Tag: welfare

Rising Welfare Costs

The Government Accountability Office released Congressional testimony this week looking at Temporary Assistance for Needy Families. TANF, which replaced unrestricted welfare in 1996, has reduced welfare rolls and encouraged recipients to obtain work. Unfortunately, TANF’s goals have been undermined.

The GAO notes that “work participation rates … do not appear to be achieving the intended purpose of encouraging states to engage specified proportions of TANF adults in work activities.”

States are required to have at least 50 percent of eligible TANF recipients from single parent families participating in work activities. However, states are given various credits and exemptions that significantly reduce the number of recipients required to work. As a result, only about 30 percent of TANF recipients engage in “work activities,” which is often liberally defined. (This has been the case before and during the recession.)

Moreover, while TANF has successfully reduced the budgetary cost of cash-welfare, overall federal spending on anti-poverty programs has increased dramatically. According to a chart from Brian Riedl, anti-poverty spending has increased an inflation-adjusted 89 percent over the present decade:

I previously discussed how TANF enrollment has dropped since its passage in 1996 while food stamp enrollment has greatly increased. A food stamp user interviewed by the New York Times indicates one reason for the trend:

‘It used to be easier to go on cash assistance,’ she said as she left a food stamp office in Brooklyn this month. ‘You didn’t have to go to work, you didn’t have to report every day to an office and sign in and sign out. Now, if you don’t go to those group job meetings in the mornings, they shut down your whole welfare case. So that’s why I just get food stamps.’

Not surprisingly, the cost of the food stamps program has gone through the roof:

The desirability of federal anti-poverty programs in the midst of difficult economic times is a sensitive topic. However, with so many Americans currently in need of assistance, now is actually a good time to discuss the role of government in taking care of the less fortunate. As a Cato essay on welfare and Temporary Assistance for Needy Families argues, the federal government isn’t the best option.

Food Stamps Cut?

Prior to last week’s passage of another $26 billion in bailout money for state and local governments, I noted that the legislation wasn’t really offset:

Congressional Democrats say the measure is paid for with a combination of spending cuts elsewhere and tax increases. However, the new spending is front loaded and much of the spending cuts wouldn’t be realized until after 2013. For example, the Congressional Budget Office’s score of the legislation shows savings from the food stamps program of $12 billion from 2014-2018. Congress can come back any time before that and rescind the cuts.

It’s typical Beltway budgetary sleight-of-hand: increase spending up front and “cut” spending on the back-end to get a more deficit-friendly score from the CBO. Democrats don’t really intend to see these cuts actualized, and have indicated as much. That hasn’t stopped media outlets from across the ideological spectrum from running sensationalist headlines.

A headline from CBS News says “Food Stamps Slashed to Pay for Teachers Job Bill.” A hysterical headline at the leftish Huffington Post reads “Cutting Food Stamps to Save Teacher Jobs: A Hateful Trade-off.” And a headline on the conservative Human Events website claims “Democrats Rob Food Stamps to Pay Teachers.”

Adding to the heat is legislation moving through Congress that would “cut” future food stamps spending to help pay for increased child nutrition programs. But as was the case with the bailout legislation, the only change that’s being proposed is to move forward the expiration date for the temporary food stamp expansion contained in the 2009 stimulus bill.

In addition to unnecessary hand-wringing over the future, the near past is all but being ignored. As the following chart shows, the cost of the food stamps programs has exploded over the decade thanks to the recession and benefit increases under presidents Bush and Obama:

The food stamps program needs to be cut. In fact, the entire federal welfare system needs to be devolved to the states, or preferably, private charity. That phantom cuts following a massive increase in food stamps spending would cause such angst indicates that those of us who believe the needy aren’t best served by Uncle Sam have our work cut out.

The Moocher Index

The Center for Immigration Studies recently put out a study arguing that immigration has had negative effects on California. One of their measures was a comparison of how many people in the state were receiving some form of welfare compared to other states. I found that data (see Table 3 of the report) very interesting, but not because of the immigration debate (I’ll leave others to debate that topic). Instead, I wanted to get a better understanding of the variations in government dependency. Is there a greater willingness to sign up for income redistribution programs, all other things being equal, from one state to another? The “all other things being equal” caveat is very important, of course, since the comparison produced by CIS may simply be an indirect measure of the factors that determine welfare eligibility. One obvious (albeit crude) way of addressing this problem is to subtract each state’s poverty rate to get a measure of how many non-poor people are signed up for income-redistribution programs. Let’s call this the Moocher Index.

