The welfare state is a crisis that has grown too large to be supported economically. The people cannot live without it and cannot live with it. Social spending now dominates government-spending standing at 44.6% of the budget by 2007. Welfare state requires fast economic growth and large population of youth to support the old. The economic and demographic situation of Washington has changed adversely with the recent economic crisis dealing the final blow to the shaky equilibrium between welfare state and the sluggish economy. Currently, government debt is too high and the government bonds are now too risky.
The modern welfare system is no longer a sustainable affair for the government. The time for reckoning is upon the welfare state. The welfare state as a political institution is not adapted for change. The welfare state ones designed to improve social security is now and engine for insecurity. There is no balance in sight between personal security and sustainable economic growth. Currently, almost 20% of the budget is for relieving poverty through food stamps, Medicaid, unemployment insurance, and most recently Medicare. This amounts to an average of 7,200 dollars per person every year. In the next fiscal year, the government plans to increase taxes, especially on the private sector by more than 500 billion dollars. The government also plans to cut federal spending. Whereas these measures may balance the budget, this is only for the short-term. To bring the budget to long-term balance, the government must consider reducing welfare state, which together with health care constitutes 65% of federal spending.
Theoretically, increasing public welfare could reduce the negative effects of the reducing private welfare; however, the public sector is also facing enormous cost pressures. The Obama health-care reflect this logic; however, the Congressional Budget Office project that the government debt with double by 2019 to constitute 82% of the GDP by 2019. Borrowing to sustain current consumption is unrealistic because eventually the huge debt will weaken the economy and reduce the capacity of the government to deliver benefits to the population. Clearly, the government has promised more than it can deliver. The current system places the responsibility of current spending on future generations too young to vote or not yet born.
Welfare state spending has very little effect on poverty reduction. The poverty rate in the United States has remained relatively constant since 1965, regardless of the increase in welfare spending. Most of the positive effect of the welfare state happened during the 1990s during the experimentation tightening of the welfare eligibility program. From 2006 to date, the poverty rate has been on the rise despite the increase in spending. The increased spending certainly has had significant influence on the levels of poverty despite not lifting more people out of poverty. Welfare state has reduced the number of people living in extreme poverty from 6.2% to 5.4%. The people remain poor; however, they are less poor. Clearly, the government is spending too much, and the results are not reflecting the level of spending. It is not just a question of government bureaucracies and overlapping jurisdictions, the system lack accountability and is grossly inefficient.
Other than achieve the set out goals, most of government programs are implemented to meet the expectations of those with stake in them. The political power used to transfer income to the poor in society also can be used to transfer income to the more fortunate in society. The more fortunate are well organized politically to receive such benefits, and used their political power to achieve their purposes. Most of the anti-poverty programs are more concerned with the protection of prerogatives of the bureaucracy than fighting poverty. Fortunate persons in the society who benefit most from anti-poverty programs are doctors, property owners, social workers, and businesspeople. The entire welfare state takes an entire wrong approach toward the issue of poverty reduction. Most of the poverty reduction programs, such as giving the poor people in society more food, clothing, healthcare, and shelter aim toward making poverty more comfortable rather than giving the poor people the paraphernalia they need to escape poverty.
The real focus of the welfare state should be enabling the children, especially from poor families to finish schooling, not get pregnant at a young age, and get a job, which that sticks. For example, high school dropouts are 75% more likely to end up poor and in a welfare program than those who finish high school. The wages of high school dropouts are lower and have been on the decline considering the inflation rate. Children who grow up with single parents are four times more like to end up poor in their adult lives than children who grow up in a two-parent family, therefore family integrity should also be a focus of welfare state. More than 60% of children living in poverty are in single parent households. Current statistics indicate that only 2.6% of the working class is below the poverty line, therefore the working class forms a minority in the poor population. Any program that seeks to reduce poverty within the country should focus on the creation of jobs, especially permanent jobs. With the exception of a few programs, such as the Pell grant and some job training programs, most of the welfare programs focus on making poverty more comfortable and end up encouraging dropping out of school and early pregnancy.
Conclusion
The federal government spends more than $668 billion annually on different welfare and anti-poverty programs. The state and local governments spends an addition $284 billion of the same. The entire government spends close to a trillion dollars annually on welfare state; however, most of the effects of the big bucks do not show on the real poverty index. The current statistics suggest that the answer to poverty reduction does not lay on increasing the spending on welfare state, indeed the current spending is way too high, the answer rest on building habits that encourage saving and prosperity within the poor in the society.
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