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What determines development and changes in welfare state policies has drawn much scholarly interest with the dominant power resources theory suggesting the influence of various sociopolitical institutions and their coalitions. This paper examines the politics of ethnic heterogeneity with particular emphasis on ethno-racial, religious, and immigration diversity in order to explain changes in welfare state policies in the United States. Despite some short-term declines, data on public social transfer expenditures suggest that welfare state policies have actually expanded significantly since the 1940s. Results from lagged and first differenced time series regressions estimated with many political economy and population characteristics suggest that the growing ethno-racial heterogeneity holds a significant power to undermine the welfare state. This and other findings provide important insights into the roles that ethnic heterogeneity politics may have played in determining welfare state policies throughout the recent history of the United States.