ditures at the state and federal levels substantially exceed $300 billion
a year ( Table 5.1 ). Of course, poverty is expensive not just in outlays
and social costs. People idled by poverty reduce the overall produc-
tivity of the workforce, lower tax revenues, and reduce the nation's
ability to compete in the global economy. Poverty, in all its manifes-
tations, reduces the viability of the whole nation.

Poverty also weighs on the national conscience because the poor
are primarily the most vulnerable members of the American popula-
tion--single-parent households, children, the least well educated, the
aged, and the handicapped. Black and Hispanic Americans suffer par-
ticularly high rates of poverty. Children, regardless of race or ethnicity,
are especially vulnerable. In the 1990s over 14 million children a year
have lived in poverty, about one in five American children ( Table 3.1 ).
Each year children compose about 40 percent of the total poverty
population.

Given the size, cost, and consequences of poverty, America has
a substantial stake in preventing this condition and in helping as
many of the poor as possible to become self-reliant, secure, and
economically productive. Major government efforts to assist the poor
grew out of the New Deal legislation of the 1930s, and these pro-
grams have evolved and grown substantially over time. As welfare
programs and expenditures have grown, skepticism about the cost
and effectiveness of these programs has become increasingly wide-
spread both within the government and outside of the government.
Despite the fact that only about one-third of all the poor receive
any type of cash assistance ( Table 5.5 ), program costs have soared.
Much of the increase in costs is attributed to the growth of health
care programs for the poor. Taking inflation into consideration, ex-
penditures for welfare programs increased by 400 percent between
1935 and 1996 (Table 5.1). During this same period, the American
population grew by only 32 percent ( Table 5.1 ). Despite major in-
creases in expenditures, poverty rates increased during the 1980s and
most of the 1990s. In the last two decades, over 90 percent of those
families receiving cash assistance lived in poverty ( Figure 2.1 ; Table
5.6 ). Despite their expense, America's major welfare programs were
not actually designed to reduce poverty. Because of their design,
only rarely did America's complicated and increasingly expensive

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