Pennsylvania Moves to Starve Poor People
That’s the message I came away with after reading an online article from a Philadelphia Inquirer reporter about a decision by the state of Pennsylvania to limit eligibility for food stamps. The article is a perfect example of the difficulty advocates for limited government face in communicating their ideas through the mainstream press.
At issue is the PA Department of Public Welfare’s decision to eliminate eligibility for food stamps for people under the age of 60 who have more than $2,000 in assets (the value of one’s house, retirement benefits, and car would be excluded). The DPW estimates that only “2 percent of the 1.8 million Pennsylvanians receiving food stamps would be affected by the asset test.” Indeed, the DPW’s website notes that “Because of changes to SNAP, most Pennsylvania households are not subject to a net income limit, nor are they subject to any resource or asset limits.”
(SNAP is the acronym for the federal Supplemental Nutrition Assistance Program, which was known as the Food Stamp program until 2008 when Congress changed its name to sound more palatable. The program is run jointly by the U.S. Department of Agriculture and state governments, but federal taxpayers pay for the direct benefits.)
One of the “changes” that the DPW refers to is categorical eligibility, which basically means that Pennsylvania households already receiving benefits from other welfare programs, including cash welfare and Supplemental Security Income, automatically qualify for food stamps. In recent years, both the state of Pennsylvania and the federal government have made it easier to qualify for food stamps benefits.
Unfortunately, the Inquirer reporter either wasn’t aware of these details or didn’t deem them important enough for inclusion. Instead, he quotes ten—let me repeat that, ten—critics of the DPW’s decision. The critics include a “national hunger expert,” the legal director of a “leading anti-hunger group,” the executive director of the Greater Philadelphia Coalition Against Hunger, the executive director of the “liberal Pennsylvania Budget and Policy Center,” and an older woman who says that she’ll “have to give up paying for my health insurance.”
It took me all of two minutes to get a quote from Nathan Benefield, the director of policy analysis at Pennsylvania’s pro-liberty Commonwealth Foundation:
Unfortunately for taxpayers, politicians in Harrisburg and Washington have for the past few years considered it a “success” to have more families on welfare. Pennsylvania welfare eligibility and spending—including for food stamps—has exploded, threatening to crowd out everything else in the state budget. Means testing for assets is a common-sense reform to ensure those who truly need aid get it.
There, was that so hard?
Of course, journalists who are interested in getting the pro-liberty take on welfare reform are welcome to contact my colleagues and me at the Cato Institute. Honestly, we don’t want people to starve in order to save a buck—we just believe that the federal government is an improper and less effective means for assisting those who are truly in need. Pressed for time? Here are Cato essays on food subsidies, welfare, and federal subsidies to state and local government.
Five Lessons for America from the European Fiscal Crisis
I’ve written about the fiscal implosion in Europe and warned that America faces the same fate if we don’t reform poorly designed entitlement programs such as Medicare and Medicaid.
But this new video from the Center for Freedom and Prosperity, narrated by an Italian student and former Cato Institute intern, may be the best explanation of what went wrong in Europe and what should happen in the United States to avoid a similar meltdown.
I particularly like the five lessons she identifies.
1. Higher taxes lead to higher spending, not lower deficits. Miss Morandotti looks at the evidence from Europe and shows that politicians almost always claim that higher taxes will be used to reduce red ink, but the inevitable result is bigger government. This is a lesson that gullible Republicans need to learn – especially since some of them want to acquiesce to a tax hike as part of the “Supercommitee” negotiations.
2. A value-added tax would be a disaster. This was music to my ears since I have repeatedly warned that the statists won’t be able to impose a European-style welfare state in the United States without first imposing this European-style money machine for big government.
3. A welfare state cripples the human spirit. This was the point eloquently made by Hadley Heath of the Independent Women’s Forum in a recent video.
4. Nations reach a point of no return when the number of people mooching off government exceeds the number of people producing. Indeed, Miss Morandotti drew these two cartoons showing how the welfare state inevitably leads to fiscal collapse.
5. Bailouts don’t work. This also was a powerful lesson. Imagine how much better things would be in Europe if Greece never received an initial bailout. Much less money would have been flushed down the toilet and this tough-love approach would have sent a very positive message to nations such as Portugal, Italy, and Spain about the danger of continued excessive spending.
If I was doing this video, I would have added one more message. If nations want a return to fiscal sanity, they need to follow “Mitchell’s Golden Rule,” which simply states that the private sector should grow faster than the government.
This rule is not overly demanding (spending actually should be substantially cut, including elimination of departments such as HUD, Transportation, Education, Agriculture, etc), but if maintained over a lengthy period will eliminate all red ink. More importantly, it will reduce the burden of government spending relative to the productive sector of the economy.
