Tag: Welfare state

The Welfare Trap

One thing conservatives constantly worry about is the danger of creating a welfare trap: a situation in which the welfare state is so entrenched that working is actually less profitable than being dependent on the state.

Check out this amazing graph from The Spectator on the UK’s welfare system:

How’s that for a perverse incentive? Lost benefits and increased taxes mean that, for a single mother, increasing her earnings from 0 to 15,000 pounds only increases her net income by 5000 pounds. Would you work for 1/3 of the wages? At certain points, she is losing 95 pence for every new pound she earns.

if I was in a position of a British single mother I have not the slightest doubt that I would choose welfare. Why break your back on the minimum wage for longer than you have to, if it doesn’t pay? Some people do have the resolve to do it. I know I wouldn’t. …So let’s not talk about “lazy” Brits. The problem is a cruel and purblind welfare system which still, to this day, strengthens the welfare trap with budgets passed without the slightest regard for its effect on the work incentives on the poorest. …Meanwhile, the cash-strapped British government is still creating still the most expensive poverty in the world.

Keep in mind that to get out of the welfare trap — to get to income levels where it does pay to work, you generally have to work your way up. You might spend years at low pay building your resume for a higher-paying job. So the real cruelty is not just that this traps people in dependency, but that it puts grease on the bottom rung of the socioeconomic ladder. It pulls back the possibility of rising above minimum wage.

OK, that’s Britain, you say. It could never happen here. Wrong. The CBO just issued a report showing that marginal rates for low-income workers are about 30-35%. And that’s an average. At certain inflection points, the marginal rate is over 100%, once the Obamacare subsidies kick in. And, even now, the marginal rate is over 60% as you cross the poverty line.

As with the UK, these traps in the tax/welfare system are created because politicians are not doing their damned homework. They have created a system so complex that only a bevy of CBO accountants can untangle it all. But look at those numbers and ask yourself: could this maybe be contributing just a tiny little bit to exodus of so many people from the work force?

This is what job creation looks like in liberal land

Unbelievable. How the left’s policies creates jobs on display! More government work that just sucks cash from the productive sector:

Economic woes have forced at least one city agency into a hiring spree — adding more workers to process the demand for food stamps and other assistance. The Human Resources Administration added more than 100 workers last July and plans to hire another 100 to serve the burgeoning number of New Yorkers applying for food stamps and rent assistance at their offices, according to the Daily News.

About 1.8 million New Yorkers are now on food stamps, which marks nearly a 65 percent increase from four years ago, according to city records. The increase in applicants has led to overcrowding at HRA offices throughout the city, and the agency said at a council hearing Tuesday that it had to hire scores of new workers and supervisors to manage the situation.

Yeah baby! We need more of these policies that force others to become dependant on government to solve our big jobs problem. You can not make this shit up to show how big of a failure the left’s way of doing things really is. Queue the people angry at me for being so insensitive to the needy, while completely ignoring the fact so many are needy precisely because of other such policies & priorities on the left.

For three years now they have blamed Bush for a bad economy they got “handed”. For the first two years after that, when they controlled both organs of congress with clear majorities and the WH, the priority was to implement costly and damaging policies intended to turn America into another Western European shithole nanny state. The last year has been spent blocking any real attempts to change the damage they caused in those first 2 years. This year looks to be more of the same, with things that provide great political sound bites to pre-empt any real action to address the disastrous consequences of the left’s reign of terror. Queue the morons that want to pretend the $5 trillion tacked on, in just the last 3 years, to the $10 trillion it took over 200 years to amass, was because of defense spending and not the massive bloated nanny state spending that was priority one for the crowd that wants to fundamentally change America. But it is all good. It’s being done to make things fair. Equal misery for all the plebes!

This is what “Hope & Change” looks like. Get used to it, and expect worse, if these class warriors are left in power for another 4 years. Ain’t this stuff all great? We need a lot fewer of the4se kinds of jobs created. Not more.

CBO numbers fail again.

