by Mitch Kokai
Senior Political Analyst, John Locke Foundation
Never shy about lampooning government dysfunction, Ronald Reagan famously said that if you want more of something, subsidize it. But even the Gipper couldn’t have imagined today’s growing zeal to subsidize getting more people on government benefits, which undermines work and leaves too many on the sidelines of the economy. Welfare programs achieve that dubious distinction when they ignore the value of other government benefits in determining eligibility. Yet liberal policymakers today are proposing not only massive federal benefit increases, but also ensuring that growing largess is ignored by programs designed to aid the needy.
The problem involves “income disregard” policies that ignore the value of government benefits in calculating eligibility for welfare programs meant to help low-income individuals and families. Ignoring such income makes benefit recipients appear artificially poorer than someone with the same income from work. That encourages benefit collection over work, and artificially expands safety net programs meant for those with low incomes.
During the pandemic, temporary federal laws mandated welfare programs ignore a record $1.4 trillion in stimulus checks, expanded unemployment benefits, and enhanced child tax credit payments when assessing whether applicants were poor enough to qualify. That meant a household with two adults and two young children could collect more than $67,000 in pandemic benefits without a penny being counted in determining its eligibility for Medicaid. Two-thirds of that amount, or nearly $47,000, would have been similarly ignored when the family applied for food stamps. Instead of recognizing those significant benefits, income disregard policies could make them appear to have no income at all.
The results were predictable: income disregards contributed to Medicaid and food stamp rolls soaring to record highs. Between February 2020 (the month before the pandemic struck) and a recent peak in April 2023, Medicaid caseloads soared from 64.1 million to 87.1 million, an increase of 36 percent.