $218 billion on the bonus value of food stamps. (3) These are by far the two largest welfare programs for the poor. There are others, but their expenditures are minuscule in comparison, and they were also added much later in the war on poverty. But let's put everything in perspective: the Pentagon spent this much in the last three years alone. And today, AFDC and food stamps each comprise about 1 percent of the federal budget.

Rector's figure of $5.3 trillion is extremely disingenuous. He cited this figure in reference to the "War on Poverty," but to arrive at such an inflated figure, he had to include solidly middle-class entitlement programs like student loans, school lunches, job training, and Medicaid. Medicaid is by far the largest item in this figure, but three-fourths of all Medicaid goes to the elderly, blind and otherwise disabled. Furthermore, Medicaid represents windfall profits for hospitals and doctors, and can hardly be described an "anti-poverty" program. In fact, a distinguished panel from the National Academy of Sciences has concluded that Medicaid, like any private insurance, should not be counted as annual income for its recipients, especially since the payments go directly to hospitals and doctors. (4)

The inclusion of middle-class entitlements in a figure intended to discredit the "War on Poverty" is a direct reflection on the statistical trustworthiness of conservative think tanks.

Return to Overview

Endnotes:

1. Robert Rector, Heritage Foundation, testimony before the House Subcommittee on Human Resources, August 9, 1994.

2. "What Do We Spend on 'Welfare'?," Center for Budget and Policy Priorities.

3. U.S. Department of Agriculture, Food and Nutrition Service, in Social Security Bulletin, Annual Statistical Supplement, 1995.

4. Center on Budget and Policy Priorities, "The Cato Institute Report On Welfare Benefits: Do Cato's California Numbers Add Up?" (Washington: March 7, 1996).

APPENDIX A



Poverty Rate (7)



1959   22.4%

1960   22.2  < recession year

1961   21.9

1962   21.0

1963   19.5

1964   19.0  < Johnson’s Great Society begins

1965   17.3

1966   14.7

1967   14.2

1968   12.8

1969   12.1

1970   12.6  < recession year

1971   12.5

1972   11.9

1973   11.1

1974   11.2  < recession year

1975   12.3  < recession year

1976   11.8  < individual benefits level off, decline

1977   11.6

1978   11.4

1979   11.7

1980   13.0  < recession year

1981   14.0  < Reagan-era cuts in individual benefits

1982   15.0  < recession year

1983   15.2

1984   14.4

1985   14.0

1986   13.6

1987   13.4

1988   13.0

1989   12.8

1990   13.5  < recession year

1991   14.2  < recession year

1992   14.8

1993   15.1



Source: U.S. Bureau of the Census, Current Population Reports, P-60

series.