US Welfare Programs, the Myths Versus the Facts

The 6 Major Welfare Programs

Six major welfare programs: temporary assistance for those in need, supplemental nutrition assistance programs, medicaid, earned income tax credit, supplemental security income, housing assistance.

Image by Adrian Mangel © The Balance 2019

Welfare programs are government subsidies to the poor. Recipients must prove their income falls below a target, which is some percentage of the federal poverty level. In 2019, that's $25,750 for a family of four.

Welfare Programs in the United States

There are six major U.S. welfare programs. They are Temporary Assistance for Needy Families, Medicaid, Supplemental Nutrition Assistance Programs, Supplemental Security Income, Earned Income Tax Credit, and Housing Assistance.

The federal government provides the funding for these programs. The states administer the programs. Some provide additional funds.

Often Congress reduces funds for these programs. If it does it without lowering the states' responsibilities, that creates an unfunded mandate. For example, the 1998 reduction in federal food stamp administration costs added $5 million to state budgets. 

Welfare programs are based on a family's income. To qualify, their income must be below an income based on the federal poverty level. Entitlement programs base eligibility upon prior contributions from payroll taxes. The four major U.S. entitlement programs are Social Security, Medicare, unemployment insurance, and worker’s compensation.

The Six Major U.S. Welfare Programs Myths Versus Facts

TANF is the Temporary Assistance for Needy Families program. Most people refer to this program as welfare. TANF provided income to 1.2 million families in October 2018. It benefited 822,192 adults and 2.3 million children.

In 2016, TANF assisted only 23% of the families living in poverty. On average, a three-person family received $447 a month. Despite this help, they still lived below the poverty line.

Welfare received a bad reputation due to President Ronald Reagan's 1976 presidential campaign. He portrayed the welfare queen who cheated the system to get enough benefits to drive a Cadillac. He also warned of how welfare created a cycle of poverty. 

Fraud like Reagan described has been cut since 1996. That's when President Bill Clinton created TANF out of the ashes of Aid to Families with Dependent Children. The number of families "on the dole" dropped from 10 million before welfare reform to 1.9 million in 2017. The new requirements were the reason for this decrease.

Medicaid paid for health care for 65 million low-income adults in 2019. The largest share, which was 50%, went to 29.5 million children. Next, it covered 19.2 million adults, mostly parents of these children. It pays for 40% of all U.S. births.

Medicaid also paid health expenses for 4.8 million blind and disabled people. The smallest category was 7.2 million low-income seniors. It paid for any health costs that Medicare didn't cover for eligible recipients.

The Affordable Care Act increased Medicaid coverage by 28%. It raised the income level and allowed single adults to qualify.

Child's Health Insurance Program. In addition to Medicaid, 6 million children received additional benefits from CHIP. It covers hospital care, medical supplies, and tests. It also provides preventive care, such as eye exams, dental care, and regular check-ups.

The Supplemental Nutrition Assistance Program is more commonly called food stamps. It gave food vouchers to 39 million people in 2018. The average individual received $127 a month. The total federal cost for SNAP was $65 billion. Of that, 93% was spent on food and the rest on administrative costs. It requires recipients without children to work after three months. It waives the requirement for those who live in areas with high unemployment.

There's an additional food stamp program for nursing mothers and young children. The Special Supplemental Food Program for Women, Infants, and Children provides food or vouchers, education, and referrals to help feed pregnant women and children up to age six. In 2017, 7.3 million people received WIC each month. Of those, more than 75% were children or infants.

The Child Nutrition Program provides free or reduced-cost lunches to 30 million children. It costs the federal government $13.8 billion.

Supplemental Security Program provides cash to help the aged, blind, and disabled to buy food, clothing, and shelter. As of 2018, roughly 8.2 million people received an average of $551 per month. Of those, 7.3 million are blind or disabled.

Earned Income Tax Credit is a tax credit for families with at least one child. For tax year 2018, a family of four, in which couples are married and filing jointly, must earn less than $51,492 a year to qualify. In tax year 2017, over 27 million received credits totaling $65 billion for an average of $2,455 per taxpayer. EITC lifted approximately 9.4 million people out of poverty, half of whom were children. It costs just 1% of the amount paid out to administer it. Unfortunately, almost one-fourth of the payments are in error. An unknown amount is fraudulent.

Housing Assistance is provided by 1.2 million units of public housing. The Housing Choice Voucher Program gives rent certificates for approved units. The subsidy allows recipients to pay no more than 30% of their income. Local agencies administer it to 2.2 million renters. This is the old Section 8 program. The Public Housing Agency allows​ some families to use the voucher to purchase a modest home.

The Low-Income Home Energy Assistance Program provides energy assistance and weatherization programs. In 2018, it provided $3.64 billion in block grants to the states.

Myths About Welfare Programs in General

A 2018 Rasmussen Report survey found that 61% of Americans believe that too many people are dependent on government financial aid.

The residents don't realize that they themselves are benefiting from federal aid given to their state governments.

In 2012, presidential candidate Mitt Romney said that 47% of the population would vote Democrat no matter what. He claimed it was because they receive some type of federal assistance. Many people believe this myth. In an interview with Vox, political scientist Suzanne Mettler said her research shows that welfare and food stamp recipients don't vote much. They are so low income that they are too busy surviving to go to the polls.

Research by the Tax Foundation and Gallup polls shows that in fact, the states that rely the most on federal benefits vote Republican. Many of the voters in these states often aren't aware of how dependent they are on tax credits, such as the deduction for home mortgage interest. They only consider visible federal benefits, such as welfare checks or food stamps. As a result, they don't think the government has done much for them personally.

Another myth is that immigrants come to the United States to collect welfare and other benefits. According to the myth, most undocumented immigrants are on welfare. But the Department of Homeland Security found that less than 1% of this population is on welfare. That's about the same as native-born Americans.

A similar myth says that undocumented immigrants come to the United States to have "anchor babies" for free. But the report found that only 15.5% of undocumented immigrants benefit from Medicaid. Around $2 billion a year goes to hospitals who must care for anyone who shows up at the emergency room. It's similar to the 16.1% of native-born Americans who use Medicaid.

The study found that 9.1% of undocumented immigrants used food stamps, compared to 11.6% of native-born. Many undocumented immigrants receive these benefits because they live in households with eligible Americans.

The Bottom Line

The United States has six major welfare programs: TANF, Medicaid, CHIP, SNAP, EITC, Supplemental Security Income, and housing assistance. To be eligible, recipients' income must be below the poverty levels set by the states. There are other limits as well. TANF recipients must get a job after two years. They won't receive additional benefits should they have another child while under this program.

Mandatory programs such as Social Security and Medicare aren't welfare programs. They are entitlement programs based on one’s payroll tax contributions.

Many Americans believe that too much federal aid is being doled out. Ironically, most of them live in states that receive the most federal aid. They don't know it because the aid is invisible, unlike food stamps and TANF checks. This invisible aid includes jobs from federal contracts and tax credits.

Other Americans believe too many undocumented immigrants are on welfare. But only a small percentage of undocumented immigrants benefit from food stamps and Medicaid. Many are only able to do so because they live in homes with eligible U.S. citizens.

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