Myth: The U.S. has wasted over $5 trillion on the war on poverty.
Fact: The U.S. has spent about $700 billion on the war on poverty.
Since the war on poverty was declared in the early 60s, the U.S.
has spent only $700 billion on AFDC and welfare, the two largest welfare
programs for the poor by far. The inflated $5 trillion figure includes
many middle class entitlement programs like student loans, school lunches,
job training, etc. Although this is indeed social spending, it is not spent
on the poor, and therefore can't be used to argue against the war on poverty.
In a 1994 congressional hearing, conservative think-tanker Robert
Rector invented one of the catchiest sound bites of the 90s:
"Since the onset of the War on Poverty, the United States has
spent over $5.3 trillion on welfare. But during the same period, the official
poverty rate has remained virtually unchanged." (1)
Like many sound bites, this one is completely false. When President
Johnson declared war on poverty in 1964, the poverty rate was 19 percent.
By 1973, this was cut to 11.1 percent, approximately where it stayed for
the rest of the decade. Poverty only began growing again during the sharp
cutbacks in welfare benefits that occurred during the Reagan years. (See
appendix A below for historical poverty rates.)
Nor has the U.S. spent anything close to $5.3 trillion on the war on
poverty. Between 1964 and 1994, the U.S. spent less than $500 billion on
Aid to Families with Dependent Children (AFDC), the program normally referred
to as "welfare." (2) Between 1962 and 1994, the U.S. spent about
$218 billion on the bonus value of food stamps. (3) These are by far the
two largest welfare programs for the poor. There are others, but their
expenditures are minuscule in comparison, and they were also added much
later in the war on poverty. But let's put everything in perspective: the
Pentagon spent this much in the last three years alone. And today, AFDC
and food stamps each comprise about 1 percent of the federal budget.
Rector's figure of $5.3 trillion is extremely disingenuous. He cited
this figure in reference to the "War on Poverty," but to arrive
at such an inflated figure, he had to include solidly middle-class entitlement
programs like student loans, school lunches, job training, and Medicaid.
Medicaid is by far the largest item in this figure, but three-fourths of
all Medicaid goes to the elderly, blind and otherwise disabled. Furthermore,
Medicaid represents windfall profits for hospitals and doctors, and can
hardly be described an "anti-poverty" program. In fact, a distinguished
panel from the National Academy of Sciences has concluded that Medicaid,
like any private insurance, should not be counted as annual income for
its recipients, especially since the payments go directly to hospitals
and doctors. (4)
The inclusion of middle-class entitlements in a figure intended to
discredit the "War on Poverty" is a direct reflection on the
statistical trustworthiness of conservative think tanks.
Return to Overview
1. Robert Rector, Heritage Foundation, testimony before the House
Subcommittee on Human Resources, August 9, 1994.
2. "What Do We Spend on 'Welfare'?," Center for Budget and
3. U.S. Department of Agriculture, Food and Nutrition Service, in Social
Security Bulletin, Annual Statistical Supplement, 1995.
4. Center on Budget and Policy Priorities, "The Cato Institute
Report On Welfare Benefits: Do Cato's California Numbers Add Up?"
(Washington: March 7, 1996).
Poverty Rate (7)
1960 22.2 < recession year
1964 19.0 < Johnsonís Great Society begins
1970 12.6 < recession year
1974 11.2 < recession year
1975 12.3 < recession year
1976 11.8 < individual benefits level off, decline
1980 13.0 < recession year
1981 14.0 < Reagan-era cuts in individual benefits
1982 15.0 < recession year
1990 13.5 < recession year
1991 14.2 < recession year
Source: U.S. Bureau of the Census, Current Population Reports, P-60