Yes, some spend it on drugs, but if you've ever been addicted to an opiate (such as Vicodan, Heroin, or Oxycontin, Rush Limbaugh's opiate of choice) you know that you cannot break the addicion without professional, medical intervention, and the cities and states do not supply enough of that to solve hte problem.
Homelessness, addiction, and poverty, exists because America, the most prosperous nation in history, continues to fail, year after year, decade after decade, to fix the problems.
Then, America passes panhandling laws to sweep the problems under the rug, out of sight, out of mind. This is America's greatest shame.
America says, Yes, we know you're poor! You're hungry! Maybe you're homeless or sick! But you can't ask for help in public places, it's unsightly! You poor people are such a nuisance!