Means-Testing Welfare is ALWAYS Dumb

It'd be easier to light the money on fire.

Human history has taught us there are some ideas so idiotic, they should be written off of any future consideration. They include:

1. Invading Russia in the winter,

2. Investing in a “multi-level” marketing scheme, and

3. Means-testing welfare programs.

Means-testing is when a government requires citizens to prove they are either financially or morally in need of welfare assistance. As the theory goes, means tests ensure that American tax dollars aren’t going to “moochers” and “welfare queens” but to those who actually need it (defense contractors). However, regardless of which welfare program or test we examine, inspection of means-tests shows they are counter-intuitive on every level. They often cost more than they save, humiliate unfortunate Americans, and prevent low-income families from receiving the assistance they need to stay alive and out of poverty.

No matter which way we cut it, means-testing welfare programs guarantees a lose-lose-lose outcome for recipients, taxpayers, and society as a whole.

Drug Testing

One of the most common justifications for means-testing is the need to ensure welfare recipients aren’t spending the government’s money on drugs. That privilege is reserved for the President’s family and friends.

In 2011, Florida became the first state to require all welfare recipients to pass a drug test. Falsely claiming welfare recipients used drugs at disproportionately high rates, America’s weirdest state required all Temporary Assistance for Needy Families (TANF) applicants to pay for a drug test before being admitted. If they passed, they were reimbursed for the cost of the test and received their benefits. If they failed, they received neither.

In the four months Florida’s drug test was in place (the ACLU successfully sued against the law and had it repealed), 4,086 applicants were tested. 2.6% tested positive for illicit substances.¹ A federal report from the same year found that 8.32% of Floridians used illegal drugs, meaning welfare recipients were 320% less likely to use drugs than non-recipients.² Testing cost Florida $118,140 and denied $73,140 in benefits to TANF applicants, resulting in a net loss of $45,000. And that’s just the cost of the tests. Legal fees amounted to $307,883, while administrative, staffing, and other expenses raised the total cost to nearly $1 million — for just four months.³ Thankfully, the ACLU saved Florida from itself by halting the law, saving taxpayers untold millions and ensuring every Floridian who needs welfare receives it, regardless of whether they suffer from addiction. As an aside, it’s worth noting that then-Governor Rick Scott owned $62 million in Soltanic Corp stock,⁴ a drug testing company. What a weird coincidence!

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While courts have routinely struck down “suspicionless” drug tests under the 4^th Amendment, a handful of states (you know the ones) still test on suspicion. The results are equally as wasteful. In 2017, states spent half a million dollars testing 2,500 Americans. Only 301 came back positive. Whether there’s valid concern of drug use or not, testing welfare recipients is counterproductive, degrading, and a waste of money. It’s a reactionary policy that should be excluded from consideration.

Child Tax Credit

The obsession with only providing help to “honest” Americans isn’t limited to drug use. Financial means-testing is used by both federal and state governments. One example is the Child Tax Credit (CTC), which has needless income requirements to ensure only children with “deserving” parents don’t starve. But don’t worry. Thanks to Republicans rolling back child labor laws, kids excluded from welfare benefits can feed themselves by getting a job in an Arkansas coal mine.

Unfortunately, this is real.

The Child Tax Credit reduces the tax obligation of low-income families by $2,000 per child. The 2021 American Rescue Plan expanded the Child Tax Credit’s eligibility, increased payments to $3,600 for children under six and $3,000 for children under eighteen, and made it fully refundable. That means that instead of having their tax burdens reduced, low-income families could receive the credit in cash. The program was so effective it lifted 5.3 million Americans out of poverty, including 2.9 million children. Unfortunately, Congress — more specifically, Joe Manchin and every Republican — refused to extend the program, casting millions of Americans back into the horrors of poverty. Why? Because they’re bad people.

The refundable Child Tax Credit greatly decreased childhood poverty. Removing it re-impoverished millions.

