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How much do we REALLY spend on Welfare?

Whenever you see a pie graph that is meant to represent all government spending. You will probably see a graph like the one at US Government Spending or the one at Wikipedia which shows that “Welfare” spending is 12% of the federal budget. The problem with that is that the government has no spending category called “Welfare”. Therefore, what somebody calls “Welfare” is somewhat subjective and undefinable.

The Office of Management and Budget(OMB) does have a spending category called “Income Security”. The two pie graphs I linked to in the introduction just take that entire category and divides it by total spending to get 12%. In 2009 accounts categorized as “income security” accounted for 533$ billion in spending. According to the government printing offices’ historical tables, table 3.2: Oulays by Function and Subfunction, that spending is broken down into 6 distinct subfunctions.

  1. General retirement and disability insurance
  2. Federal employee retirement and disability
  3. Unemployment compensation
  4. Housing assistance
  5. Food and nutrition assistance
  6. Other income security

But as I described in a previous post, 3 out of the 6 income security subfunctions go to pensions and unemployment – things that must be earned by working and paying into.

The 3 remaining subfunctions cost a combined 284$ billion dollars, but even that doesn’t tell the whole story. Over the last week I’ve taken a more detailed look at each of these subfunctions to get an idea of how that money is spent. What I found was that even in the remaining subfunctions, Food and Nutrition, Housing Assistance, and Other that not all of that spending was spent on the poor.

When I analyzed the “Other” income security subfunction, I graphed how that money was spent by categorizing that spending into 4 different categories:

  1. Not Directed at PoorEarned: Welfare not targeted to poor. The poor may use these programs, but just being poor will not qualify you for these programs.
  2. Direct: Welfare that’s Direct money to the poor
  3. In-direct: Money paid to 3rd parties on behalf of the poor
  4. Poor & Middle Class: These are tax rebates that poor and most middle class people qualify for and use.

I would now like to extend that analysis to the entire 533$ billion that the U.S. government spent on “income security”. Here’s how the numbers break down.

Amount of Income Security Spending(in millions) by Type

(Click chart for Larger Image. See The Numbers for this Chart)

As you can see the vast majority of the money spent in the “Income Security” function of the government is spent on programs not directed at the poor or programs where the income must be earned. If you want to know how I categorized everything, here’s how I did it:

  • Unemployment and Pensions are classified as not-directed at poorEarned.
  • For Food & Nutrition, WIC & SNAP(Food Stamps) are “Direct”, School lunches are “non-direct”, the rest are “not-directed at poor”
  • For Housing Assistance, I categorized the temporary “new homeowner” credit as “Poor & Middle Class” and the rest as non-direct
  • For the rest you can read my previous post on how I broke down “Other Income Security

If you would like more details on why I categorized the programs as such, I suggest you read my previous posts: Income Security, Food and Nutrition, Housing Assistance, and Other Income Security.

If you total up the direct and non-direct spending categories which are all the programs that are meant to help the poor, you will see that Tweet That Thought. I counted off-budget programs since the pie graphs in the beginning counted social security and other “off-budget” accounts. If you only want to go with on-budget expenditures it’s 6.4%, still a far cry from the 12% that most internet graphs will show you. Just for fun I decided to graph those numbers. Feel free to copy these graphs to show anyone who thinks we actually spend 12% of the federal budget helping the poor.

Welfare Spending as percentage of Entire 2009 Budget Welfare Spending as percentage of 2009 on-budget expenses

(Click charts for Larger Images.)

Source for all numbers is the Public Budget Database

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