Wednesday, December 12, 2012

The American Welfare State

Throughout the presidential campaign, Republican candidates pointed to the number of food stamp recipients -- increasing from 33 million people in 2009 to 43 million in 2012 -- as a sign that poverty had skyrocketed under President Obama. But a new study suggests that the reason there has been such an increase in food stamp recipients during the last four years is even more pernicious.

The study's authors, George Mason University's David Armor and Sonia Sousa, argue that the food stamp program can no longer be regarded as an anti-poverty program because nearly half of its recipients are above the poverty line, many of them substantially so. And other anti-poverty programs have an even higher percentage of the non-poor among their recipients.

Armor and Sousa reported their findings in "Restoring a True Safety Net," an article published in the public policy magazine National Affairs. The study examined spending over the last thirty years for federal anti-poverty programs providing nutrition, health care, housing and cash assistance for the supposed poor. They show that the explosion in costs for these programs has little to do with the higher numbers of Americans who have fallen into poverty since the Great Recession (as the authors dub the economic downturn that began in 2008).

Spending for poverty programs received a big boost during the Bush years, a $100 billion increase over eight years. But the Obama spending spree dwarfed those increases. In his first two years in office, President Obama increased such spending by $150 billion, some of it in the 2009 stimulus package. The portion of the federal budget now attributable to fighting the "war on poverty" is now roughly equal to the entire defense budget ($666 billion compared to $693 billion), slightly less than spending on Social Security ($700 billion), but more than on Medicare ($551 billion). Taken together, federal spending on income transfers and other social benefits are now 2.76 times greater than spending for national defense.

How did this happen? The major changes occurred when the government allowed more lenient standards for eligibility for benefits. Most of these programs were originally designed to help those who lived below the official poverty line, which in 2011 was $11,702 for a single person and $22,811 for a family of four. But over the years, the federal government has lowered the threshold so that even those earning twice the income considered below poverty still qualify.

States play a role in determining who qualifies as well; and in several states, a family of four with income of over $45,000 a year is eligible to receive benefits. According to the study, over half of the recipients of food stamps (now known as the Supplemental Nutrition Assistance Program or SNAP), have income above the poverty line. Of the 40.3 million receiving food stamps in 2010 (the last year for which detailed figures are available), 20.4 were above the poverty cut-off. Of these, a whopping 8 million have income twice the poverty level.

And the non-poor receive more benefits than food stamps. Those living at 133-200 percent or more of the poverty level also constitute the greatest number of beneficiaries of Medicaid and the Children's Health Insurance Program. Even Temporary Assistance to Needy Families (TANF), which gives cash benefits to those supposedly in need, now supports those whose incomes are twice the official poverty definition; indeed 40 percent of TANF funds go to families whose incomes are more than 200 percent of poverty.

The policy implications of these findings are enormous. What once were programs to provide a safety net for the truly poor are now programs to boost the living standards of the lower middle class. More importantly, these changes reflect a sea change in social and economic policy. Those who have warned that America is heading toward a welfare state are wrong. We are already there. As Congress and White House officials debate the fiscal crisis, the failure to deal with the burgeoning dependency of millions of Americans will doom any long-term, viable solution.



Why Work Anyway?

I was shocked by something I heard from one of my friend’s sons the other day.  He is a college graduate with a business degree and fortunately has a job.  We were all talking about the fiscal cliff and how it would affect people making over $250K a year.  His reaction to the top rate rising to 39% along with the California State tax increase due to Proposition 30 prompted him to say, “Whew, I think I dodged a bullet! I was up for a promotion with a pay raise but someone else got it. I’m pretty sure my taxable income will be under the level where I would have gotten punished.”  PUNISHED.

He was basically saying that he would rather earn less and stop advancing in his career than be hit with massive taxes.  I asked him to explain and he said that basically he didn’t want to work and then fork over 50% or more of his earnings to the government.  He said that he had gone to school, studied hard and gotten a job but was still burdened with excessive student loans and he felt that with that hanging over his head he couldn’t afford to pay more in taxes.

As for buying a home and starting a family, well that was not even an option for him.  He said that if they were talking about taking away the mortgage home deduction then why buy a house anyway?

This is where we have come in this country.  It is now a better option to take a lower paying job, rent a home or live with mom and take government benefits than it is to climb up the ladder to success.  The American dream is fading folks.  Like an old photograph from a Polaroid instant camera, the picture is slowly disintegrating.

Our entitlement society is out of control. It is a sad fact that a head of a household of four making minimum wage has more disposable income than a family making $60,000 a year.  In an article in August 2010 this issue was discussed in The National Review.

 “In many cases, economists have calculated, welfare recipients who enter the work force or receive pay raises lose a dollar or more of benefits for each additional dollar they earn. The system makes fools of those who work hard.

“Recently the chairmen of two important subcommittees on Capitol Hill convened a hearing on this issue. The hearing elicited some revealing testimony from one of the chairmen’s congressional colleagues.”

“The more benefits the government provides, the stronger the disincentive to work,” Representative Geoff Davis (R., Ky.) pointed out. The great irony, he added, is that although federal welfare programs “are designed to alleviate poverty while promoting work,” collectively they have “an unintended side effect of discouraging harder work and higher earnings.”

Less work and lower earnings, in turn, translate into greater dependency on the government — and zero or even downward social and economic mobility for those mired in poverty.”

Working women who are single with children often forego a raise because it would push them into the dilemma of losing Title 20 daycare if they made more money.   There are over 70 Federal welfare programs right now and the list will continue to grow under Obama.  If a person works and climbs the ladder, they will become disqualified for these programs and lose all of the benefits that they have become so accustomed to.

