Cash and Non-cash Benefits for Persons with Limited Income: Eligibility Rules, Recipient and Expenditure Data, FY2000-FY2002

Publication Date: November 2003

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Social conditions

Type:

Abstract:

More than 80 benefit programs provide aid -- in cash and noncash form -- that is directed primarily to persons with limited income. Such programs constitute the public "welfare" system, if welfare is defined as income-tested or need-based benefits. This definition omits social insurance programs like Social Security and Medicare.

Income-tested benefit programs in FY2002 cost $522.2 billion: $373.2 billion in federal funds and $149 billion in state-local funds (Table 1). Welfare spending represented almost 19% of all federal outlays, with medical aid accounting for 8% of the budget. Total welfare spending equaled 5% of the gross domestic product and set a new record high, up $45.3 billion (9.5%) from the previous peak of FY2001. In current dollars, spending increased during the year for all forms of aid except jobs and training. Higher medical spending accounted for $32.8 billion of the net increase, and 54 cents of every welfare dollar went for medical assistance. Expressed in constant FY2002 dollars (Table 2), welfare spending increased by 7.9% from the 2001 level.

The composition of welfare spending differed by level of government (Tables 3 and 4). Medical aid consumed 80% of state-local welfare funds, but 43.9% of federal welfare dollars.

Most income-tested programs provide benefits, in the form of cash, goods, or services, to persons who make no payment and render no service in return. However, in the case of the job and training programs and some educational benefits, recipients must work or study. Further, the block grant program of Temporary Assistance for Needy Families (TANF) requires adults to start work after a period of enrollment, the food stamp program imposes work and training requirements, and public housing requires residents to engage in "self-sufficiency" activities or perform community service. Finally, the Earned Income Tax Credit (EITC) is available only to workers.

An unduplicated count of welfare beneficiaries is not available. Enrollment in TANF and food stamps remained far below 1994/1995 peak levels during 20002002, but Medicaid enrollment set a new record high. Average 2002 monthly numbers: Food stamps, 20.2 million; TANF, 5.1 million; and Supplemental Security Income (SSI), 6.9 million. During the year 50.9 million persons received Medicaid services, and in 2001, EITC payments went to an estimated 16.8 million tax filers. Census Bureau data indicate that 5.4 million families with children were poor in 2002 before receiving cash aid from TANF, General Assistance (GA) or the EITC, compared with 6.7 million in 1996 (last full year of the pre-TANF welfare program). Among these families, the EITC was received by 53.7% of those with a female head and by 71.7% of those with a male present (Figure 3).