Romney's Charge That Most Federal Low-Income Spending Goes for "Overhead" and "Bureaucrats" Is False

[웃 910]

Romney's Charge That Most Federal Low-Income Spending Goes for "Overhead" and "Bureaucrats" Is False

For Major Low-Income Programs, More Than 90 Percent Goes to Beneficiaries

Presidential candidate Mitt Romney has endorsed a proposal to eliminate major federal assistance programs for low-income Americans and turn them over to the states, often with deep funding cuts. But the rationale he offered for doing so in this past Sunday's "Meet the Press" debate — that the federal bureaucracy eats up most of the money Congress provides for these programs, and little actually reaches people in need — is simply false. At least nine-tenths of federal spending for each of these programs (and in most cases, a higher percentage) reaches low-income Americans.

Romney said that "all these federal programs that are bundled to help people and make sure we have a safety net need to be brought together and sent back to the states," and he specifically called for subjecting Medicaid, food stamps, and housing vouchers to this treatment. He has also embraced the budget of House Budget Committee Chairman Paul Ryan (R-WI), which the House passed in April, including provisions that would convert Medicaid and food stamps to block grants and cut their federal funding by $750 billion and $127 billion over ten years, respectively.

On Sunday, Romney said that most federal funding for these programs is absorbed by federal administrative costs, leaving very little for the low-income people whom the programs are supposed to help:

What unfortunately happens is with all the multiplicity of federal programs, you have massive overhead, with government bureaucrats in Washington administering all these programs, very little of the money that's actually needed by those that really need help, those that can't care for themselves, actually reaches them.

This statement is false. Budget data for the major low-income assistance programs — Medicaid, food stamps (now known as the Supplemental Nutrition Assistance Program, or SNAP), the Supplemental Security Income program for the elderly and disabled poor, housing vouchers, the school lunch and breakfast programs, and the Earned Income Tax Credit — show that, in every case, federal administrative costs range from less than 1 percent to 8 percent of total federal program spending. Combined federal and state administrative costs range from 1 percent to 10 percent of total federal- and state-funded program spending.

As detailed below, the data show that 91 to 99 percent of total federal spending on these programs reaches beneficiaries in the form of benefits or services, as does 90 to 99 percent of combined federal and state spending for these programs. These figures are for fiscal year 2010, the latest year for which full data are available.

Turning the programs over to the states, as Romney has proposed, likely would not reduce their administrative costs materially, if at all. State and local governments would still incur administrative costs and states would have to assume some administrative costs that the federal government now bears. In addition, splitting certain administrative tasks among the 50 states would likely be less efficient and more costly than having the federal government continue to carry them out. One example is approving and monitoring retail food stores that participate in SNAP to prevent program abuse. The federal government uses a centralized database on SNAP food purchases across the country to identify stores that have suspicious redemption patterns and warrant investigation — something that states would be hard-pressed to replicate individually without spending considerably more money.

The data on the six major low-income programs are as follows:

• Medicaid. Federally funded administrative costs accounted for 3.8 percent of federal Medicaid spending in fiscal year 2010; the other 96.2 percent went for health care and long-term care for beneficiaries. Moreover, most of the 3.8 percent went for the federally financed portion of state administrative costs.[1] The federal government's own administrative costs accounted for only 0.2 percent of federal Medicaid spending. For federal- and state-funded Medicaid spending combined, 4.6 percent went for administrative costs and 95.4 percent went for care for beneficiaries.
• SNAP (formerly known as food stamps). Federal administrative costs accounted for one-quarter of 1 percent of federal SNAP spending in 2010. Adding the federally financed portion of state administrative costs brings total administrative costs to 4 percent of federal SNAP spending. Another 1 percent of federal costs went for the federal share of costs of nutrition education and employment and training services for SNAP participants. Some 94.6 percent of federal spending went directly for food that the program's low-income beneficiaries purchased.These percentages change only modestly with regard to total SNAP costs — i.e., federal- and state-funded costs combined. Eight percent of total federal- and state-funded costs went for administration, less than 2 percent went for services for beneficiaries, and about 90 percent went for food that beneficiaries purchased.[2]
• Housing vouchers. Some 0.3 percent of program dollars went for federal administrative costs, 8.7 percent went for the administrative costs of the 2,400 state and local public housing agencies (PHAs) that operate the program, and 90.9 percent went for rental assistance for low-income tenants.
• Supplemental Security Income (SSI). Some 92.8 percent of spending went for benefit payments to beneficiaries, with administrative costs accounting for the remaining 7.2 percent. That figure includes the federal government's own administrative costs (5.2 percent) as well as the costs of the states' Disability Determination Services (2.0 percent), which are reimbursed by the federal government.
• School lunch and breakfast programs. One percent of federal spending went for federal administrative costs, while 1.6 percent went for federal support for state administrative costs. The rest, 97.4 percent, went to schools to subsidize their costs in operating the school meals programs.
• Earned Income Tax Credit. Over 99 percent of EITC dollars went directly to households receiving the EITC, with the IRS estimating that its administrative costs amounted to less than 1 percent of EITC costs.

http://www.cbpp.org/...fa=view&id=3655

Edited January 12, 2012 by ☠

[I AM NOT THAT GUY 5,715]

So, the Obamanation strategy is to portray Romney as the inevitable GOP winner, then totally destroy his credibility. Gotcha.