For both the short-lived fully refundable tax credit and the traditional non-refundable version, means-testing raised unnecessary barriers to entry for needy families. While the purpose of both was to give low-income families extra cash (either through a reduced tax burden or cash deposit), requiring proof of poverty prevents those who need help the most from accessing it. To prove they’re eligible for the CTC, families must file a tax return, something low-income families are less likely to do as they are below the poverty line and usually don’t owe taxes. A survey from the Urban Institute found that 14% of families with children under eighteen who did not receive the refundable CTC but were eligible for it were not planning to file tax returns, meaning they would not receive the benefit. That percentage rises to 25% for families with income twice the federal poverty line ($22,000 for a family of three), it goes up to 21% for non-White households, and single adults are almost twice as likely not to file taxes as married couples.⁵

Obviously, those who don’t file taxes won’t receive the Child Tax Credit, meaning the low-income families the program is designed to help won’t get necessary assistance. While some blame these families for not filing taxes, that ignores the reality that America’s tax code is needlessly confusing, thanks to lobbying from Turbo Tax and other tax-accounting businesses. Focus groups found that, among families who were eligible but did not receive the CTC benefit, they did not apply for it because they:

• Didn’t know they were eligible,

• Thought they might lose other welfare programs,

• Were unemployed at the time,

• Are immigrants and were concerned about green cards and documented status.

While conservatives will inevitably point the finger at these families (“You need to be personally responsible!” say the libertarians who got rich off government contracts), the fact remains that the Child Tax Credit and other welfare programs are designed to alleviate poverty. Thanks to Washington’s purposeless complexity and moral grandstanding, it is failing to do so. 

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However, the absurdity of means-testing social programs isn’t a uniquely American phenomenon. Recently, the United Kingdom’s Labour government announced it would start means-testing its Winter Fuel Payment (WFP), a direct cash benefit paid to elderly Britons every winter. The WFP had been distributed without means-testing for the last twenty-seven years. But still, Labour leader Kier Starmer argues such requirements are necessary. Matt Bruenig laid out the absurdity of this proposal in his most recent article for the

People's Policy Project

.

“When the government announced that it was going to start paying the WFP only to those receiving the means-tested Pension Credit (or similar benefits), it was pointed out that the Pension Credit, like all means-tested programs, suffers from a non-participation problem: because of the administrative burden involved, not everyone who is eligible for the Pension Credit signs up for it… The government’s response to this critique was to say that it was going to embark upon an aggressive awareness campaign aimed at getting everyone who is eligible for the Pension Credit to sign up for it. The problem with this is that, currently, only 63 percent of people who are eligible for the Pension Credit are signed up for it. If that number were to go to 100 percent, then all of the savings from lower WFP outlays would be offset by higher Pension Credit outlays, negating the whole cost-savings rationale for the WFP cuts to begin with.”

The Comedy of the Winter Fuel Payment Means Test

While it’s a small victory, it’s nice to know foolishness isn’t limited to Uncle Sam.

United Kingdom Prime Minister Keir Starmer argues in favor of his proposed cuts to the winter fuel payment during a BBC interview.

What frustrates me most about needless means-testing is that there is a very simple solution to ensure needy families receive assistance without waste: Make welfare programs universal and tax it back from wealthy households who don’t need it. The short-lived refundable Child Tax Credit proved that a meager cash distribution can significantly reduce poverty. So, the government should reactivate this program and distribute that cash to everyone, regardless of income. Then, when Americans file taxes, the IRS can see which households are wealthy enough that they don’t need the distribution and require it be paid back.

This is a no-brainer means of reducing poverty, one politicians are well aware of. Unfortunately, the U.S. government won’t streamline the welfare system not because it can’t, but because it doesn’t want to. While low-income families jumping through hoops may sound like a bug of America’s welfare programs, it’s actually a sinister feature. Both Democrats and Republicans (but more of the latter) believe that poor people are poor because of their own incompetence. The Republican Vice Presidential nominee wrote an entire book about it. While some politicians are comfortable publicly saying, “Let the poor starve,” many are not. Either they can’t bring themselves to accept their putrid beliefs, or they don’t want to lose votes for bringing attention to their cruelty. So, they leave the means-testing barriers in place, knowing full well it will prevent needy Americans from getting the support they need. 

Yet again, we see that poverty is not an inevitability but a policy choice. 

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1. https://www.aclu.org/news/smart-justice/just-we-suspected-florida-saved-nothing-drug-testing-welfare

2. https://obamawhitehouse.archives.gov/sites/default/files/docs/state_profile-florida.pdf

3. https://www.clasp.org/wp-content/uploads/2022/01/2019_drug-testing-and-public-_0.pdf

4. https://www.salon.com/2013/08/29/gop%E2%80%99s_inane_money_eating_sham_drug_tests_for_welfare_a_huge_failure/

5. https://www.taxpolicycenter.org/taxvox/many-low-income-families-may-not-get-full-child-tax-credit-because-they-wont-file-tax-return