How Much Does the Nation Spend on Welfare? - Public Aid

Public assistance has usually included such programs as Aid to Families with Dependent Children/Temporary Assistance for Needy Families (AFDC/TANF), General Assistance, and Medicaid. In 2000 public assistance accounted for 43 percent of all public aid spending—a 48 percent increase since 1980. According to the U.S. Census

TABLE 1.1
Government expenditures for income-tested benefits by type of benefit, 1980–2000
[In millions of dollars (105,312 represents $105,312,000,000). For years ending September 30. Programs covered provide cash, goods, or services to persons who make no payment and render no service in return. In case of many programs, including family cash welfare, food and housing programs, job and training programs and some educational programs, some recipients must work or study. Most of the programs base eligibility on individual, household, or family income, but some use group or area income tests; and a few offer help on the basis of presumed need. Constant dollar figures are based on the Consumer Price Index for all Urban Consumers]

	Total spending		Constant (2000) dollars
Level of government and year	Current dollars	Constant (2000) dollars	Medical benefits	Cash aid	Food benefits	Housing benefits	Education benefits	Jobs/training	Services	Energy aid
Total
1980	105,312	224,866	69,606	61,332	28,924	21,869	11,052	18,589	9,818	3,675
1985	144,291	231,158	79,204	60,294	32,666	24,207	15,972	6,370	8,773	3,672
1990	213,055	282,815	115,250	72,019	33,326	23,926	19,102	5,631	11,267	2,294
1993	314,451	374,152	170,155	89,003	43,237	32,672	17,941	6,346	12,889	1,909
1994	352,487	408,624	187,153	100,067	43,909	34,142	18,015	6,393	16,633	2,311
1995	371,109	418,484	196,922	103,291	43,558	35,764	18,146	6,132	12,775	1,896
1996	375,310	411,725	195,199	101,426	42,876	35,656	17,967	5,138	12,090	1,373
1997	384,465	410,821	198,815	99,463	39,908	35,561	18,737	4,246	12,587	1,502
1998	394,687	414,944	203,549	96,269	36,906	34,681	19,052	5,142	17,939	1,405
1999	408,405	421,379	213,619	96,576	35,718	29,848	19,058	5,831	19,291	1,439
2000	436,985	436,985	225,858	91,703	34,347	34,906	20,385	7,347	20,724	1,715
Federal
1980	80,679	172,268	41,421	40,522	27,948	21,869	10,441	18,416	7,975	3,675
1985	106,061	169,912	44,664	39,227	31,018	24,207	15,245	6,240	5,689	3,622
1990	151,990	201,756	66,671	48,378	31,687	23,926	18,267	5,277	5,421	2,129
1993	225,768	268,632	101,200	63,479	41,374	31,089	17,030	5,677	6,958	1,825
1994	250,066	289,891	108,609	73,494	41,857	32,270	16,968	5,635	8,836	2,222
1995	262,899	296,460	114,359	76,594	41,494	33,142	17,069	5,217	6,779	1,805
1996	268,097	294,110	114,009	76,804	40,770	32,958	16,919	4,432	6,924	1,293
1997	274,153	292,947	115,176	76,773	37,799	32,937	17,641	4,056	7,130	1,434
1998	280,138	294,516	116,604	76,687	34,869	31,939	17,857	4,390	10,848	1,322
1999	291,022	300,267	123,476	76,726	33,618	29,848	17,830	4,929	12,490	1,351
2000	306,520	306,520	131,468	72,516	32,182	29,261	19,043	6,219	14,201	1,630
State and local
1980	24,633	52,598	28,185	20,810	976	–	611	173	1,843	–
1985	38,230	61,246	34,540	21,067	1,648	–	727	130	3,084	50
1990	61,065	81,059	48,579	23,641	1,639	–	835	354	5,846	165
1993	88,683	105,520	68,955	25,524	1,863	1,583	911	669	5,931	84
1994	102,421	118,733	78,544	26,573	2,052	1,872	1,047	758	7,797	89
1995	108,210	122,024	82,563	26,697	2,064	2,622	1,077	915	5,996	91
1996	107,213	117,615	81,190	24,622	2,106	2,698	1,048	706	5,166	80
1997	110,312	117,874	83,639	22,690	2,109	2,624	1,096	190	5,457	68
1998	114,549	120,428	86,945	19,582	2,037	2,742	1,195	752	7,091	83
1999	117,383	121,112	90,143	19,850	2,100	(NA)	1,228	902	6,801	88
2000	130,465	130,465	94,390	19,187	2,165	5,645	1,342	1,128	6,523	85
–Represents or rounds to zero. NA Not available.
SOURCE: "No. 515. Government Expenditures for Income-Tested Benefits by Type of Benefit: 1980–2000," in "Social Insurance and Human Services," Statistical Abstract of the United States: 2002, U.S. Census Bureau, Washington, DC, 2002 [Online] http://www.census.gov/prod/2003pubs/02statab/socinsur.pdf [accessed January 7, 2004]

