WELFARE OUT OF CONTROL

By Ross Kaminsky


Today, the first-ever program-wide reduction in the Supplemental Nutrition Assistance Program (“SNAP”), also known as food stamps, will take place. The reduction amounts to $5 billion out of a program that spent nearly $80 billion in the most recent fiscal year, more than double what food stamps cost taxpayers when Barack Obama took office and more than five times the cost in FY2002.
Food stamp benefits are distributed to a shocking 47 million people, about 14 percent of all households in the United States, up more than two-thirds from five years ago despite the unemployment rate having dropped far below the worst months of 2009 and 2010.

Think about that: Nearly one out of every seven Americans gets the government cheese. That can only be good for those who distribute the Velveeta (or, for today’s pampered and unashamed EBT recipients, perhaps a fine organic chèvre), lovingly keeping millions of Americans as their little pet mice. We’re not even a nation of sheep anymore; we’ve been downgraded to rodents, hoping to be fed by our benevolent government keepers. Maybe we’ll even get over-sized Habitrails one day.

This increase in dependency is a specific goal of the Obama administration, with the USDA giving bonuses to states for “efficiency” in adding more people to the food stamp welfare rolls. In 2011, Oregon bragged of a $5 million “performance bonus” for increasing SNAP recipients by 60 percent over three years.

Contrary to willfully ignorant reporting describing today’s reductions as “a move by congress,” these automatic “cuts” represent the end of a temporary boost of 13.6 percent in SNAP benefits enacted through President Obama’s 2009 stimulus, which failed to stimulate anything other than the growth of government and dependency — again, precisely the goal of this administration.

Due to the reduction, according to CBS News, “the maximum payment for a family of four will shrink from $668 a month to $632, or $432 over the course of a year.” In other words, program participants will see a modest cut which was always intended to take place at the end of a temporary boost in benefits (despite Reagan’s warning that “nothing lasts longer than a temporary government program”).

Yet panic-stricken liberals are warning of — and perhaps hoping for — riots.

Fox News has reported that the Department of Homeland Security is wasting $80 million taxpayer dollars to protect government buildings from the violence of those living off the forced generosity of others when that generosity is slightly reduced.

This has to stop.

We are not a nation of impoverished peasants living in straw huts, desperate for just enough kindness from the czar to allow us to survive, albeit cold and hungry, through another gray winter, while we listen hopefully to Bolsheviks promising to free us from bitter serfdom.
We are not a nation of mice, helpless in our cages but for the magical hand that makes cheese appear in our bowl.
And we are not a nation accustomed to seeing our fellow citizens’ self-worth destroyed by being led into the opiate of dependency — at least not on this scale.

Separate from discussions of the importance of freedom, the immorality of redistribution, and the exceptionalism and self-reliance that once defined the American character, an economic debate also surrounds the food stamp program.

It’s one thing for Nancy Pelosi, economoron that she is, to suggest that food stamps provide economic stimulus. Back in 2010, the lunatic leftist gave us this piece of economic wisdom: “It is the biggest bang for the buck when you do food stamps and unemployment insurance. The biggest bang for the buck.”

But it’s something else when a financial reporter buys unquestioningly into that obviously ridiculous argument.

In a piece called “Food stamp cuts will hurt more than you think,” Yahoo! Finance reporter Jeff Cox gives us this gem of economic idiocy:

Programs such as SNAP have what economists call a “multiplier effect”—in other words, a dollar given to an entitlement recipient has amplified economic benefits. In this case, those consist primarily of the grocers who benefit when food stamp users shop in their stores. The estimated multiplier effect for food stamps is as high as 2 to 1.

Cox, who republished this story on CNBC’s website, is regurgitating a myth perpetuated by the left and seemingly accepted by an economically ignorant public (including, obviously, financial reporters who should know better).

Particularly annoying about the myth, beyond the fact that it is used to support harmful public policy, is that it is so obviously impossible.

