[LINK] How rational is the US federal state

When you encounter something that is surprising, you should actually be surprised. Surprise means that either your model of the world is wrong or you're getting lied to. I think Fake Explanations has a relevant parable.

A common tactic in 'unbelievable statistics' is that they attempt to substitute one number for another number in a comparison and hope nobody notices. To delve further into defending against the dark arts, they use this particular statement to gloss over the slight of hand they perform...

To be clear, not all households living below the poverty line receive $61,194 worth of assistance per year. After all, many above the poverty line also receive benefits from social welfare programs (e.g. pell grants).

When you read it, your mental radar should go off like a banshee. They're trying to get your mind to accept that it'll "be doing a little rounding" and turn off hard checks on the numbers. A useful 5-second level skill to counteract this is to ask yourself exactly how many people are receiving these "pell grants and stuff" that takes up a (seemingly) negligible proportion of people[*]. A quick googling says over 100 million, aka more than twice the number of Americans living in poverty.

This pushes our numbers to 150 million recipients rather than 17 million. That's an order of magnitude of difference and brings us to a roughly expected ~$6900 spent per recipient. It strikes me as a little high, but not really shocking. It turns out that my model was, in fact, basically correct and it was just the article doing creative things with words and statistics.

[*]Alternatively, you can try to calculate the money spent on "pell grants and stuff" which comes to ~$700 billion. Apparently the US gives out over 126 million scholarships each year. Who'd have thunk it?

Edit: That's not to say I agree or disagree with moving to direct cash payments. I just felt a need to point out how the article was being such a tricksy little hobbitses.

This Weekly Standard article is just silly political spin, but it's based on a genuine report by the Congressional Research Service (a rigorous, nonpartisan government research agency) which was requested by the Republicans on the Senate Budget Committee (who had political motivations for requesting this particular report, but limited control over its contents). This press release from the Senate Republicans describes the source of the numbers in more detail, and includes a link to the full report (pdf).

The CRS report counts about $750 billion in federal government spending on "welfare programs", which they define as spending which is means-tested; that is, programs that "(1) had provisions that base an individual’s eligibility or priority for service on a measure (or proxy) of low or limited income; or (2) target resources in some way (e.g., through allocation formulas, variable matching rates) using a measure (or proxy) of low or limited income." Entitlement programs (Social Security and Medicare) were not included. The Senate Republicans estimated that there was another $280 billion in state and local government spending on federal welfare programs, bringing the total just over $1 trillion.

About half of that $1 trillion in spending is for health programs (primarily Medicaid). Most of that money is spent on people with expensive medical issues rather than being simple redistribution to the poor - about 2/3 of Medicaid spending goes to people who are disabled or elderly.

For the non-health half of the spending, this webpage has a list of the largest programs with brief descriptions of what they do (or see the pdf above for a more detailed breakdown). The top 5 spending areas (accounting for 80% of the non-health federal spending) are Negative Income Tax (primarily EITC), SNAP (food stamps), Housing Assistance (Section 8 housing subsidies and various other programs), SSI (cash for the disabled and elderly), and Pell Grants (financial aid for college students).

I'm sympathetic to the basic point that most of the money spent by the government supposedly on the poor doesn't get to them, but their analysis is so poorly presented, or so half assed in the first place, that I can't tell if there is much truth or sense in the main claim. Ugh!