Tuesday, May 22, 2012

America's welfare mess

Every so often, an article crosses your desk that makes you feel like you’ve been hit between the eyes with a sledgehammer. Even if you have a solid understanding of the topic, and you notice that the facts at hand match your previous suspicions, somehow you still have to keep a grip on yourself because it is so staggering. That is what happened to me while reading Michael Tanner’s recent report for the Cato Institute on the American welfare system.

Tanner is a recognized expert on our welfare system, having written two books on the subject during the 1990’s, when people were actually making an effort to restructure the welfare state. In fact, his work helped form the philosophical basis for the landmark welfare reform enacted in 1996. Since then, Tanner has been studying other areas of public policy, but he recently returned to look at the current welfare structure. Tanner told me that even he was shocked at what he found.

To be fair, Mr. Tanner admits that some of the recent increases in welfare expenditures are due to the recession. But he also observes that the escalation in welfare spending has been far greater during the current recession than the previous ones. Furthermore, people have hung on to their welfare participation for a much longer period of time. That being said, our Treasury Secretary, Timothy Geithner, was recently on Meet the Press and blamed the cause of the deficit on guess who -- the Bush Administration. Not according to Tanner’s study.

There are currently 126 separate federal anti-poverty (welfare) programs. That stupefying figure includes 33 separate housing programs run by four cabinet departments, 21 programs providing food or food assistance in three cabinet departments and one federal agency, eight health care programs in five different agencies within Health and Human Services, and, to top it off, 27 cash or general assistance programs spread throughout seven cabinet departments and six agencies. Tanner concluded that for at least the past 10 years, we’ve had more than 100 federal anti-poverty programs!

If you’re not already confused, let me fix that: the players change so often that ultimately you need a scorecard. In 2011, four obscure programs – Vista, Even Start, the Senior Companion Program (which used to be called grandchildren), and the Foster Grandparent Program – were eliminated. But of course, new ones were created. We now have the Capacity Building for Sustainable Communities Fund, the Emergency Homeowners Loan Program, and the Choice Neighborhood Planning Grants. (I probably qualify for this one because I’ve got some pretty choice neighbors.)

How much are we spending on all this? Well, pull up your socks. Tanner calculates that the federal government lays out $44,544 for a “poor” family of three, and that state and local governments throw in another $20,610 (some of which, I assume, comes from federal block grants). This means that a family of three can, in theory, get $67,154 from the government in housing, health care, food, and cash assistance. So here’s the big question: why bother working?

Then there’s the other big question: with all these handouts, why hasn’t poverty been eliminated? A family of three is considered below the poverty line when their income is less than $18,530, so how can anyone still be living in poverty in America when we’re paying out benefits equivalent to almost four times that amount? Certainly, a lot of the money goes to overhead. With 33 federal housing programs – not to mention the ones at the state and local level – there’s an army of middle-class government employees getting their pockets lined. Unfortunately, because of the complexity of the budget process (or lack of budget since the Senate has not passed one in three years), Tanner can’t quite nail down that overhead figure. But he does comment in his report on the people who profit from these programs, writing: “Anti-poverty programs are usually more concerned with protecting the prerogatives of the bureaucracy than with actually fighting poverty.”

What are we getting for our $668 billion a year? It’s certainly not a reduction in poverty. Combine the federal largesse with the $284 billion spent by state and local governments and we are handing out almost $1 trillion a year. Since the beginning of the Great Society in 1965, we’ve increased our combined anti-poverty spending threefold as a percentage of GDP, yet the overall poverty rate has stayed constant with only a modest dip during the mid-1990’s as a result of the welfare reform bill.

Because of the bizarre maze of federal and state programs, it’s nearly impossible to analyze due to the diffusion of the efforts through the multitude of programs. When Mitt Romney talks about reorganizing government, he should emphasize this chaotic situation as an example of how to streamline government and save billions. Massive elimination and consolidation of these programs would not only conserve precious tax dollars, but better serve the recipients of these programs. The tangled mass of programs – along with the lack of co-coordinated oversight – leads only to confusion and fraud, neither of which helps anyone (except the criminals.)

This report demonstrates (yet again) the inefficient disaster of our federal government. Mr. Tanner should be hired to advise the Romney campaign, because we all know that Mr. Obama will never effectively spearhead any change to this morass. And change we need or we will drown.



