A pretty interesting site that offers some worthwhile numbers. According to the site federal and local governments spend about 350 billion dollars a year on various safety net programs, 13 in all which are listed by the site. When one considers the cost of these programs including their administration cost one has to wonder what sort of savings could be achieved by consolidating them and going to a straight benefit payment scheme.
(I have excluded the big health programs and SSI, I believe one needs to exclude these from safety net programs, Medicaid and Medicare in dealing with the health care industry is a very unique animal and shouldn’t have to have it’s mission muddled by being lumped in with far different programs. SSI has really come to be more of a retirement account system than a true “safety net” program, this is evidenced by the amount of people who receive the benefit despite not being in poverty).
Another point the site makes is that while safety net spending has increased what has increased just as fast are various subsidies to the middle class, things like the mortgage interest deduction, for instance. While this a worthy axe to grind I think that it isn’t quite right to lump the two together. For instance since many subsidies to the middle and upper class occur in tax breaks it is more reasonable to lump that problem in with the deficit problem, creating shortfalls in revenue increases debt, than it is to lump it in with shortfalls in safety net spending. If those revenues were coming in the most likely thing to do with them would be relieve debt not pay out the funds elsewhere.
So, in any rate, if we take 350 billion dollars of spending and divide it up amongst 40 million people living in poverty as a direct payment benefit it gives you $8,750.00 dollars a year. Not a great windfall by any measure. Now it must be remembered that when we count those 40 million people we are including members of families. So if those dollars were spent on a per person basis a family of four would be bringing in $35,000.00 a year. Which interestingly enough is quite close to the number conservative groups have given for the value of welfare programs received by the poor. (Which we know is a flawed number, since very few people apply for and receive that many benefits). So there is room within these totals to give individuals more and families less.
This scenario leads to an argument that without proper oversight this would lead to a lot of abuse within in the system. I find this to be a poor argument and here is the reason, if oversight results in savings far beyond the entirety of administrative costs then this may be a worthwhile argument, however if it does not then you are essentially just punishing people, which we shouldn’t be doing to poor people.
I would have a greater concern, which is that by axing all the administrative jobs you are axing a serious amount of good jobs out of the economy. Yes consumption should remain flat since you are moving that consumptive power to other people, but you are in essence destroying an industry. Even a grossly inefficient industry employs people. This for me is the greatest argument against the direct benefit scheme.
It is a good site that provides much food for thought.