Welfare now 21% of Federal Budget

SixNein

Welfare, as it's normally defined (the welfare check), refers to the federal program called TANF or "Temporary Assistance to Needy Families.". And spending on it has been decreasing for over a decade. We currently spend about 16.5 billion on it per year.




Welfare, as been re-defined here, is more about providing general welfare to the public. And the entire federal budget should be included in such a definition.

So my thought: Republicans are manufacturing a talking point to use in elections. It's untrue, but truth doesn't really matter.

Pythagorean

I think I figured out the problem. We've extended human lifetime. And.. baby boomers.

Healthcare: 916

Major Hitters for Healthcare:

Medical Service for Seniors - 530
Grants to States for Medicaid - 282

Welfare: 422

Major Hitters for Welfare:

Supplemental Nutrition Assistance Program - 76
Unemployment - 77
Supplemental Security Income Program - 54
Payment Where Earned Income Credit Exceeds Liability for Tax - 52
Housing - 57

russ_watters

Does anyone ever check definitions? It was just yesterday that I suggested it might be a good idea:
http://dictionary.reference.com/browse/welfare http://en.wikipedia.org/wiki/Welfare

The US program labeled "welfare" is not the only program that fits the definition and that's not a conservative conspiracy to broaden the definition. That's shoe's generally on the other foot around here.

Programs like food stamps exist because it is better to earmark the money for specific purposes related to standard of living, rather than just handing the poor a big bag of cash. The so titled "Welfare" program is just left-over, miscellaneous bag of cash we hand the poor that isn't earmarked for specific standard of living use.

russ_watters

That's a problem? I thought it was a goal and a good thing?

Why were these programs set up like pyramid schemes that relied on a broad base of payers to fund those getting the money out if the goal has always been to extend lifespans and we'd been succeeding? Didn't our benevolent President FDR know this when he handed us this ticking time bomb?

Pythagorean

Why do you call FDR benevolent?

The baby boom had just started when FDR died. There's actually a hump in the birth rate from 1940 to 1965, it wasn't business as usual; the rate of increase increased. And the rate of increase has since decreased dramatically. And now we're currently seeing the baby boomers get into retirement and programs like... Medical Service for Seniors.

But I wasn't seriously proposing reducing human life.

russ_watters

The crack about FDR was sarcasm. FDR is viewed as one of our best Presidents by liberals and one of our worst by conservatives. I'm a conservative.

The Baby Boom is just a diversion. It doesn't change the fact that these programs, as designed, had a trajectory toward insolvency. The Baby Boom just changes the slope of the trajectory a little. Though I would debate that it hurt: if anything, in a wider view, the Baby Boom helped, since the "boom" is inverted. The Baby Boom was preceded by a steep drop in births.

Anyway, I am not a person who would be OK with the program (or any program) failing as long as I'm already dead when it happens, and it seems to me that that's a lot of the motivation for fighting against changes in these programs. But even the 'it won't be bankrupt until at least 2035 and even then there will still be some money to pay' argument is flawed, to me. In my view, the programs failed decades ago and people just haven't accepted it yet. Why?

Because as a sort of forced-savings retirement program, your money should be growing*. You should be getting back a lot more money than you put in. It used to be that way, but it isn't anymore. Most people won't be getting back what they paid in and that is a net loss versus a real retirement plan and old-age healthcare savings fund. Our failure to deal with this problem is damaging our retiree standard of living.

*Calculations I've done on my own retirement show that assuming 3% annual pay raises and 5% investment growth (both after inflation), after 30 years of investing you should have roughly 3x as much money as you've invested. If after you retire the money grows at 3% (due to more cautious investing) and you live another 25 years, it should grow another 1x over what you put in. So overall, a relatively conservative strategy should net you 4x what you paid in. Instead, I'll be getting less than 1x. Given the 15% witholding for SS and Medicare (including the employer portion) and projecting over a reasonably successfull engineer's career, these poorly conceived programs are going to drain millions of dollars from my retirement.

This is not greed talking. These millions of dollars that I could have had are not going to help the needy. They are being wasted on propping up flawed programs. If the programs had been designed better, we would all be getting more back.

Oltz

Well said Russ I concur.

