More than 80 benefit programs provide cash and noncash aid that is directedprimarily to persons with limited income. These benefit programs cost $522.2 billionin FY2002, a record high. This sum was up $45.3 billion (9.5%) from the previouspeak of FY2001, and it equaled 5% of the gross domestic product (GDP). Federalfunds provided 71.5% of the total. Higher medical spending accounted for $32.8billion of the year's net increase, and 54 cents out of every welfare dollar went formedical benefits. Federal welfare outlays represented 18.6% of the federal budget,with 8% attributed to medical assistance. See Table 1 for FY2000-FY2002summary. After adjustment for price inflation, 2002 welfare spending was up $38.2 billion (7.9%) from that of 2001, the previous peak. Real spending increases (2002 dollars)were dominated by medical assistance (up $29.1 billion). Other increases were:education benefits,$ 4.1 billion; food benefits, $3.3 billion; housing, $2.3 billion; andservices, $1.2 billion. Outlays for cash aid dropped by $1.2 billion; and for jobs andtraining, by $0.5 billion. Spending for "human capital" programs (ones providing education and employment and training activities) accounted for 7.3% of all welfare dollars(compared with 19.6% for cash assistance). This report consists of a catalog of 85 need-based programs. (1) For each programthe report provides the funding formula, eligibility requirements, and benefit levels. At the back of the report, summary Table 14 gives expenditure data (federal andstate/local) and recipient data for FY2000-FY2002 by program. Two programs arenew to this series of reports: farmers' market nutrition programs (formerly treatedas a component of the food stamp program) and housing assistance for specialpopulations -- elderly and disabled. Historical tables have been revised to accountfor these additions. Most of these programs base eligibility on individual, household, or family income, but some use group or area income tests (see Table 7 -- page 16); and afew offer help on the basis of presumed "need." Most provide income "transfers." That is, they transfer income, in the form of cash, goods, or services, to persons whomake no payment and render no service in return. However, in the case of the joband training programs and some educational benefits, recipients must work or studyfor wages, training allowances, stipends, grants, or loans. Further, the TANF blockgrant program requires adults to commence work (defined by the state) after a periodof enrollment, the Food Stamp program imposes work and training requirements,and public housing programs require recipients to engage in "self-sufficiency"activities or to perform community service. Finally, the Earned Income Tax Credit(EITC.) is available only to workers. This report excludes income maintenance programs that are not income-tested, including social insurance and many veterans' benefits, and all but two tax-transferprograms. Thus, it excludes Social Security cash benefits, unemploymentcompensation, and Medicare. Outlays for the Old-Age, Survivors, and DisabilityInsurance programs (Social Security cash benefit programs) in FY2002 totaled $456billion, financed primarily from payroll tax collections. The report also excludespayments, even though financed with general revenues, that may be regarded as"deferred compensation," such as veterans' housing benefits and medical care forveterans with a service-connected disability. The report includes two tax-transfer programs, the EITC for low-income workers with children and the child tax credit. The EITC reduces the taxes ofworking families with gross income below specified limits and makes directpayments ("refunds") to those whose income is below the tax threshold or whose taxliability is smaller than their credit. Before the 2001 tax law, the child tax credit wasrefundable only to some taxpayers with three or more children, but it now isrefundable (up to certain limits) for those with earnings above $10,000. This reporttreats the direct payment component of these credits, but not the reduction in taxliability, as a welfare expenditure. Other tax benefits are excluded from the reportbecause they are not refundable (make no direct payments). Further, in most casesthey impose no income test for eligibility. Examples of these other tax benefits arethe deductibility of mortgage interest and property taxes on owner-occupied homes(equivalent to outlays of $63.3 billion and $21.8 billion, respectively, in 2002). These tax transfers increase families' disposable income by reducing their taxliability and are known as "tax expenditures." (The standard deduction and personalexemption in the income tax code also