As food stamp utilization escalated over the last several years, the program’s advocates assured us that there was nothing to worry about. Yes, more people than ever before were on food stamps, but that was just because of the recession. Once the recovery began and the unemployment rate declined, fewer people would need food stamps.
Yet, newly released data from the U.S. Department of Agriculture now tells us that in 2013, years after the recession officially ended, 20 percent of U.S. households were on food stamps, an all-time high. According to the USDA, 23.05 million households received food stamps in FY2013. While no doubt some increase in food stamps was a countercyclical response to the recession, this cannot adequately explain why the number of households in the program has increased by 4.43 million since 2010—a period of consistent, albeit low, job growth and a decreasing unemployment rate.
This continued increase in food stamp participation runs counter to the projections put out by the Congressional Budget Office, which in 2011 projected that SNAP participation would decline from 2012 levels to 45.9 million individual participants in 2013. Instead, average monthly enrollment for 2013 was 47.6 million. The continued growth in food stamp participation raises the question of when, if ever, the program will return to pre-recession levels as promised.
In fact, as I pointed out in this policy analysis last year, much of the growth in the program was not due to the recession, but rather to deliberate policy choices that loosened eligibility and work requirements.
The Department of Health and Human Service (HHS) spends more than $908 billion each year (nearly a third of the federal budget) in various redistribution programs, the most important ones being Medicaid and Medicare.
Medicaid helps low-income citizens getting healthcare. It matches state spending, encouraging them to spend more than they otherwise would – their spending increased from $ 118 billion in 2000 to $ 275 billion in 2010, and is projected to double in the next decade. Ten to twenty percent of Medicaid funds ($ 180 billion) are wasted in various frauds.
Medicare, which helps seniors over 65 getting healthcare, is the third largest expenditure for the federal government. It is estimated that its unfunded liabilities could reach $30 trillion (in other words, $30,000 billion) in the next 75 years.
In order to stop hemorrhaging so much money, serious reforms need to be enacted. For Medicare, freedom of choice in coverage should be given back to citizens, along with private competition and personal savings. And for Medicaid, states should ultimately be the only ones spending money of the program, keeping them from overspending. In the end, this would save hundreds on billions of dollars each year. To that end we’ve created a short video which makes these and other points, which you can watch below:
The Senate is considering legislation to revive the emergency unemployment insurance program. These federally funded benefits were in place from mid-2008 to the end of 2013.
Federal policymakers like to spend money helping people in need, but there are large and less visible costs to such welfare legislation. Here are some reasons why new UI spending is not a good idea:
Our current UI system is economically damaging, hugely complex, and fraud-ridden. Rather than adding to the system’s problems with higher benefits, policymakers should consider moving to a pro-growth savings-based UI system, as Chile has done.
The Affordable Care Act is like a big box of Christmas presents: you keep rummaging around in the peanuts and find hidden treasures. Or hidden costs, as it were. Here’s one I hadn’t heard of until today:
Office workers in search of snacks will be counting calories along with their change under new labeling regulations for vending machines included in President Barack Obama’s health care overhaul law.
Requiring calorie information to be displayed on roughly 5 million vending machines nationwide will help consumers make healthier choices, says the Food and Drug Administration, which is expected to release final rules early next year. It estimates the cost to the vending machine industry at $25.8 million initially and $24 million per year after that, but says if just .02 percent of obese adults ate 100 fewer calories a week, the savings to the health care system would be at least that great.
The rules will apply to about 10,800 companies that operate 20 or more machines. Nearly three quarters of those companies have three or fewer employees, and their profit margin is extremely low, according to the National Automatic Merchandising Association. An initial investment of $2,400 plus $2,200 in annual costs is a lot of money for a small company that only clears a few thousand dollars a year, said Eric Dell, the group’s vice president for government affairs.
“The money that would be spent to comply with this - there’s no return on the investment,” he said.
In my experience, vending machines shuffle their offerings fairly frequently. If the machine operators have to change the calorie information displayed every time they swap potato chips for corn chips, then $2,200 seems like a conservative estimate of costs. But then, as Hillary Clinton said when it was suggested that her own health care plan would bankrupt small businesses, “I can’t be responsible for every undercapitalized small business in America.”
Washington offers many opportunities for schadenfreude, that wonderful German word which means to enjoy the misery of others. The realization of liberal professionals who voted for Barack Obama that they will be forced to spend more on health insurance was one of those moments.