First, food stamp money is simply redistributed from other Americans, either by taxing their earnings today or by deficit spending and taxing our children’s future earnings. Which means that any positive economic effect is offset by an equal negative economic effect, some immediately and some as a wet blanket on the next generation’s economic opportunity.

Second, if it were the case that food stamps have a miraculous positive multiplier, not only should we then put the whole country on food stamps, we should also use rent stamps and gasoline stamps and grande Frappucino stamps. Economic growth would skyrocket! Government revenue would surge so much from GDP growth that we could slash tax rates and still leave government with more revenue than it’s taking in today, while we all get rich at the same time.

In 1848, the great French economist Frédéric Bastiat warned against the Pied Pipers of Redistribution:

There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.
Yet this difference is tremendous; for it almost always happens that when the immediate consequence is favorable, the later consequences are disastrous, and vice versa. Whence it follows that the bad economist pursues a small present good that will be followed by a great evil to come…

It is simply and obviously impossible for redistribution to create important positive economic effects, which is also why Obama’s ginormous stimulus package failed, why cash-for-clunkers failed, and why every Keynesian economic program ever attempted has failed.

Economic benefits arising from theft (also called taxation), even if the confiscated money is then redistributed toward ostensibly charitable ends, are no more likely to exist than is the Tooth Fairy.

In fact, there is no economic difference between the money I redistribute to my daughter when she loses a tooth and the money Democrats redistribute to people through the food stamp program (as long as my daughter then spends the money, such as on a candy bar in a grocery store, right behind a food stamp recipient). In both cases, one person’s gain is another person’s (my) loss. But at least when I act as the Tooth Fairy, we know that our money is going to someone we want it to go to.

I do not want Americans to starve in the streets, much less riot at the thought of getting less of my money. But even during the Great Depression, prior to the existence of the welfare state, we did not have either. The American people have been, and must return to being, proud, self-sufficient whenever possible, and voluntarily generous, rather than living in a statist world where Big Brother takes care of everything — meaning citizens need care little for others, or even for themselves.
Today’s first-in-history nationwide reduction in food stamp spending is a welcome pause in the metastasizing culture of dependency intentionally brought on Americans since FDR trampled the Constitution to create a welfare state.

But it represents the beginning rather than the end of the conversation: In September, the House of Representatives passed the Nutrition Reform and Work Opportunity Act of 2013 which would cut almost $40 billion from food stamp spending over the course of a decade (representing less than a 5 percent reduction) by more rigorous means testing, eliminating certain duplicate benefits, ending bonus payments and SNAP advertising budgets, and cutting down on fraud and abuse within the program.

Would you blow your whistle on kleptocrats? Do you have a news tip, firsthand account of political corruption, or reliable information about a government foul-up? Please send your scoop to Basil Venitis at venitis@gmail.com for publication in http://themostsearched.blogspot.com

 

WELFARE FALLACIES

15% of Americans are poor.  Record poverty is not the result of insufficient welfare spending.  Every year, the American government spends a trillion dollars on means-tested welfare aid.  The U.S. has record-high poverty, because of bad policies that have damaged the economy and failed to create jobs. In the long term, the lack of self-sufficiency has been caused by a massive welfare state that discourages work.

 

One of the great fallacies of our time is that if government doesn't do something, no one will. Its corollary is that if you are opposed to the government doing something, that you are opposed to anyone performing that function at all. These disastrous fallacy color much of our national debate concerning heath care, education, poverty, housing, disaster relief, and other issues.

 

The welfare system is unfair to everyone: to taxpayers who must pick up the bill for failed programs; to society, whose mediating institutions of community, church and family are increasingly pushed aside; and most of all to the poor themselves, who are trapped in a system that destroys opportunity for themselves and hope for their children. 