ParticleGrl

Are you really sure you are going to find 5% after-inflation investment growth? Due to my youth, I largely missed the 90s boom, and over the last decade I'm averaging a bit over 3% BEFORE inflation and I'm invested in broad index funds, so I'm pretty sure I'm matching the market. I hope we come roaring back, but most estimates are another decade to full employment, which means further low growth.

What happens if the timing of your retirement and a massive financial crash happen to coincide? I have family members who were counting on their 401ks and on downsizing their home in retirement in order to live comfortably. Unfortunately, the crash was badly timed for them and they ended up seeing most of their nest egg wiped out, and the low interest rates now mean they've had to dip into their savings faster than they thought. They now rely at least partially on their social security and are glad they have it.

mheslep

Exactly. These kind of increases in benefits per head



would have crashed the system long ago without the large simultaneous increase in tax paying labor force brought about the baby boom.

mheslep

The general rule on investment, as I've understood it, is that as retirement approaches one moves into bonds or similarly stable securities, so that a ten or 15 year reversal in otherwise strong growth stocks is avoided. Staying in stocks is a decision to gamble on postponing retirement should the downturn take place.

Pythagorean

conservative/liberal/sarcasm... these things don't contribute much to the discussion.

Social factors are amongst some of the more chaotic, especially in economic systems. I don't see how you can separate two idealized trajectories (new deal vs. baby-boomers) in a nonlinear system, it's not like superposition and zero-sum applies. There is damping/sources, amplification, feedback, etc. Certainly a population injection can cause breakdowns and crises where saturation occurs. If everything were linear, you could predict out to infinity.

I'm not arguing that FDR did "the right thing", but I especially doubt anyone on the ground in 2012 can appreciate all the intersecting factors presented to the administration at the time. Anyway, since we can't go back in time, complaining about the past isn't really part of the solution.

So we know that the biggest single spending item in welfare is medical services for old people. Cutting all spending on food stamps would be a meager contribution compared to cutting senior medical spending in half (for instance, not for argument).

That's what my financial adviser says. Take more risks when you are younger. The more time you throw the die, the better your chance of winning. You have time to get over the losses and throw the die again when you're young. As long as you keep your risks to a manageable level, it generally pays off.

Pythagorean

How do we know the raising pensions aren't a result of the population boom requiring more services? What sectors of government made up the pensions? We need another pie chart.

SixNein

There is a difference between general welfare and welfare the program.

The talking point conservatives are shooting for is confusing one with the other. So they lumped a great deal of different things together and called them "welfare."

For example, the child tax credit can be fully claimed for up 110,000 dollar income. Median household income is much less then 110,000 dollars.

According to republicans, this is "welfare."

russ_watters

You just missed a boom and therefore have invested in a period when growth is below average. But the lifetime average of the stock market is roughly 8% after inflation, so I wouldn't expect that trend to continue. Planning for 5% is conservative.

russ_watters

Agreed, but I didn't find it to be worth pointing that out when you did it.

Again, none of that is relevant. Regardless of the exact shape of the trajectory, the point is the trajectory was always downward. No, but acknowledging what the flaws are is critical for correcting them. But unfortunately, few people acknowledge the worst flaw -- the one that means the programs have already failed. That they are already causing financial hardship.

russ_watters

Programs, yes. The difference is on which side of the poverty line the programs fall. Please provide a source for the claim in your last sentence.

And regardless of that, you still have the shoe on the wrong foot here. You're claiming that conservatives abuse the definition of "welfare", when all we know for sure that at least one liberal does: you did. But even if you can show that some conservative somewhere abused the definition, that person isn't posting in this thread, so you're castigating no one. More to the point, the existence of that person abusing the definition in one direction still wouldn't make it ok for you to abuse it in the other.

At this point, I would appreciate it if you would explicitly acknowledge your error and what the definition actually says/applies instead of continuing to weasel around it. I'm referring to this: All of that is wrong or at least mis-applied. The links I posted and the links others posted are correct: "Welfare programs" are more than just "the Welfare program".

mheslep

The chart is plotted per capita, in constant dollars.

The fraction of the overall population on federal pension has also increased dramatically. In 1950 2% drew SS benefits, and in 2008 16%.

The pension figure from the chart is $820B in 2012, spread over 314 million people. The pension makeup is almost all social security, $778B/yr, with the balance going to federal employee ( currently 2.2 million on the job) retirement/disability. Interestingly, next year's 2013 federal pension total is estimated to be $58B more, $878B, 2014 $925B, ...