Government waste

Most of my work on government stimulus focuses on economic theory and evidence. But every so often it’s a good idea to remind ourselves of the ridiculous ways that government wastes money. Here are some details from a boondoggle in West Virginia.
Nobody told Hurricane librarian Rebecca Elliot that the $22,600 Internet router in the branch library’s storage closet was powerful enough to serve an entire college campus. Nobody told Elliot how much the router cost or who paid for it. Workers just showed up and installed the device. They left behind no instructions, no user manual. The high-end router serves four public computer terminals at the small library in Putnam County. …The state of West Virginia is using $24 million in federal economic stimulus money to put high-powered Internet computer routers in small libraries, elementary schools and health clinics, even though the pricey equipment is designed to serve major research universities, medical centers and large corporations, a Gazette-Mail investigation has found. …The Cisco 3945 series routers, which cost $22,600 each, are built to serve “tens of thousands” of users or device connections, according to a Cisco sales agent. The routers are designed to serve a minimum of 500 users. Yet state broadband project officials directed the installation of the stimulus-funded Cisco routers in West Virginia schools with fewer than a dozen computers and libraries that have only a single terminal for patrons.

Sounds like the government could have bought every user a laptop and squandered less money.

It’s important to realize that this type of boondoggle is the rule, not the exception. Every so often, we see stories about absurd waste, such as the $423,000 study to find out that men don’t like to wear condoms, the Pentagon spending $900 on a $7 control switch, or a $100,000 library grant to a city without a library.

We should get upset about these examples. But remember that the cartoon below is exactly right. The waste, fraud, and pork that we find out about is dwarfed by what remains hidden.



How Do You Compromise with a Progressive?

I forced myself to watch Bill Maher this Friday as I was trying to chart out this column. Thankfully I hadn’t just eaten.

It was sickening to listen as cerebral dwarves Maher and some not-so-bright jackass from the fascist rag The Nation talked about how Republicans and the Tea Party are evil and the cause of all our economic problems while Rhodes Scholar and former U.S. Sen. Bill Bradley, D-N.J. sat there smirking like a broken Muppet. The world in which progressives live makes the world J.K. Rowling created for Harry Potter seem normal.

And it wasn’t just the economy conservatives had wrecked. This august panel also blamed conservatives and the Tea Party for what they determined was the rebirth of racism in this country. More than that, they believe racism is worse now that at any time in recent history. The evidence of this, as is often the case with progressives, is their say-so. There’s nothing like being lectured by three wealthy white progressives about the plight of minorities in the world.

Maher’s show is the hollowed-out tree for intellectual elves on the political left to gather and make themselves feel good about their failed ideas… outside of MSNBC, naturally. As such, these elfin academics took a moment to lament the primary loss of Sen. Richard Lugar, R-ish-Ind., to Richard Mourdock because Mourdock doesn’t support “compromise.” That got me wondering – How do you compromise with people like this?

Many progressives scoffed at the concept of a “War on Terrorism.” Many more equated the United States to the terrorists who attacked us on 9/11. Still others subscribed to the stupidity that if only we’d talk with our attackers, find out what they want and negotiate with them we could avoid attacks in the future.

Putting aside the fact that these are the same people who demand terrorists at Gitmo get a presumption of innocence and due process yet simultaneously call for the head of George Zimmerman in the Trayvon Martin case, how do you negotiate with a terrorist?

Turns out it’s strikingly similar to negotiating with a progressive. You don’t. Not at all.

Chief amongst the desires of al Qaeda is us dead and Israel destroyed. Assuming your position is not wanting to be dead and not having Israel destroyed, which can be a lot to ask of far too many progressives these days, what do you compromise on? Allow them to murder some of us and destroy part of Israel?

Progressives’ goal is to raise taxes, spend more, grow government and make an ever-growing number of people dependent on government services, so those people will vote continually to keep them in power. Conservatives, though not necessarily Republicans, seek to bind the government to the Constitution, that pesky document that progressives all too often treat as a small speed bump on their way to their tyrannical Utopia.

Conservatives want less government involvement in people’s lives, smaller, constitutionally limited government and lower taxes for everyone. When two sides are pitted against one another, one side wanting higher taxes and more spending while the other wants lower taxes, or at least no increase, and less spending (or even just a decrease in the rate of increase) how do they compromise? Where is the middle ground?

