How Much Does the Nation Spend on Welfare?
The U.S. Social Security Administration defines social welfare expenditures as the cost of "cash benefits, services, and the administration of public programs that directly benefit individuals and families." This broad definition includes expenditures for social security (Old-Age, Survivor's, Disability, and Health Insurance, or OASDHI), health and medical programs, education, housing, veterans' programs, and public aid programs.
In fiscal year 2000 (the last year for which combined information on social welfare expenditures from all sources is available) federal, state, and local governments spent about $1.01 trillion on social welfare programs. According to the Treasury Department's 2002 Financial Report of the U.S. Government, the total expenditure for social welfare in 2002 was slightly over 4 percent of the gross domestic product (GDP), the monetary total of the domestic goods and services produced by the United States. This reflects a drop of nearly one full percentage point since 1980 and about .75 percent since the early 1990s.
While the Social Security Administration uses a broad definition of social welfare to categorize public expenditures, public welfare, or public aid, is generally taken to refer to cash or noncash assistance for low-income persons. This narrower definition excludes social insurance programs such as Social Security and Medicare, which are considered entitlement programs—that is, programs to which people have a right because of contributions they have made from their earnings.
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