DOGE Should Tackle Our Welfare System

If President-elect Trump’s new “Department of Government Efficiency” (DOGE) wants to tackle a real nightmare of waste and inefficiency, it should take a hard look at social welfare and anti-poverty programs. After all, the federal government currently spends more than $1.1 trillion annually to fight poverty, with state and local governments contributing another $700 billion. And while government has done a great deal to reduce material deprivation and make poverty less miserable, policymakers have largely failed to help people escape poverty and become self-sufficient. Surely, this is an area ripe for reinvention. 

Consolidate redundant programs 

The sheer size and complexity of the current welfare system, with a multitude of overlapping programs—often with contradictory eligibility requirements, differing rules, mixed oversight, and divided management—is a bureaucratic nightmare.

Is there really a need for 34 separate housing programs run by seven cabinet departments? What is the justification for 23 programs providing food assistance administered by three cabinet departments, or 13 healthcare programs administered by three agencies within the Department of Health and Human Services and the Department of Veteran Affairs? Should five cabinet departments oversee 15 cash or general​ assistance programs?  

The number of these programs works to entice more people into the welfare system—increasing both cost and enrollment—without targeting those efforts to the people who are most in need. Many existing programs have become fiefs for special interests, many of which have become political powerhouses and bureaucratic roadblocks to reform. And, while the overhead and administrative costs for most programs appear modest—generally less than five percent—the costs add up. Moreover, the opaqueness and complexity of the current system breeds waste, fraud, and abuse.  

Break-up provider cartels through cash payments

The process of consolidation would create an opportunity for another important reform: shifting from “in-kind” benefits to cash payments. Currently, less than a quarter of federal welfare benefits provide direct cash benefits to recipients, including various refundable tax credits and vouchers. The rest provide payments, not to poor Americans, but to various middlemen who provide services to the poor. 

Furthermore, cash benefits allow beneficiaries to decide for themselves how much of their income should be allocated to rent, food, education, or transportation. They might also choose to save more or invest in learning new skills that will help them earn more in the future. Policymakers can’t expect people to behave responsibly if they are never given the chance.

Cash benefits also could encourage mobility, helping poorer individuals to break away from geographic concentrations of poverty that can isolate them from the rest of society and reinforce the worst aspects of growing up in poor communities. Finally, cash benefits would help to reduce the influence of provider cartels—including farmers, grocers, landlords, and medical providers—and other special interests that lobby lawmakers aggressively to benefit from increased spending and program participation. 

Establish a digital ID for access to benefits

According to the Government Accountability Office, the federal government fraud and abuse in government transfer programs could run between $230 billion to $521 billion annually. On top of that, the government makes roughly $162 billion in “improper payments” every year. While most of this can be traced to entitlement programs such as Social Security, Medicare, and Medicaid, a not insignificant amount results from welfare and anti-poverty programs. At the same time, the complexity of the application process means that many low-income Americans fail to receive benefits that they need and are eligible for. Estimates suggest that Americans forgo as much as $140 billion per year in benefits, enough to lift some 15 million people out of poverty.  

Both problems could be reduced if the federal government followed the lead of countries such as Estonia and adopted digital technologies to enable secure identity verification, for instance, combining a secure chip-enabled identification card with an individual PIN. As the federal government’s Joint Financial Management Program puts it, this would go a long way toward, “verifying that the person attempting to interact with a federal program office is who they claim to be.” Both taxpayers and beneficiaries would benefit. 

Too often, the nation’s sclerotic, overly bureaucratic social welfare system fails both taxpayers and the poor it’s meant to help. DOGE should take notice.