Bureau, by 2000 the cost of medical benefits had risen 69 percent since 1980, while the cost of cash aid programs increased by a third. In 1980 medical and cash aid programs accounted for 58 percent of public aid spending; in 2000 these programs absorbed 72 percent of public aid budgets. Table 1.1 breaks down all social welfare spending by specific categories and by state and federal spending.

The portion of the GDP spent on social welfare increased only moderately between 1975 and 2000. In 2000 public aid accounted for about 4 percent of the nation's GDP, an increase of approximately one percentage point from expenditures in the late 1970s and 1980s and one-half point since 1995. However, public health and medical costs nearly doubled in the twenty years from 1975 to 1995, from 3.2 percent of the GDP in 1975 to 6.1 percent of the GDP by the mid-1990s. (See Table 1.2.) This increase reflects, among many factors, the growing number of older Americans, who have greater need of medical services, as well as the increasing cost of medical care in general.

A rapid increase occurred in public spending on health and medical care between 1990 and 2000. (See Table 1.3.) In 1990 the government spent $282.5 billion on health care. Ten years later, government spending on health and medical care had more than doubled, to nearly $587.2 billion. Medicare and public assistance payments (primarily Medicaid) accounted for almost three-quarters of that sum. In 1990 the government paid about $110.2

TABLE 1.2
Social welfare expenditures under public programs as percent of gross domestic product and total government outlays, 1980 to 1995 [493 represents $493,000,000,000]

	Total expenditures				Federal				State and local government
			Percent of—				Percent of—				Percent of—
Year	Total (bil. dol.)	Percent change1	Total GDP2	Total govt. outlays	Total (bil. dol.)	Percent change1	Total GDP2	Total federal outlays	Total (bil. dol.)	Percent change1	Total GDP2	Total state outlays
1980	493	14.7	18.6	57.2	303	15.2	11.4	54.4	190	13.8	7.2	62.9
1985	732	8.0	18.4	54.4	451	7.1	11.3	48.7	281	9.3	7.1	68.8
1990	1,049	9.6	18.5	58.2	617	9.1	10.9	51.4	432	10.3	7.6	74.0
1992	1,267	9.2	20.6	63.7	750	10.8	12.2	57.4	517	7.0	8.4	77.6
1993	1,367	7.8	21.1	66.6	805	7.2	12.4	60.0	561	8.5	8.7	80.7
1994	1,436	5.1	21.0	64.5	853	6.1	12.5	57.4	583	3.7	8.5	80.4
1995	1,505	4.8	20.9	67.5	888	4.1	12.4	60.2	617	5.8	8.6	83.6
1Percent change from immediate prior year.
2Gross domestic product.
SOURCE: "Social Welfare Expenditures Under Public Programs as Percent of GDP and Total Government Outlays: 1980 to 1995," in Statistical Abstract of the United States, 2000, U.S. Census Bureau, Washington, DC, 2000

billion for Medicare; in 2000 it spent $224.4 billion. Similarly, spending on public assistance medical payments (Medicaid) in 1990 reached $78.7 billion, but by 2000 Medicaid accounted for over $208.5 billion. These are huge changes involving enormous sums of money over a relatively short time. This situation helps to explain some of the problems governments face in trying to control their budgets and why health care has become a major national issue.

Welfare Payments

According to the U.S. Bureau of the Census, in 2000 the two major categories of public cash benefit payments paid out about $50 billion. Family assistance payments (primarily AFDC/TANF, not including Medicaid) totaled $18.3 billion, while $31.7 billion was paid out for SSI. Spending for SSI increased by 90 percent between 1990 and 2000. Much of this growth reflects the increase in the number of retired Americans, many of whom need Supplemental Security Income in order to live. By contrast, expenditures for family assistance declined by 4.7 percent during the same period. (See Table 1.4.)

Table 1.5 uses fiscal year 2000 dollars to compare how federal funds have been divided among various types of income-tested benefits from 1968 through 2000. (See Table 1.5.)