Poverty spending and the poverty gap

This paper examines two questions basic to welfare policy: (1) whether the amount of poverty‐related transfers is sufficient to fill the poverty gap, and (2) which families actually get benefits and how much of their income deficit is filled by those benefits. Transfers are sufficient: the post‐Social Security poverty gap is $74 billion while poverty‐related programs total $198 billion. Further, 86% of current income‐conditioned benefits go to the pretransfer poor and 89% of those are used to alleviate poverty (fill the poverty gap). Thus, if a substantial fraction of total Federal and State expenditures on poverty‐related programs could be targeted more toward the poor, the poverty gap can be eliminated. The current programs, however, would have to be changed substantially to achieve the necessary retargeting.