 

We should eliminate the entire social welfare system. This includes eliminating welfare agencies, food stamps, subsidized housing, and all the rest. Individuals who are unable to fully support themselves and their families through the job market must, once again, learn to rely on supportive family, church, community, or private charity to bridge the gap.

 

Half of taxpayers do not pay taxes, while receiving generous federal benefits. Talk about a perfect fiscal storm. On the one hand, more and more spending on dependence-creating programs. On the other, an ever-shrinking number of taxpayers to pay for these programs.  

 

It’s worth recalling what Thomas Jefferson called the sum of good government in his first Inaugural Address: a wise and frugal government, which shall restrain men from injuring one another, which shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned.  We’re drifting further and further from this ideal. Let’s hope that citizens wake up before we go too far down this dangerous path.

 

An important factor in retarding the EU economies is the expensive social welfare entitlements enjoyed by Europeans. While the U.S. federal and state governments spend roughly 18 percent of GDP on pensions, welfare, and health care costs, the EU spends nearly 29 percent. The list of entitlements seems endless: unemployment benefits, welfare payments, pensions, paid maternity leaves, child-care subsidies, free university education, expansive sick leave, restricted working hours, generous paid vacation and holiday leave, and government-provided health care. As EU champion T. R. Reid puts it, falling into the EU government safety net is like falling into a large, soft bed with a down comforter for protection against the cold and a matron standing by with a warm cup of tea to soothe discomfort.

 

As desirable as these boons may be, they all cost money and depend on an expanding economy that creates jobs and increases tax revenues. As we currently see in Greece, a sluggish economy has the opposite effect, constricting the funds available for welfare spending. At the same time, social spending continues to increase as the demand for more entitlements grows and an aging, longer-living population stresses budgets further. Given that by 2050 the EU economies will have a mere two workers for every retiree, the EU social welfare paradise is heading for bankruptcy. 

 

When government assumes increasing responsibility for needs that civil society can provide, it crowds out the responsibilities and resources of private institutions. Government is well suited to meeting needs that require the exercise of coercive power but poorly equipped to address other needs, including the problems of the heart that often contribute to poverty and social breakdown.

 

Government programs can shape people’s sense of responsibility and obligation for each other. For instance, Social Security and similar government programs that provide for the elderly can influence people’s sense of responsibility to take care of their parents and grandparents. Government-funded unemployment benefits can diminish a community’s sense of obligation to its neighbors who lose their jobs. Furthermore, government welfare lowers private giving to the poor.  10 percent increase in a state’s welfare spending correlates with a 3 percent decrease in charitable giving by its citizens.

 

Government social welfare spending can also crowd out private efforts to help those in need. For example, before Medicare Part D was enacted in 2003, two-thirds of Medicare enrollees received prescription drug coverage from nongovernmental providers.  Analysts have since found that the new drug benefit resulted in a crowd-out rate of 72 percent. For every seven prescriptions now paid for by the government, five would previously have been privately financed.

 

The State Children’s Health Insurance Program (SCHIP) has had a similar crowd-out effect. In 2007, according to the Congressional Budget Office, 25 percent to 50 percent of those covered by previous SCHIP expansions were likely crowded out of private coverage. 

 

In whatever field it occurs, this crowding out yields the same result: Government programs and funding push the organizations best equipped to care for those in need to the periphery, while the government assumes more responsibility and control over more resources.

 

 

ENTITLEMENTS VERSUS GIFTS

 

A government that oversteps its legitimate limits and undermines the proper responsibility of other institutions is acting not only unconstitutionally, but also unjustly. Such an expansive government also works against the best interests of those in poverty. Government serves best when it establishes and maintains the social conditions that allow families, churches, and ministries to nurture healthy relationships and allow businesses to provide opportunities for work.

 

Calling for limited government does not mean ignoring the plight of those in poverty.  Limited government is a component of a larger framework that benefits people in need. That framework recognizes not only material needs, but also familial, spiritual, moral, emotional, and social needs.