This creates a moral dilemma. When good people continue to stay on unemployment because taking a job would not pay them as much as their benefit, how can you really blame them?  We don’t live in a culture where people are embarrassed to ask for a handout.  It is so easy just to file for benefits by computer, have the funds deposited directly into your bank account or take your EBT credit card to buy anything you want.  There is no shame in taking government assistance, you are entitled to it.

“Today, more people than ever before—67.3 million Americans, from college students to retirees to welfare beneficiaries—depend on the federal government for housing, food, income, student aid, or other assistance once considered to be the responsibility of individuals, families, neighborhoods, churches, and other civil society institutions. The United States reached another milestone in 2010: For the first time in history, half the population pays no federal income taxes.” - National Review

So the tipping point has been reached and now the government is scrambling to grab any and all money that working people make just to pay these entitlements.  Unfortunately, the American people are waking up and becoming more like the young man I talked to.  They are seeing that their hard work and effort is not benefiting their own families, but being redistributed to others; some who need it and others who just don’t bother to work.  Look at the major companies that are paying out dividends before the huge taxes kick in.  They can see the writing on the wall and are preparing for it.

The young already know that they will probably never see social security or Medicare benefits in their lifetime yet they see it withdrawn from their checks every week.  They are the ones sensing the “unfairness” of all of this, not the people reaping the benefits.

This is NOT America, this is not who we are as a country.  If we don’t stop punishing success and achievement, future American generations (if there are any) will be content to sit at home and count their government goodies but will never excel at anything, never strive to be anything.  There will be no incentive to achieve success.  Why should you? It will just be taken away.

Once the so-called “rich” have been drained dry the only option left for the government will be to just keep printing money.  That lasts until the economy collapses in on itself and by that time the country we knew will be just like that fading Polaroid, a memory.



Fewer Americans employed, unemployment rate drops

Perhaps it is time for Congress to zero out the budget of the Bureau of Labor Statistics, an agency of the Department of Labor whose data is so important to financial markets that figuring out how to protect it against its early release has become a major debate in the halls of the Frances Perkins Building.

Why? Their work has become increasingly irrelevant.

This morning the Labor Department announced that the unemployment rate dropped from 7.9 to 7.7 percent. The economy must be booming.

Only one problem: the same report shows that 122,000 fewer Americans were employed in November than in October.

What?  This disconnect is why the unemployment rate has become the most meaningless economic statistic released by the government. What’s worse is that it duplicates private-sector efforts that are more reflective of what is happening in the economy.

Both ADP with its payroll survey and Gallup with a traditional employment survey actually accomplish what the Labor Department attempts to do without costing taxpayers a dime.

This is not a debate about whether the Labor Department numbers are correct or not: it is a question of whether they are relevant or even a necessary government function.

Given the divergence between the announced unemployment rate and the actual number of people employed, it just may be time for the Labor Department to get out of the statistical survey game altogether.

As the Senate is currently being asked to decide whether to confirm a new commissioner to lead the Bureau of Labor Statistics, they should ask the real question. Is the bureau performing a necessary function that cannot be done by the private sector?

Since the answer is no, there really is no excuse for either confirming a new commissioner, or continuing to fund the agency itself. After all, I’m sure if the government statisticians were measuring the economy from the unemployment lines, they might have a chance of getting a true picture of our nation’s employment situation.



Ten Things to Say to an Obama Voter Who Just Got Laid Off

1. "Hey, at least that successful Mormon businessman didn't win."

2. "Didn't your lady parts warn you this would happen?"

3. "Look at the Bright Side, Gay marriage passed in four states."

4. "Hey, Big Bird still has a job. Isn't that the important thing?"

5. "I am sure Obama cares deeply about your situation. Maybe he'll send you a postcard from Hawaii."

6. "Well, look at the bright side, Rush Limbaugh is getting a massive tax increase."

7. "Hey! Now you'll have more time to play with your unicorn."

8. "Isn't it worth losing your job to know that religious organizations now have to pay for abortions and contraceptives?"

9. "Well, now you and Keith Olbermann have something else in common."

10. "Forward!"

From George Roper



“Riding” Social Security off a cliff:  "As currently arranged, Social Security allows today’s retirees to free-ride on other people’s money. By voting for candidates who promise to maintain (or even better, to increase) Social Security’s stream of payments to each retiree, retirees free-ride on the earnings of current workers. Or if Uncle Sam borrows the money to pay today’s retirees, these retirees free-ride on the earnings of future workers, who will be taxed so that Uncle Sam can repay his creditors."

Two of a kind:  "For all those who think that our deficit is caused by a dearth of revenue, consider this thought experiment. In 2012, the federal government will spend $3.56 trillion. Last week's Powerball jackpot was a reported $587.5 million, the largest winning Powerball payout ever. In order to finance current spending, the federal government would have to hit that jackpot 6,570 times. As recently as fiscal year 2001, President Clinton's last budget, federal spending amounted to just $1.9 trillion."

UP the fiscal cliff?:  "Regarding the so-called fiscal cliff; the President wants to increase taxes on those earning $250,000 or more per year.  He says it is to reduce the deficit.  But it will have almost no effect on the deficit. Many of us predict that the next step he will take if he gets the $250,000 is to say, 'Oops, that did not help much, let’s go to $200,000'."



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The Big Lie of the late 20th century was that Nazism was Rightist.  It was in fact typical of the Leftism of its day.  It was only to the Right of  Stalin's Communism.  The very word "Nazi" is a German abbreviation for "National Socialist" (Nationalsozialist) and the full name of Hitler's political party (translated) was "The National Socialist German Workers' Party" (In German: Nationalsozialistische Deutsche Arbeiterpartei)


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