Cato Institute Press Release

CBPP is wrong: welfare is a rational choice for many

Cato scholars show welfare benefits often exceed wages for entry-level jobs

Welfare benefits available to a typical welfare household substantially
exceed the amount a recipient could earn in an entry-level job in virtually
every state, according to a briefing paper released today by Cato Institute
scholars Michael Tanner and Naomi Lopez.

The paper was released in response to a critique written by Sharon Parrott
of the Center on Budget and Policy Priorities (CBPP) suggesting that actual
welfare benefits are lower than Michael Tanner, Stephen Moore and David
Hartman stated in a September Cato study (Policy Analysis no. 240).

The CBPP critique used only 2 of 77 federal welfare programs in its
calculations=FEAid to Families with Dependent Children and food stamps while
the initial Cato study used 7.  "The CBPP attack is not supported by the
data and seriously underestimates the actual value of the available welfare
benefits package," says Tanner.  "In fact, we may have understated the
available welfare benefits in some cases because our study did not take into
account state and local welfare assistance programs."

The CBPP paper rejects the inclusion of Medicaid as a benefit because
"Medicaid payments cannot be used to meet basic family expenses such as
food, clothing and shelter."  Tanner assails that logic.  "According to
Parrott, any noncash benefit has no value to the recipient.  After all, food
stamps are not a cash benefit and cannot be used to pay for clothing or
shelter.  By the CBPP's interesting logic, there should be no problem with
cutting-or even eliminating-Medicaid, since the loss of benefits would not
reduce the income of recipients."


Briefing Paper no. 27

http://bp-027es.html