Friday, October 25, 2013

My View

Random ruminations from your resident curmudgeon...

The Senate Budget Committee released data this week that shows that over the last 5 years, the U.S. has spent $3.7 TRILLION on all welfare and poverty assistance programs. By contrast, over the same period, the U.S. spent $797.4 billion on education, transportation, and the NASA program. Let that sink in for a moment...

I'll wait...

We are spending nearly 5 times more on welfare and poverty assistance programs as we are on educating our children, maintaining our transportation infrastructure, and funding one of the few government programs (NASA) that has yielded positive results.

Part of the problem is that our federal government currently has 80 different means tested poverty programs. A means tested program is simply based on income, and the recipients of these benefits do not pay anything into the programs, unlike Social Security or Medicare. Oh yeah, this $3.7 trillion over the past 5 years does not include another $200 billion contributed by the states.

One of the numerous problems that we face in managing these welfare/poverty programs is that effective governmental oversight is virtually non-existent. For instance, a person may receive food stamps from the Department of Agriculture and housing subsidies from the Federal Housing Administration and free medical care from the Department of Human Services.

As a country, we must take care of those that need help. No argument there. But there are better ways to do this. Great Britain has consolidated all their social welfare programs into a single credit for the beneficiaries that comes from a single source, and that credit is capped with an annual limit. This improves efficiency for their social services and allows them to track spending per recipient.

While there are some systemic tweaks that can be made to these federal programs, perhaps the more fundamental issues that we as a country should focus upon is that we have created an environment that is not favorable for companies to hire; our educational system is not (for the most) turning out graduates that are ready to compete in a highly competitive global marketplace; and we have made it too easy for potential workers to drop out of the work force.

About that last point...

We have seen an explosion in the number of people that have moved to disability status and have dropped out of the work force. Look at the following graph from the Social Security Administration:

Title: social security benefits - Description: social security benefits

As of mid-year 2013, the number of workers on disability has moved over the 11 million mark. Disability has become the new unemployment, and once workers move to disabled status, they rarely go back into the work force.

Why mention disability? It is just one of the myriad of federal programs that, while intended for good, has become a fallback for many people unable to find a job and becoming gainfully employed. Now you may not think that that has a significant impact on you.

And you would be wrong.

Here are some staggering numbers from the U.S. Census Bureau: as of the 4th quarter of 2011, 49.2% of the American population received some form of government benefit.

Nearly 50% of the population is receiving some form of payment from Washington. 82,457,000 people- 28% of our population- receive Medicaid benefits. 23,228,000 receive benefits under the Women's, Infant's, and Children (WIC) program; 13,433,000 Americans live in government subsidized housing; 5,098,000 receive unemployment benefits; 49,901,000 are currently receiving Social Security; 49,073,000 who received food stamps; 46,440,000 are on Medicare.

And the list goes on.

Keep in mind these numbers are from the end of 2011. Think they have diminished? No, they have exploded higher.

And this does not include the effect of the debacle that is Obamacare.

You can see the problem.

The $3.7 trillion spent on welfare and poverty assistance programs represents a transfer of wealth and income from those that are producers and earners of that income to those that are not.

And we are dangerously close to moving beyond the 50% level of the population that is receiving some form of transfer payment. When that happens, do any of you believe that our politicians will have any incentive to rein in this spending?

They are able to buy votes and power with this ability to keep these programs running and expanding.

Please note that I am decidedly in favor of helping those that are less fortunate. I just want to do it on my terms and not be bullied into having my income confiscated for inefficient benefit programs and have no say in where those funds are directed.

The point of this lengthy and negative post is twofold:

You need to know what is happening in Washington with your money and with these burgeoning programs. You need to know about the growth of the myriad of poverty/welfare programs and you need to demand that Congress get these programs running more efficiently and that they create an environment in this country where it is favorable to work. This includes limiting the benefits in the welfare/poverty outlays and relieving the regulatory and tax pressure on small businesses that are on the front line of job growth.

The other point is simply this:

The growth of our deficit spending and our total debt is unsustainable. The growth of social welfare programs contributes to this situation (along with waste and unnecessary defense spending), and the fiscal discipline to begin to restrain these programs must be enacted soon. We have seen that Washington does not have the cajones to do this on their own, so we must become more involved and we must hold our elected representatives accountable for the action (or inaction) that addresses this mess.

If Washington fails to exact some fiscal discipline and move toward getting their financial house in order, that discipline will eventually happen. But it will be exacted by the markets and it will painful and calamitous.

As a country, we are on an unsustainable financial track. The burden on the taxpayers of this country is heavy, and you can see why. If we stand idly by, it is only going to get worse.

And financially disastrous.

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