Unfortunately, the politicians have done precisely the wrong thing during the Bush-Obama spending binge. Government has grown faster than the private sector. This is why this new video is so timely. Europe is collapsing before our eyes, yet the political elite in Washington think it’s okay to maintain business-as-usual policies.
Please share widely…before it’s too late.
New Video Shows the War on Poverty Is a Failure
The Center for Freedom and Prosperity has released another “Economics 101″ video, and this one has a very powerful message about the federal government’s so-called War on Poverty.
As explained by Hadley Heath of the Independent Women’s Forum, the various income redistribution schemes being imposed by Washington are bad for taxpayers — and bad for poor people.
The video has a plethora of useful information, but the data on the poverty rate is particularly compelling. Prior to the War on Poverty, the United States was getting more prosperous with each passing year and there were dramatic reductions in the level of destitution.
But once the federal government got involved in the mid-1960s, the good news evaporated. Indeed, the poverty rate has basically stagnated for the past 40-plus years, usually hovering around 13 percent depending on economic conditions.
Another remarkable finding in the video is that poor people in America rarely suffer from material deprivation. Indeed, they have wide access to consumer goods that used to be considered luxuries – and they also have more housing space than the average European (and with Europe falling apart, the comparisons presumably will become even more noteworthy).
The most important message of the video, however, is that small government and economic freedom are the best answers for poverty. As Hadley explains, poor people can be liberated to live meaningful, self-reliant lives if we can reduce the heavy burden of the federal government.
Last but not least, the video doesn’t address every issue in great detail, and there are three additional points that should be added to any discussion of poverty.
- The biggest beneficiaries of the current system are the army of bureaucrats that receive very comfortable salaries administering various programs.
- The Obama Administration is looking to re-define poverty in a way that would expand the welfare state and increase the burden of redistribution programs.
- The welfare reform legislation of the 1990s was a small step in the right direction because it eliminated a federal entitlement and shifted responsibility back to the state level. This success story should be replicated for programs such as Medicaid.
This last point is worth emphasizing because it is also one of the core messages of the video. The federal government has done a terrible job dealing with poverty. The time has come to get Washington out of the racket of income redistribution.
Dramatic Increase in Poverty Rate: One Small Step for Obama, One Giant Step for the So-Called War on Poverty
The Census Bureau has just released the 2010 poverty numbers, and the new data is terrible.
There are now a record number of poor people in America, and the poverty rate has jumped to 15.1 percent.
But I don’t really blame President Obama for these grim numbers. Yes, he’s increased the burden of government, which doubtlessly has hindered the economy’s performance and made things worse, but the White House crowd legitimately can argue that they inherited a crummy situation.
What’s really striking, if we look at the chart, is that the poverty rate in America was steadily declining. But then, once President Lyndon Johnson started a “War on Poverty,” that progress came to a halt.
As I’ve explained before, the so-called War on Poverty has undermined economic progress by trapping people in lives of dependency. And this certainly is consistent with the data in the chart, which show that the poverty rate no longer is falling and instead bumps around between 12 percent and 15 percent.
This is bad news for poor people, of course, but it’s also bad news for taxpayers. The federal government, which shouldn’t have any role in the field of income redistribution, has squandered trillions of dollars on dozens of means-tested programs. And they’ve arguably made matters worse.
By the way, just in case you think I’m being too easy on Obama, read this post about how the Administration is considering a terrible plan to re-define poverty in order to justify ever-larger amounts of redistribution.
I fully agree that the president’s policies definitely have made—and will continue to make—matters worse. But the fundamental problem is 40-plus years of a misguided “War on Poverty” by the federal government.
Charity and the Federal Government
David Boaz’s post on bizarre and utterly preposterous claims that the federal government’s “social safety net” has been shrinking brought to my mind James Madison’s position that “Charity is no part of the legislative duty of the government.”
“The Father of the Constitution” wasn’t being cold-hearted when he took this position during a 1794 debate in the House of Representatives over federal aid to refugees. Rather, he was merely recognizing that “the government of the United States is a definite government, confined to specified objects.” Charity just wasn’t one of the specified objects. Of course, future politicians decided otherwise.
Today, most young Americans grow up in federally subsidized schools offering federally subsidized meals. They are inculcated to view the federal government as a benevolent caregiver that exists to provide Americans with housing, food, health care, and even income (to name just a few). Madison’s unfortunately quaint notion that the federal government isn’t supposed to be engaged in “charitable” activities would probably leave them dumbfounded.
I single out children because this week a private charity that I am involved with, the Purple Feet Foundation, is giving select inner-city sixth graders an opportunity to take hold of their futures now. Instead of promoting dependency, these kids will spend the week engaged in educational activities that will hopefully inspire them to utilize their individual talents to succeed in life. The Foundation does not seek, nor will it accept, taxpayer money. I believe this sets a good example for these kids.
