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DC Has a Bigger Welfare State than Any European Country besides Denmark

August 24, 2015 in Economics

By Michael D. Tanner, Charles Hughes

Michael D. Tanner and Charles Hughes

When you hear the term “welfare state,” most people think of Europe and countries like Denmark or France. No doubt those countries offer a wide range of benefits targeted to the middle class, retirees, and so forth. But according to a new study released by the Cato Institute this week, someone who is poor might just be better off here in D.C.

The federal government currently funds more than 100 anti-poverty programs. While no one participates in all of them, many can and do collect assistance from multiple programs.

In D.C., a mother with two children under the age of five who participates in six major welfare programs — Temporary Assistance for Needy Families (TANF), Supplemental Nutrition Assistance Program (SNAP or food stamps), housing assistance, home energy assistance, Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), and free commodities) would receive a benefits package worth $34,963 per year.

D.C. has the second highest benefit package in the United States, but overall the U.S. fits comfortably in the middle of the pack when it comes to providing for the poor.”

Using a similar measure, Cato found that benefits in Europe ranged from $38,588 per year in Denmark to just $1,112 in Romania. In fact, the District’s welfare system can be more generous than every country included except Denmark. The benefits package is higher than in well known welfare states as France ($17,324), Germany ($23,257) and even Sweden ($22,111). Moreover, this benefit package doesn’t include Medicaid, which would be worth roughly $8,140 for this household, because Europe’s health care systems are not targeted to the poor, unlike Medicaid.

Of course, D.C. has the second highest benefit package in the United States, but overall the U.S. fits comfortably in the middle of the pack when it comes to providing for the poor.

One of the problems with these welfare systems is that they can create situations where participants have little incentive to increase work effort because they would lose most of their earnings through lower benefits or higher taxes, while also having to bear the costs associated with going to work like transportation: these people would see little tangible improvement in their standard of living by taking up a job, working more hours or moving up the job ladder.

People in these programs are not lazy, but they are also not stupid. Like everyone else, they respond to incentives. …read more

Source: OP-EDS

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