Reported the New York Times: “Many in New York’s professional and cultural elite have long supported President Obama’s health care plan. But now, to their surprise, opera singers, music teachers, photographers, doctors, lawyers and others are learning that their health insurance plans are being canceled and they may have to pay more to get comparable coverage, if they can find it.”
It’s not that they didn’t have policies that they liked and wanted to keep. It seems that the policies were too good.
Explained the Times: “The rationale for disqualifying those policies, said Larry Levitt, a health expert at the Kaiser Family Foundation, was to prevent associations from selling insurance to healthy members who are needed to keep the new health exchanges financially viable.” Unfortunately for these privileged Obama supporters, most make too much money for even the generous subsidies available under the exchanges.
Admittedly, it takes a few moments to stop laughing after reading this article. If you believe in social justice and all that, you shouldn’t whine about the government running up your costs to fulfill its elaborate social engineering plan. After all, that’s the purpose of liberal government—create Rube Goldberg policy contraptions that promote some higher good. So what if you get run over in the process? Eggs and omelets as the old Communists liked to say.
Still, it is striking how government is destroying civil society institutions which meet real human needs. Even stranger is the possible federal attack on charities and hospitals which are paying the premiums for low-income patients.
For instance, the Los Angeles nonprofit A Better LA has begun to subsidize health insurance for low-income people through the California state exchange. Some hospitals are doing the same. Melinda Hatton of the American Hospital Association told the Journal: “We thought it was the kind of thing the Affordable Care Act would really support and encourage.”
Insurers are counting on covering well-off, and presumably healthier, professionals, not less well-off, and presumably less healthy, nonprofessionals. Reported the Journal: “Help from nonprofits or hospitals could speed the arrival of less healthy customers into the exchanges, outpacing the arrival of younger, healthier people.”
The administration has yet to state a clear position. But Health and Human Services has indicated its “concerns with this practice, because it could skew the insurance risk pool.”
Government is threatening civil society institutions, ranging from charitable to business, which are aiding the poor, disadvantaged, and uninsured! True, the aid process is disorganized, decentralized, uncertain, and uneven. But that is society.
This complex interplay is what makes community. Discerning and addressing needs, organizing diverse approaches, and responding to the people in front of you is what genuine compassion, which once meant “suffering with,” is all about. David Beito has detailed the once important role of mutual aid societies, and how they were replaced by “impersonal bureaucracies controlled by outsiders,” such as Obamacare health exchanges.
Ultimately, Barack Obama and his allies have the world backwards. They believe that government trumps society, and the solution to any problem should start in Washington. Individual choice and community relations are unimportant.
Professional associations and charities demonstrate that society should be the starting point. People should be not just allowed but encouraged to organize to solve problems. Not only are individual lives bettered, but the sinews of community are strengthened. Instead of supplanting other institutions, government should act as the ultimate backstop to help meet social needs which are not otherwise addressed.
As my colleague David Boaz observed, Obamacare is “another example of a big-government, left-liberal policy that is pushing people away from cooperation and community and toward atomistic individualism.” It’s quite an accomplishment. Who says President Obama is a failure!?
Welfare advocates regularly urge Americans to look to the European welfare state as a model. At least in the case of the Netherlands, they might be on to something.
The Dutch have just announced a massive reform of their welfare system, designed to reduce dependency and put a new emphasis on work. For example, welfare applicants will now be required to prove that they spent at least 4 weeks actively searching for a job before they become eligible for any assistance. And once they begin to receive benefits they will either have to work or perform volunteer community service. Dutch welfare recipients would be required to take available jobs even if they had to move or commute up to three hours per day.
Given that just 42 percent of U.S. welfare recipients are engaged in even broadly defined work activities (including job training, college, or job search), and that an attempt to restore work requirements to the food stamp program has been met with a storm of resistance, the Dutch appear to be much more pro-work than we are.
Other reforms would reduce benefits by treating families as a single unit, rather than as separate individuals. For instance a mother with two children would receive a single payment rather than three separate payments. The combined payment would be less, based on the assumption of “shared expense.”
According to the Dutch government, the reforms will ensure that welfare is seen as “a safety net, rather than a right.”
What the Dutch apparently understand is that, in the long run, welfare dependency hurts the very people it is designed to help. Making poverty a bit more comfortable may be satisfying in the short term, but the real goal should be to reduce the number of people in poverty. To do that requires people to take more responsibility for their own lives.
That’s a lesson in European compassion that the U.S. could learn from.
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