Those of us who desire the limited federal government that Madison envisioned are often accused of being uncaring about those who are in need. In fact, the opposite is the truth: we recognize that government programs are wasteful, ineffective, and counterproductive to the aims that they are trying to achieve. As a Cato essay on federal welfare explains, private charity is superior to government programs for several reasons:
Private charities are able to individualize their approaches to the circumstances of poor people. By contrast, government programs are usually designed in a one-size-fits-all manner that treats all recipients alike. Most government programs rely on the simple provision of cash or services without any attempt to differentiate between the needs of recipients.
The eligibility requirements for government welfare programs are arbitrary and cannot be changed to fit individual circumstances. Consequently, some people in genuine need do not receive assistance, while benefits often go to people who do not really need them. Surveys of people with low incomes generally indicate a higher level of satisfaction with private charities than with government welfare agencies.
Private charities also have a better record of actually delivering aid to recipients because they do not have as much administrative overhead, inefficiency, and waste as government programs. A lot of the money spent on federal and state social welfare programs never reaches recipients because it is consumed by fraud and bureaucracy…
Another advantage of private charity is that aid is much more likely to be targeted to short-term emergency assistance, not long-term dependency. Private charity provides a safety net, not a way of life. Moreover, private charities may demand that the poor change their behavior in exchange for assistance, such as stopping drug abuse, looking for a job, or avoiding pregnancy. Private charities are more likely than government programs to offer counseling and one-on-one follow-up, rather than simply providing a check.
Two Pictures that Perfectly Capture the Rise and Fall of the Welfare State
In my speeches, especially when talking about the fiscal crisis in Europe (or the future fiscal crisis in America), I often warn that the welfare state reaches a point of no return when the people riding in the welfare wagon begins to outnumber the people pulling the wagon.
To be more specific, if more than 50 percent of the population is dependent on government (employed in the bureaucracy, living off welfare, receiving public pensions, etc.), it becomes difficult for taxpayers to form a majority coalition to fix the mess. This may explain why Greek politicians have resisted significant reforms, even though the nation faces a fiscal death spiral.
But you don’t need me to explain this relationship. One of our Cato interns, Silvia Morandotti, used her artistic skills to create two images (click pictures for better resolution) that show what a welfare state looks like when it first begins and what it eventually becomes.
Romney and Huckabee, What a Choice
You know you’re really wrong when Mike Huckabee can call you out. But that’s the situation Mitt Romney finds himself in, as Michael Cannon points out below. Huckabee says Romney’s government-run health care plan with an individual mandate is a bad idea, Romney says he’s still proud of his plan, which is totally different from President Obama’s government-run health care plan with an individual mandate. But really, what can he do? In 17 years of seeking high political office, he is known for two things: changing his position on a surprisingly large number of issues, and his Massachusetts health care program. Which was of course the forerunner of Obamacare, as Michael Cannon and I pointed out in the video that Michael linked. So Romney is still defending a position I think we’ve already refuted.
Meanwhile, in speeches and interviews this week, Mike Huckabee continues to make the untenable connection between gay marriage and family breakdown that I discussed two weeks ago in the Los Angeles Times. Huckabee told reporters:
Huckabee opposes gay marriage on the grounds that, according to him, it destroys traditional families.
“There is a quantified impact of broken families,” Huckabee said. “[There is a] $300 billion dad deficit in America every year…that’s the amount of money that we spend as taxpayers to pick up the pieces because dads are derelict in their duties.”
But what’s the connection? As I wrote:
One thing gay couples are not doing is filling the world with fatherless children. Indeed, it’s hard to imagine that allowing more people to make the emotional and financial commitments of marriage could cause family breakdown or welfare spending….
Social conservatives point to a real problem and then offer phony solutions.
But you won’t find your keys on the thoroughfare if you dropped them in the alley, and you won’t reduce the costs of social breakdown by keeping gays unmarried and preventing them from adopting orphans.
One might add that, as Huckabee knows very well, rates of divorce and unwed motherhood soared decades before anyone started agitating for gay marriage.
If Huckabee and Romney are the Republican frontrunners, President Obama must be sleeping well these days.
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. Read the rest of this post »
Filed under: General; Government and Politics; Health Care; Tax and Budget Policy
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.
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Social Conservatives Offer Irrelevant Solutions
Posted by David Boaz
In today’s Los Angeles Times I write that social conservatives are pointing to real problems, but the only policy solutions they discuss are completely irrelevant to what they call “the high cost of a dysfunctional society”:
Filed under: Government and Politics
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