At the start of the year, I pointed out how politicians used the pandemic as an excuse to increase the long-run trend line of government spending.
Today, let’s look at how one component of the federal budget has contributed to America’s perilous fiscal state.
Here’s a chart from the Economic Policy Innovation Center (EPIC) showing how the burden of redistribution spending has expanded since the pandemic, as well how much the budget for those programs is projected to increase over the next 10 years.
In large part, the growth of redistribution outlays is associated with inflation, so we have an unsavory combination of bad monetary policy and bad fiscal policy.
But here’s another chart from EPIC that is an even bigger indictment of the welfare state. If you divide total spending on so-called means-tested programs by the number of people in poverty, you get more than $31,000.
That’s nearly twice as much money as the poverty level!
By the way, some people look at these numbers and say it would be more efficient to get rid of the programs and simply give every poor $16,650.
After all that would save money, eliminate poverty, and get rid of bureaucracy.
But that simple analysis overlooks the fact that all low-income people in the country would then have an incentive to lose their jobs and become wards of the state.
Heck, that perverse incentive is already there. So the last thing we need is for politicians to make a bad situation even worse.
Guided by the 14th Theorem of Government, there’s several takeaways from the above charts.
- The fiscal burden of welfare spending is enormous.
- The welfare state is grotesquely inefficient.
- Poor people are being trapped in government dependency.
The right solution is to get rid of the Washington welfare state.
Take all the money currently being spending on redistribution, turn it into a block grant, and give the money to the states and let them figure out the best way of dealing with poverty.
But the block grant should shrink over time and eventually disappear. As I wrote two days ago, “states should have full control – and full responsibility – for designing and funding their income redistribution programs.”
