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In 1902 governments in the United States spent very little on relief of the poor, including less than 0.2 percent of GDP on relief and 0.25 percent of GDP on health care services. In the early 21st century, governments spend about percent of GDP on welfare programs. (Health care for the poor, Medicaid, is described separately below.)
Prior to the Great Depression, non-health care expenditures on the poor were minimal, less than 0.2 percent of GDP. But in the Great Depression state and local governments sharply increased spending on welfare, with an initial boost from the federal government, and expenditures reached 2 percent of GDP in 1940. Between 1940 and 1960 welfare was mainly borne by state governments, with total cost fluctuating between 1 and 2 percent of GDP including a 0.5 percent contribution from the federal government.
In the 1960s the federal government started to dominate welfare spending, contributing about half of the 4 percent of GDP cost by the early 1980s and about two-thirds of the 4.5 percent of GDP peak cost in the Great Recession in 2010.
In the 2010s federal welfare spending declined off a peak of 3.36 percent GDP in 2010 (including 0.96 percent GDP transferred to states) to an estimated 2.1 percent GDP in 2015 (including 0.72 percent GDP transferred to states) and a projected 1.9 percent GDP by 2020. State welfare spending has declined from 1.6 percent GDP in 2010 to an estimated 0.78 percent in 2015. Local welfare spending has declined from 0.61 percent GDP in 2010 to an estimated 0.47 percent in 2015.
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Detailed table of spending data sources here.
Federal spending data begins in 1792.
State and local spending data begins in 1890.
State and local spending data for individual states begins in 1957.
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> State and Local Finances FY13
Source: CBO Long-Term Budget Outlook .