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Friday, February 20, 2009
"Someplace, there must be some overhead."

There is a great section in Reagan's speech where he figures out how much we are spending to get rid of poverty:

"...But now we're told that 9.3 million families in this country are poverty-stricken on the basis of earning less than 3,000 dollars a year. Welfare spending [is] 10 times greater than in the dark depths of the Depression. We're spending 45 billion dollars on welfare. Now do a little arithmetic, and you'll find that if we divided the 45 billion dollars up equally among those 9 million poor families, we'd be able to give each family 4,600 dollars a year. And this added to their present income should eliminate poverty. Direct aid to the poor, however, is only running only about 600 dollars per family. It would seem that someplace there must be some overhead...."

I did some back of the envelope math to update these numbers for a speech I gave to the college Republicans recently:

Welfare payments and programs total a mere $468 billion. Another $30 billion for EITC. Let’s call it an even $500 billion.

Total number of poor people in America = 37 million. Divide it equally and that comes to $13,513.51 for each man, woman and child in poverty.

Thus, a family of five living in poverty could receive a mere $67,565 in government funding. For a family of five, the poverty status ends at $23,400. So that’s about $45,000 more than they would need to no longer be considered living in poverty.

To paraphrase Reagan again: It seems somewhere, there must be some overhead.

(Note: The poverty line in the US for 2006 (last figure available at the time) was $9,800 for an individual and about $3,400 for each individual person in the household.)

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