Report: 'Safety net' of aid programs helped Americans weather recession

The country's welfare programs scored high marks during the Great Recession, according to a new report by Robert A. Moffitt, a professor of economics at Johns Hopkins University.

The report, published this month in The Annals of the American Academy of Political and Social Science, shows the country's "social safety net" expanded to catch many Americans during the economic downturn in 2008 and 2009. In "The Great Recession and the Social Safety Net," Moffitt found aggregate safety net spending by half a trillion dollars from 2007 to 2010. Meanwhile, caseloads rose, too, from 276 million to 310 million.

"Our results show that there was a major response from the safety net to the Great Recession," said Moffitt, whose research was the focus of an entry on The New York Times' Economix blog. "The programs did their job and made a difference—there's no question about it."

Carrying the bulk of this load, he said, were the Earned Income Tax Credit, Unemployment Insurance, and the Supplemental Nutrition Assistance Program (SNAP). Together, the three programs accounted for about a third of the spending increase. Other programs that expanded to meet the demand included Unemployment Insurance, Medicaid, Medicare, and Social Security retirement and disability benefits.

Spending on SNAP, or food stamps, more than doubled, Moffitt found, vaulting from $30 billion in 2007 to $65 billion in 2010. The program was not only helping more people, Moffitt said, but those people were each getting slightly more assistance.

With the Earned Income Tax Credit, a federal income tax refund for low- to moderate-income working families, spending rose from $49 to $59 billion. Spending per person actually dropped, Moffitt found. The growth was entirely due to an increase in the number of recipients. Medicaid spending also rose during the recession, from $327 billion in 2007 to $401 billion in 2010, Moffitt found. And soocial insurance programs grew substantially as well, with unemployment insurance showing the steepest incline—from $34 to $142 billion during the recession.

The additional money went to a wide range of demographic groups, and families with and without children, he found. Somewhat less of the increase went to the elderly and the disabled.

"There have been many complaints that the U.S. safety net has been shredded and is inadequate to serve those who in need," Moffitt said. "And there have been other voices saying that government is ineffectual and that much of the money is wasted.

"My findings—which I did not expect—showed that neither of these is correct. The U.S. safety net is very healthy and was extremely responsive to the Great Recession, helping families of all different types and at all different income levels."