Tag: welfare

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.

Son of the Stimulus

Like the sequel to a horror film, the politicians in Washington just passed another stimulus proposal. Only this time, they’re calling it a “jobs bill” in hopes that a different name will yield a better result.

But if past performance is any indicator of future results, this is bad news for taxpayers. By every possible measure, the first stimulus was a flop. But don’t take my word for it. Instead, look at what the White House said would happen.

The Administration early last year said that doing nothing would mean an unemployment rate of nine percent. Spending $787 billion, they said, was necessary to keep the unemployment rate at eight percent instead.

So what happened? As millions of Americans can painfully attest, the jobless rate actually climbed to 10 percent, a full percentage point higher than Obama claimed it would be if no bill was passed.

The President and his people also are arguing that the so-called stimulus is responsible for two million jobs. Yet according to the Department of Labor, total employment has dropped significantly – by more than three million – since the so-called stimulus was adopted. The White House wants us to believe this sow’s ear is really a silk purse by claiming that the economy actually would have lost more than five million jobs without all the new pork-barrel spending. This is the infamous “jobs saved or created” number. The advantage of this approach is that there are no objective benchmarks. Unemployment could climb to 15 percent, but Obama’s people can always say there would be two million fewer jobs without all the added government spending.

To be fair, this does not mean that Obama’s supposed stimulus caused unemployment to jump to 10 percent. In all likelihood, a big jump in unemployment was probably going to occur regardless of whether politicians squandered another $787 billion. The White House was foolish to make specific predictions that now can be used to discredit the stimulus, but it’s also true that Obama inherited a mess – and that mess seems to be worse than most people thought.

Moreover, it takes time for an Administration to implement changes and impact the economy’s performance. Reagan took office in early 1981 during an economic crisis, for instance, and it took about two years for his policies to rejuvenate the economy. It certainly seems fair to also give Obama time to get the economy moving again.

That being said, there is little reason to expect good results for Obama in the future. Reagan reversed the big-government policies of his predecessor. Obama, by contrast, is continuing Bush’s big-government approach. Heck, the only real difference in their economic policies is that Bush was a borrow-and-spender and Obama is a borrow-and-tax-and-spender.

This raises an interesting question: Since last year’s stimulus was a flop, isn’t the Administration making a big mistake by doing the same thing all over again?

The President’s people actually are being very clever. Recessions don’t last forever. Indeed, the average downturn lasts only about one year. And since the recession began back in late 2007, it’s quite likely that the economic recovery already has begun (the National Bureau of Economic Research is the organization that eventually will announce when the recession officially ended).

So let’s consider the political incentives for the Administration. Last year’s stimulus is seen as a flop. So as the economy recovers this year, it will be difficult for Obama to claim that this was because of a pork-filled spending bill adopted early last year. But with the passing of a supposed jobs bill, that puts them in a position to take credit for a recovery that was already happening anyway.

That may be smart politics, but it’s not good economics. The issue has never been whether the economy would climb out of recession. The real challenge is whether the economy will enjoy good growth once the recovery begins. Unfortunately, the Obama Administration policies of bigger government – combined with the Bush Administration policies of bigger government – will permanently lower the baseline growth of the United States.

If America becomes a big-government welfare state like France, then it’s quite likely that we will suffer from French-style stagnation and lower living standards.

The Federal Government Is Bribing States to Create More Welfare Dependency?!?

If you want to get depressed or angry, the New York Times has an article celebrating the effort by politicians at all levels of government to lure more people into the food stamp program. New York City is running ads in foreign languagues asking people to stick their snouts in the public trough. The City is even signing up prisoners when they get out of jail. The state of New York, meanwhile, actually set up quotas for enrolling new recipients. And on the federal level, there apparently is a program that gives states “bonuses” for putting more people on the dole. No wonder one out of every eight Americans is receiving food stamps. By the way, this is not just the fault of Democrats. The ranking Republican on the Agriculture Committee is a big defender of the program, in part because of the sordid pact among urban and rural politicians to support each other’s handouts. And President George W. Bush’s food stamp administrator actually had the gall to assert “food stamps is not welfare.” No wonder the burden of federal spending skyrocketed during the reign of so-called compassionate conservatism. The correct policy, of course, is to get the federal government out of the welfare business. If Mayor Bloomberg thinks it is a “civic duty” to expand food stamps, he should see whether New York City voters agree with him - and want to foot the bill.

A decade ago, New York City officials were so reluctant to give out food stamps, they made people register one day and return the next just to get an application. The welfare commissioner said the program caused dependency and the poor were “better off” without it. Now the city urges the needy to seek aid (in languages from Albanian to Yiddish). Neighborhood groups recruit clients at churches and grocery stores, with materials that all but proclaim a civic duty to apply — to “help New York farmers, grocers, and businesses.” There is even a program on Rikers Island to enroll inmates leaving the jail. “Applying for food stamps is easier than ever,” city posters say. …These changes, combined with soaring unemployment, have pushed enrollment to record highs, with one in eight Americans now getting aid. “I’ve seen a remarkable shift,” said Senator Richard G. Lugar, an Indiana Republican and prominent food stamp supporter. “People now see that it’s necessary to have a strong food stamp program.” …The program has commercial allies, in farmers and grocery stores, and it got an unexpected boost from President George W. Bush, whose food stamp administrator, Eric Bost, proved an ardent supporter. “I assure you, food stamps is not welfare,” Mr. Bost said in a recent interview. Still, some critics see it as welfare in disguise and advocate more restraints. …The federal government now gives bonuses to states that enroll the most eligible people. …In 2008, the program got an upbeat new name: the Supplemental Nutrition Assistance Program — SNAP. …Since Mayor Michael R. Bloomberg took office eight years ago, the rolls have doubled, to 1.6 million people… Albany made a parallel push to enroll the working poor, setting an explicit goal for caseload growth. “This is all federal money — it drives dollars to local economies,” said Russell Sykes, a senior program official. But Mr. Turner, now a consultant in Milwaukee, warns that the aid encourages the poor to work less and therefore remain in need. “It’s going to be very difficult with large swaths of the lower middle class tasting the fruits of dependency to be weaned from this,” he said.