It’s always the side that wants a bigger, more intrusive, ever-expanding government who wins in that compromise, no matter how much “compromise” there is, because they get more. And the goal is always “more.”

Progressives are like heroin addicts, only less honest. They both want “just one last fix” before they’ve finally had enough and will get serious about quitting. But a junkie will ask you for money for that next fix; progressives simply will deem a need for more of your money and then vote to take it. Neither is ever really done, and “just one more” is never enough with either.

The simple fact is there is no negotiating with terrorists or junkies just as there is no negotiating with progressives. “Compromise” might as well have six fewer letters when it comes to protecting individual liberty because there is simply no room for it anymore. We’ve already given away too much of our founding soul to give away any more and remain the nation, the people, we are meant to be.

There’s a reason all the people of the world who seek freedom and opportunity always try to come here. For them, and for our future, we can not allow politicians to negotiate that away any further in the name of compromise.



What Air India tells us about state run and monopoly companies

A nice little story here about Air India. It illustrates the dangers of having either state run or monopolistic companies.
Some of the airline’s staggering losses are rooted in exceptionally generous staff benefits. Investigators discovered pilots insisted in staying in five star hotels in New York, Chicago and Mumbai during stop-overs instead of spending the night at cheaper airport hotels.

Significant losses in revenues are due to serving and retired pilots and crew taking business class seats ahead of paying customers. The practice was restricted in 2009 when its chief executive appealed to staff to co-operate and stressed there was no shame in traveling economy.

Despite the restrictions on staff using business class tickets, paying passengers were rejected to make way for Air India staff who were upgraded from economy seats. At one point, Air India’s business class ticket holders were shunted onto rival airlines — at Air India’s cost — because their own staff had occupied the seats.

The temptation for any group of insiders is to make use of that insiderdom to gain privileges. This is as true of CEOs as it is of airline pilots, as true of politicians as it is of scribblers for think tanks. It's simply human nature: when we talk about bureaucrats we call it public choice economics and when we talk about everyone else we call it the blindingly obvious.

The only cure we've got for this is competition: everyone needs to be put in fear of their livelihood about the success of the organisation. To consider that a business class airfare not paid by a customer makes that job more insecure: that the claim of a gargantuan pay deal for inhabiting the corner office makes losing that job more likely. And this really only can be done when the players in the marketplace are indeed playing in a market. One where such behaviour really does bring down a company and thus impose discipline on all others.

Which does pose problems with the politicians. For we've tried having competing governments in the Wars of the Roses and didn't like the result much. Perhaps we'll just have to revert to terminal violence in this difficult case?



Hopeless Change for the Young

In 2008, Obama inspired legions of young Americans who bought into his "Change you can believe in" campaign message. According to the Pew Research Center, voters under the age of 30 supported Obama over John McCain 66:31 – by far the largest disparity between young voters and other age groups in any presidential election since exit polling began in 1972.

Sadly, three years later, it is more like Hopeless Change that millions of young Americans face. In exchange for that 2:1 vote of confidence they gave Obama in 2008, the 18-29 year-olds are feeling the brunt of the economic stagnation – often by twice the degree of all other age groups. According to the Wall Street Journal, "The U.S. labor market is in a malaise, but young adults are in crisis."

Unfortunately, what has happened is persistent unemployment, particularly long-term unemployment, depressed wages and purchasing power, massive depreciation of home values, doubling of gas prices, rapid increase in food and health care costs, and nearly stagnant economic growth. Virtually everyone and every sector have been negatively impacted, but young Americans just entering the workforce are suffering the most.

A new economic report by Gallup says 32% of 18-29 year-olds in the U.S. workforce were underemployed in April. That number is greater than the previous month of March (30.1%) and also higher than a year ago (30.7%), so nearly three years after the recovery supposedly began the trend is still worsening. Unemployment among this age group (13.6%) is nearly twice as high as any other age group, according to Gallup. Another 18.4% are working part-time, "but wanting to work full time." This trend is also worse than in March as well as April, 2011.

"Today's slow economic growth is a disaster for those unemployed and underemployed as they look for jobs when so few new jobs are being created. For younger Americans as a group, this is a particularly acute issue," summarized Gallup.



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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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