A few quick observations. Why is Vermont (by far) the state with the largest proportion of non-poor people signed up for welfare programs? I have no idea, but maybe this explains why they elect people like Bernie Sanders. But it’s not just Vermont. Four of the top five states on the Moocher Index are from the Northeast, as are six of the top nine. Mississippi also scores poorly, coming in second, but many other southern states do well. Indeed, if we reversed the ranking and did a Self-Reliance Index, Virginia, Florida, and Georgia would score in the top 10. Nevada, arguably the nation’s most libertarian state, is the state with the lowest number of non-poor people signed up for welfare.

Let’s now emphasize several caveats. I’m not an expert on the mechanics of social welfare programs, but even I know that eligibility is not governed solely by the poverty rate. Indeed, some welfare programs are open to people with much higher levels of income. This means that a more thorough analysis at the very least would have to include some measure of income distribution by state. Moreover, states use different formulas for Medicaid eligibility, so this index ideally also would be adjusted for state-specific policies that make it easier or harder for people to become dependent. There also are some states (and even colleges) that actually try to lure people into signing up for welfare, which also might affect the results. And I’m sure there are many other factors that are important, including perhaps immigration. If anybody knows of substantive research in this area, please don’t hesitate to share material.

Immigration II: On the Substance of the Matter

Responding to my immigration post this morning, my colleagues Dan Griswold and Jason Kuznicki have focused on the single short paragraph that touched on the substance of the matter. (The question before me, posed by Politico Arena, concerned mainly the political implications of the new Arizona law, given the latest Pew Research Center poll on the issue.) I quite agree with both that we’ve never had full control of our southern border (or any border, for that matter), but as Dan has noted elsewhere, when we had a guest-worker program in place, illegal immigration dropped by 95 percent – no small drop. And illegal, not legal, immigration is the issue before us. And Dan is right too that we’ve thrown a lot of enforcement at the problem in recent years, to limited avail, so it’s not true that Congress hasn’t done anything. What it has done, however, hasn’t addressed the real problem, the underlying substantive law, as Dan has often written.

I’m struck, though, by Jason’s unqualified comment that he can’t say he shares my views on immigration.” Really? I did say, I believe, that Congress needs to address the problem, including with a guest-worker program. And I also said that “It hardly needs saying that a welfare state, in the age of terrorism, cannot have open borders.” I can’t imagine anyone disagreeing with that.

Concerning both the welfare state and terrorism, Jason points to “remedies” at the far end of the problem. He writes, for example, that our welfare state is going broke anyway, and “compared to the damage being done by native-born U.S. citizens and their cursedly long lifespans, the immigrants’ overall effects are quite small.” (I won’t take that “cursedly long lifespan” point personally.) True, but in places where the welfare state issues are concentrated, like border-state emergency rooms and schools, that long-term national perspective isn’t the issue. Yes, getting the government out of health care and education might ameliorate those localized problems (that question’s for another day), but we can’t always wait for more remote problems to be solved before we address more immediate ones.

And that goes for Jason’s terrorism point, too. He writes: “Without the black market in drugs, we’d have a lot less to fear from terrorists, particularly on our southern border.” I’m all for legalizing recreational drugs. But I was alluding to Islamic terrorists, not narco-terrorists, when I spoke of getting control of our borders. Legalizing drugs (again, a more remote remedy) might have some effect on the coffers of Islamic terrorists, but it would hardly solve the terrorism problem. As long as that problem exists, we need border control. Let’s remember, for example, that it was an alert border agent who thwarted the would-be LAX bomber.

Another View on Immigration

With all due respect to my colleague Roger Pilon, I can’t say I share his views on immigration. This is an old, old argument among libertarians, so it should come as no surprise that someone takes the opposing view here. Roger writes,

We no longer control our southern border, and Congress seems unable or unwilling to do anything about it. It hardly needs saying that a welfare state, in the age of terrorism, cannot have open borders.

It’s never really been the case, though, that we did control that southern border. Passage has always been relatively easy, at least aside from the natural dangers. This may be a good thing or a bad thing, but it’s a matter of historical fact. We can certainly change that, but it will only be by doing something relatively new.