decrease families' taxable income.) Table 1. Expenditures of Major Need-Tested Benefit Programs,by Form of Benefit and Level of Government,FY2000-FY2002 (millions of current dollars) Source: Table prepared by the Congressional Research Service (CRS). Note: Program data on which this table is based are found in summary table ( Table 14 ) at the back of the report. Total expenditures on cash and noncash welfare programs multiplied many times between 1968 and 2002 ( Table 2 ). Even after allowance for price inflation,spending sextupled (rising 523%) over the 34 years, a period when the U.S.population rose by an estimated 43%. (2) Measuredin constant 2002 dollars, (3) theannual rate of growth in spending over the whole period was 5.5%. However, thegrowth pattern was uneven. Real spending almost tripled in the first 10 years,declined in some years (1982, 1996. and 1997), and in the last 5 years rose at anannual rate of 3.9%. Total per capita welfare spending grew in real terms (constantFY2002 dollars) from $416 in FY1968 to a peak above $1,800 in FY2002. Table 2. Total Expenditures for Need-Based Benefits, FY1968-FY2002 (in millions of dollars) Source: Table prepared by the Congressional Research Service (CRS). FY1968 and FY1973 data are from: Income Security for Americans: Recommendations of thePublic Welfare Study . Report of the Subcommittee on Fiscal Policy of the JointEconomic Committee. December 5, 1974. Table 4 , p. 28 of Joint EconomicCommittee study, (1968 federal total has been increased by $54 million to correct atypographical error in that table, and the 1973 federal total has been increased by$101 million to include Title X family planning, previously omitted from this reportseries). Data for FY1975-FY1999 are from previous editions of this report (revisedto incorporate public housing capital fund costs, to account for new estimates ofsome program outlays, and to provide historical data for some newly added programs). Data for FY2000-FY2002 are from Table 1 of this report. Figure 1 shows the course of expenditures for income-tested benefits from FY1975-FY2002. The upper line shows total real spending (federal and state-localspending); the bottom line shows state-local spending alone; the space betweenrepresents federal spending. Throughout this period federal expenditures accountedfor more than 70% of the total. The federal share rose above 76% in 1978-1980, thenbegan a general decline. In the 1993-2002 decade it averaged 71.4%. Major Welfare Policy Changes (1968-2002). During 1968-1976, Congress liberalized some oldwelfare programs and established new ones. Some of the major expansions follow. Effective in 1969, Congress gave a work incentive bonus to all mothers who receivedAid to Families with Dependent Children (AFDC) checks; the bonus, virtuallyrepealed in late 1981, was the right to a welfare supplement even after their earningsrose above the state standard of need. In 1969, minimum rents for public housingwere abolished (reinstituted, at a lower level, in 1974). By 1970 amendment, theFood Stamp program was converted into a federal income guarantee in participatingcounties. By 1972 amendment, basic educational opportunity grants were adoptedfor all needy college students (extended to "middle - income" students by 1978 lawand renamed Pell grants in 1980). In 1972, effective in 1974, a federal cash incomeguarantee -- Supplemental Security Income (SSI) -- was enacted for the aged,blind, and disabled, and Congress established the Special Supplemental FoodProgram for Women, Infants, and Children (WIC). Effective in 1974, food stampswere extended to all counties, providing a national income guarantee in the form offood stamps. In 1975, a rebatable tax credit was adopted for low-income workerswith children. In 1981, Congress moved to restrict eligibility for some programs and to lower some benefits. For example, it imposed gross income eligibility limits for AFDC andfood stamps, reduced AFDC and food stamp benefits for families with earnings,raised public housing rents, and reduced subsidies for school lunches. Effective inFY1983, it temporarily reduced the food stamp guarantee. Thereafter, Congressrestored food stamp benefit rules for workers (1985), expanded Medicaid eligibilityfor some needy persons not enrolled in cash welfare, sharply expanded the EITC (andgave it inflation protection) (1986), and required all states to offer AFDC to needytwo-parent families in which the primary earner is unemployed or underemployed(1988). It also established the Job Opportunities and Basic Skills (JOBS) programfor AFDC recipients and expanded federal matching funds for work and training andfor related child care. In 1993 ( P.L.