The government benefits safety net is now being used widely, with about one dollar in every six of the average person’s income (around 16.2%) coming in from the food stamp program, healthcare or SSA benefits or some form of federal or state check or voucher. These figures apply for the first quarter of 2009, according to the Bureau of Economic Analysis, and are the highest since the government started taking notes in 1929.
The government is estimated to spend $2 trillion on benefits for 2009 – that’s about $17,000 per household. The recession and policy shifts are some of the reasons behind the 19% increase in benefits usage in the first months of 2009, compared to the last few months of 2008.
Here are some of the reasons why there is a $209 billion increase from a year ago:
Unemployment insurance – The recently passed stimulus provisions have increased unemployment benefits. About a fourth of the increase in overall benefit costs is in unemployment insurance.
Social Security – The recession has caused a 10% to 15% jump for early retirement, and a 5.8% increase in benefits was implemented last January 1. That’s a $55 billion increase in social security.
Food Stamps – 33.2 million people enrolled for the program in March, 5.2 million more than last year. The average benefit per person as of March was at $114.
While detractors warn that the increase in benefits spending may lead to another economic crisis, advocates stand by the fact that the benefits safety net is doing its job, with the increase being modest compared to the recessions effects.