As to the welfare state, don’t expect me to shed any tears. Our welfare state is already well on the path to bankruptcy, with or without illegal immigrants. Compared to the damage being done by native-born U.S. citizens and their cursedly long lifespans, the immigrants’ overall effects are quite small. It would be unkind of us to set up such an ill-considered system and then pin its inevitable demise on others.

And as to terrorism, there are measures we could take that would both combat it and increase individual liberty – like legalizing recreational drugs. Without the black market in drugs, we’d have a lot less to fear from terrorists, particularly on our southern border. I can’t say I favor a liberty-restricting policy to quash terrorism when a liberty-increasing policy seems to do even better.

The Welfare State and Terrorism

Here are some very depressing stories showing the corrosive — and perhaps even deadly — effect of redistibutionist policies.

We begin with a story of a government that actually tried to do the right thing, but was thwarted by a supra-national court. The Daily Mail reports that a European Court has ruled that the UK no longer can impose restrictions on welfare payments to women married to suspected terrorists:

A European court has instructed Britain to drop restrictions which limit social security benefits paid to the wives of terror suspects. Ministers imposed tight rules on payouts to stop the money falling into the hands of alleged Al Qaeda fanatics. Under the restrictions, cash payments were strictly limited and families had to show receipts to justify every penny of spending. But yesterday the European Court of Justice said there was no danger of the handouts being used to fund terror and branded the measures unlawful.

Unfortunately, this story is not an isolated incident. Here’s a report from the Express about a Muslim cleric who collected welfare from the Brits while (to put it mildly) being a reprehensible jerk:

The twisted cleric provoked outrage by comparing British troops to Nazi stormtroopers and telling parents of dead soldiers that their children had died in vain. …Choudary, a former lawyer…rakes in more than £25,000 a year in welfare handouts.

CNN reports, “Since the mid-90s, London has been a haven for foreign jihadi preachers, organizers, agitators and propagandists, many of them recipients of generous welfare benefits.”  And the BBC notes that:

In November 2000, Mr Kaplan was convicted for incitement to murder and sentenced to four years in jail. Since then, intelligence reports say his followers have become even more devoted to Mr Kaplan, considering him a martyr for the cause of Allah. …Mr Kaplan is believed to have a fortune worth millions. Nonetheless, he claimed social benefits in Cologne for many years until 2m Deutschmarks (1m euros, £700,000) in cash was found in his flat.

This Mickey Kaus blog post has more nauseating details.

The most amazing story comes from Australia. Here’s a Youtube copy of a report showing that Aussie taxpayers gave $1 million in welfare over 19 years to an Islamic extremist who planned to kill thousands of innocent people.

Six Reasons to Downsize the Federal Government

1. Additional federal spending transfers resources from the more productive private sector to the less productive public sector of the economy. The bulk of federal spending goes toward subsidies and benefit payments, which generally do not enhance economic productivity. With lower productivity, average American incomes will fall.

2. As federal spending rises, it creates pressure to raise taxes now and in the future. Higher taxes reduce incentives for productive activities such as working, saving, investing, and starting businesses. Higher taxes also increase incentives to engage in unproductive activities such as tax avoidance.

3. Much federal spending is wasteful and many federal programs are mismanaged. Cost overruns, fraud and abuse, and other bureaucratic failures are endemic in many agencies. It’s true that failures also occur in the private sector, but they are weeded out by competition, bankruptcy, and other market forces. We need to similarly weed out government failures.

4. Federal programs often benefit special interest groups while harming the broader interests of the general public. How is that possible in a democracy? The answer is that logrolling or horse-trading in Congress allows programs to be enacted even though they are only favored by minorities of legislators and voters. One solution is to impose a legal or constitutional cap on the overall federal budget to force politicians to make spending trade-offs.

5. Many federal programs cause active damage to society, in addition to the damage caused by the higher taxes needed to fund them. Programs usually distort markets and they sometimes cause social and environmental damage. Some examples are housing subsidies that helped to cause the financial crises, welfare programs that have created dependency, and farm subsidies that have harmed the environment.

6. The expansion of the federal government in recent decades runs counter to the American tradition of federalism. Federal functions should be “few and defined” in James Madison’s words, with most government activities left to the states. The explosion in federal aid to the states since the 1960s has strangled diversity and innovation in state governments because aid has been accompanied by a mass of one-size-fits-all regulations.

For more, see DownsizingGovernment.org.