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Saturday, December 08, 2012

Welfare Spending Equates To $168 Per Day For Every Household In Poverty: Median Income $137 A Day

By Susan Duclos

Welfare benefits can and should be available to help those unable to work, but is meant as a temporary measure for those able to work but have fallen on hard times, but what happens when the government makes it more profitable for those living in poverty to receive welfare benefits than it is to go out and work?

Answer: Out of control government spending that equals more than Social Security, Medicare, or national defense.

Senate Budget Committee Ranking Member, Jeff Sessions has released a chart that calculates data from CRS, the Census Bureau and the Oxford Handbook of State and  Government Finance, that shows that total welfare spending equates to nearly $168.00 per day for every household in poverty and if converted to cash payments, the hourly rate exceeds median income by 20 percent. (That is before the median income workers pay taxes!) - H/T TWS

 Based on data from the Congressional Research Service, cumulative spending on means-tested federal welfare programs, if converted into cash, would equal $167.65 per day per household living below the poverty level. By comparison, the median household income in 2011 of $50,054 equals $137.13 per day. Additionally, spending on federal welfare benefits, if converted into cash payments, equals enough to provide $30.60 per hour, 40 hours per week, to each household living below poverty. The median household hourly wage is $25.03. After accounting for federal taxes, the median hourly wage drops to between $21.50 and $23.45, depending on a household’s deductions and filing status. State and local taxes further reduce the median household’s hourly earnings. By contrast, welfare benefits are not taxed.

The universe of means-tested welfare spending refers to programs that provide low-income assistance in the form of direct or indirect financial support—such as food stamps, free housing, child care, etc.—and which the recipient does not pay into (in contrast to Medicare or Social Security). For fiscal year 2011, CRS identified roughly 80 overlapping federal means-tested welfare programs that together represented the single largest budget item in 2011—more than the nation spends on Social Security, Medicare, or national defense. The total amount spent on these federal programs, when taken together with approximately $280 billion in state contributions, amounted to roughly $1 trillion. Nearly 95 percent of these costs come from four categories of spending: medical assistance, cash assistance, food assistance, and social / housing assistance. Under the President’s FY13 budget proposal, means-tested spending would increase an additional 30 percent over the next four years.

In 1996 President Bill Clinton signed the Personal Responsibility and Work Opportunity Reconciliation Act. Under the act, the federal government gives annual lump sums to the states to use to assist the poor. In turn the states had to adhere to certain criteria to ensure that those receiving aid are being encouraged to move from welfare to work. While criticized at the time, the measure was a resounding success as welfare rolls decreased and employment increased.

Recently Barack Obama gutted Clinton's welfare reform by issuing a new directive stating that the traditional TANF work requirements can be waived or overridden by a legal device called the section 1115 waiver authority under the Social Security law.

Through a number of actions by the Obama administration over the last four years, more people are now on foodstamps and receiving welfare benefits than has been seen in recent history.

Those numbers are about to get larger.

The American economy is like a pie that gets bigger when investors invest their money, businesses start, grow, and employ more workers, thereby putting more taxpayers into the system and less on welfare.

Let's look at what is happening instead, Barack Obama wants to raise taxes on the so-called rich, which includes 24 percent of small businesses, 2.1 million of them, which employ 93 percent of all workers that work in small businesses. Added to that, more of the taxes written into Obamacare are about to go into effect.

Businesses owners across the country have confirmed that they are planning to hire less in 2013, fire more people and others have cut worker's hours to under 30 hours a week to avoid the additional costs of having to provide healthcare for full time workers, which under the Obamacare law, is now workers that work more than 30 hours.

Wisconsin and Iowa business owners have cited taxes, Obamacare, and regulations, as the reasons for the decrease in planned hirings and the increase in planned firings. Gallup has confirmed that it is a nationwide trend.

How many of those planned layoffs will result in workers no longer earning a paycheck and instead being forced to apply for welfare benefits?

One would think if unemployment went down, more people would be working and less would need welfare, right?

Wrong. The exact opposite is happening. Unemployment is going down but foodstamp enrollment is surging.

The recent unemployment report by the labor department shows why what should be happening is not. Unemployment dropped to 7.7 percent, not because more people are working, but because 350,000 have completely dropped out of the workforce.

The result? The topline unemployment numbers decreases, yet welfare usage increases.

The real kicker here is that Obama knows what his policies have done and what his proposed policies will do, as evidenced by his budget proposal which would increase welfare spending by 30 percent over the next four years.

Who does Obama want to pay that extra 30 percent? Businesses owners and the so-called rich and if they are paying that money to the government, it is that much less they have to spend on their businesses, invest and hire more workers. It is a viscous circle.

The American economy, that pie, is getting smaller yet there are more people lining up to get a slice.

What happens when the pie is gone?

Answer: You have Obama's economy, where it pays better to not work and go on welfare than it does to work to support yourself and your family.