 

This framework leaves room for each institution to play its proper role and do what it does best. It allows families, churches, and nonprofits to meet basic needs, nurture healthy relationships, and develop virtuous citizens. Within this framework, businesses provide opportunities for work and expand wealth, and government safeguards lives, property, and institutions. Together, limited government, free enterprise, and a strong civil society foster the kind of communities that enable people to escape poverty.

 

As the West copes with long-term unemployment, it’s important to ramp up social supports. Unstable finances can create unstable families. As blue-collar jobs vanish, working-class communities have seen an increase in divorce rates, as have fragile families — cohabiting couples raising children outside of marriage, who face a higher probability of splitting up.  Increasingly complex family structures can put financial pressures on families and on single parents, while creating emotional pressures on children, compounding the cycle of poverty.

 

Giving gifts can be a powerful thing. Gifts create a kind of momentum of good will that bind both giver and receiver in a more personal relationship. The giver often is motivated by the desire to help, while the receiver usually is motivated by gratitude to give back, at a minimum, an expression of thanks. 

 

This seemingly basic dynamic is important when it comes to tackling social ills. If conditions permit, gift-givers often have a vested interest in seeing that the desired objective of their help is achieved. For example, we desire the recipient to use our gift of money to purchase food instead of illegal drugs. By the same token, the receiver often desires to demonstrate good stewardship of the gift, by using it wisely rather than wastefully.  

 

Entitlements foster a different social relationship, mainly because governments typically deliver the benefits through impersonal, top-down programs. These aren’t personal, voluntary acts taken on behalf of a friend, neighbor or someone else we know. Entitlement programs are funded by taxes, which government mandates under threat of penalty. The requirement often fosters a sense of resentment among taxpayers rather than a desire to help others.

 

And on the other side, an entitlement mentality tends to undercut the feeling and offering of gratitude. In fact, sometimes that sense of entitlement tempts recipients to “play” the system, leading to waste, fraud and long-term dependence on the dole.

 

Ever-expanding entitlements aren’t just a fiscal liability; they're a moral threat as well. They have the power to shape cultural attitudes and social dynamics. Americans need to be aware of this potential, so we not only can avoid financial collapse but also foster the kinds of relationships most conducive to genuine compassion and flourishing.

 

Effective anti-poverty efforts pursue conditions and policies that create opportunities and incentives to work. History shows this is better achieved by free markets than by government control.

 

Policies allowing markets to determine prices and people to reap the fruits of their labor are more likely to encourage innovation, risk-taking, entrepreneurship and investment — activities that also create new jobs. Excessive regulations, punitive taxation and redistribution schemes stunt these dynamics.

 

Libertarian policies create economic conditions that expand opportunities to work and generate upward mobility for all. Without these conditions, many end up trapped in an impersonal and degrading system. The government welfare system was intended to serve as a safety net against extreme poverty. In dire situations, when civil society can’t meet people’s basic needs, the government does have an interest in providing material support. However, this safety net should neither discourage healthy behaviors, such as work and marriage, nor crowd out smaller, voluntary organizations. And it should not foster long-term dependence on government, but rather help people get back on their feet — like a trampoline rather than a hammock.

 

Welfare policies were discouraging work and marriage, hurting many of the very people they intend to help. In 1996, American reforms to the central federal assistance program for needy families added work requirements and policies to encourage marriage and strengthen families. As a result of these new incentives, welfare caseloads were cut in half. Work participation increased as well, particularly among the most disadvantaged. Ten years after the reform, 1.6 million fewer children were living in poverty, and by 2001 black child poverty dropped to its lowest rate in national history.

 

People trapped in poverty need relationships that provide personal knowledge and meaningful connections, access to private organizations that offer extensive care and accountability, the opportunity to work and provide for their loved ones and secure social conditions buttressed by the rule of law. Libertarian policies advance these goals and allow each institution in society to do what they do best in serving the common good.