[웃 910]

So, the Obamanation strategy is to portray Romney as the inevitable GOP winner, then totally destroy his credibility. Gotcha.

I don't think it is that deep.

He made a false statement the other day, and this one article corrects him. That's all.

[Mr. Big Dog 10,747]

So, the Obamanation strategy is to portray Romney as the inevitable GOP winner, then totally destroy his credibility. Gotcha.

Mitt was going to be nominee from the start. That much was clear. Not because he's so great but because the other clowns that actually joined the GOP race are just... . It's those other clowns that made Mitt inevitable. But I wonder: Destroy his credibility? What credibility? Mitt supports every position on every issue. He covers the political spectrum from left of the late Ted Kennedy to right of Rick Santorum. What credibility is left to be destroyed?

[Gary and Alla 3,694]

Most of it goes for buying reliable Democrat votes. The rest goes to make another generation dependent on goverment and provide reliable votes for the next generation of Democrat politicians.

If Romney were not just another sleazy, slimy politician he would say so and there would be a chance something would change.

Edited January 12, 2012 by Gary and Alla

[Dan J 277]

The real question is if medicaid can achieve 95% efficiency why is it so hard for insurance companies to get to 85% as required by the new health care law?

[Mr. Big Dog 10,747]

The real question is if medicaid can achieve 95% efficiency why is it so hard for insurance companies to get to 85% as required by the new health care law?

If they have to spend 85% on medical claims, then that leaves only 15% for operating expenses and profits. With such requirements, you're effectively disabling the insurance companies from fulfilling their sole purpose.

[Gary and Alla 3,694]

If they have to spend 85% on medical claims, then that leaves only 15% for operating expenses and profits. With such requirements, you're effectively disabling the insurance companies from fulfilling their sole purpose.

Really so medicaid has only 5% operating expenses? That would leave 10% for profit. Which insurance company is making 10% profit on revenue?

[Mr. Big Dog 10,747]

Really so medicaid has only 5% operating expenses? That would leave 10% for profit. Which insurance company is making 10% profit on revenue?

Well, you tell me. If they do not, then we are effectively saying that corporations aren't able to work as efficiently as the government.

Edited January 12, 2012 by Mr. Big Dog

[Dan J 277]

Really so medicaid has only 5% operating expenses? That would leave 10% for profit. Which insurance company is making 10% profit on revenue?

Private insurance company operating expenses are much higher. They pay for marketing, higher management salaries, sales people, etc. They will now be required to use 85% of their revenue on claims, which means that many companies were even less efficient than that.

Edited January 12, 2012 by Dan J

[Mr. Big Dog 10,747]

Private insurance company operating expenses are much higher. They pay for marketing, higher management salaries, sales people, etc. They will now be required to use 85% of their revenue on claims, which means that many companies were even less efficient than that.

So we're saying that the nation could save hugely if we had medical coverage run by the government. Aside from operating on lower cost, it would also eliminate vast overheads which the medical providers maintain today to support the private insurers.

[ayomide1 5]

I am a republican leaning individual...but i will never vote for Romney......He has nothing to offer......No ideas....nothing

[luckytxn 2,264]

These stupid arguments again. Everyone is thinking that the Feds are so much better than private companies at administrating. Remember that the privates have to have all of their resources under one roof. (fraud detection, legal, procurement, etc.) The Feds figures only show the agency and their sole operation. Now those same agencies have to use other agencies to do what the privates have to do and these costs are more than the privates would have on their own. The privates have to look at the bottom line where the Feds can be as wasteful as they want. Now granted that Romney is way off base by saying the figure is as high as it is but it is still a lot higher than private corporations. Now if the states were to administer the same plans on their own the bureaucracy costs is about half of the Feds and thus a savings can be seen where the same taxes can be used to do more good.

I am a republican leaning individual...but i will never vote for Romney......He has nothing to offer......No ideas....nothing

He has charisma.

[Mr. Big Dog 10,747]

He has charisma.

Yeah, like a paperweight.

[I AM NOT THAT GUY 5,715]

Yeah, like a paperweight.

Maybe I am getting jaded, but nobody looks "Presidential" anymore. We need another actor.