Recently I posted about how the CBO had to downgrade the effects it was claiming for the Patronage Bill. Certain people then proceeded to not just question that this was what happened, while trying to defend this epic trillion dollar failure, but to imply I was purposefully being dishonest about the CBO being dishonest – leaning left in that dishonesty – or the way the LSM reports on this crap. Well, the the usual suspects at the CBO were at it again:

A recent report from the Congressional Budget Office (CB0) says, “The share of income received by the top 1% grew from about 8% in 1979 to over 17% in 2007.” This news caused quite a stir, feeding the left’s obsession with inequality. Washington Post columnist Eugene Robinson, for example, said this “jaw-dropping report” shows “why the Occupy Wall Street protests have struck such a nerve.” The New York Times opined that the study is “likely to have a major impact on the debate in Congress over the fairness of federal tax and spending policies.”

But here’s a question: Why did the report stop at 2007? The CBO didn’t say, although its report briefly acknowledged—in a footnote—that “high income taxpayers had especially large declines in adjusted gross income between 2007 and 2009.” No kidding. Once these two years are brought into the picture, the share of after-tax income of the top 1% by my estimate fell to 11.3% in 2009 from the 17.3% that the CBO reported for 2007.

WHAT? The CBO rigged a report in such a way that it could advance a collectivist talking point? NEVAH! It’s not like we have a history of them doing this – as I pointed out in the comments, only to be rebuffed. We saw the same shit with the CBO scoring of Obamacare. Granted, the CBO got off easy because they claim they where “told” to score it that way by the usual suspects, but that’s nonsense considering there is a history there of doing things like that.

Before you ask what the problem was with what the CBO reported about Obamacare, let me point it out in brief. The CBO scored it over a decade, 10 years for those that are math challenged, and then factored in tax income from day one while only factoring the really big outlays after 4 if not 5 years of collecting taxes. That was all done so they could make the ludicrous claim that Obamacare would save us a measly $112 billion or such. Anyone that understands basic math, ignoring the obvious shenanigans and double counting of outlays/savings from Medicare and other such systems they claim they will raid for cash to make these numbers work, sees two things. The first is that there is no way these numbers produced by the CBO bear out even if you focus only on the narrow window they looked at. If this boondoggle follows historical precedent – and you can look at the bits and pieces they have so far put in place for proof this will be more of the same – it will cost at least twice as much as they predicted. So, unless you also believe in Unicorns, it is clear that we will not have any savings at all, but be running a deficit before the first decade is over.

Then, the second obvious issue, which comes at the end of that decade the CBO scored for, clearly shows that we are looking at massive deficits to fund this program. There is not enough rationing that can be done to make these numbers work. Obamacare is going to cost us trillions in just the next 2 decades.

Back to our CBO bullshit du jour. Maybe it is not just the fact that the Keynesians are economic illiterates but signs of an actual plan in motion, one that advances and explains what Obama means when he talks about “social justice” and “wealth redistribution”, that gets pointed out by this passage in the WJS article:

The larger truth is that recessions always destroy wealth and small business incomes at the top. Perhaps those who obsess over income shares should welcome stock market crashes and deep recessions because such calamities invariably reduce “inequality.” Of course, the same recessions also increase poverty and unemployment.

The author then goes through some details to point out precisely why the CBO chose to ignore 2007-2009 in that report. The evil wealthy, those 1%ers, took a huge hit when things went south and that 17% number the left uses to tell us how unfair it is that the wealthy have money, would drop considerably and then seriously undermine the class warrior’s agenda. Further more, it shows that whenever government tries to fleece the producers, they don’t just roll over and play along, but take active measures to shield their wealth (How evil of them! – that was sarcasm BTW). And that what this obviously and purposefully rigged CBO analysis, done to create more class warfare collectivist talking points, really should have reported was the following:

In short, what the Congressional Budget Office presents as increased inequality from 2003 to 2007 was actually evidence that the top 1% of earners report more taxable income when tax rates are reduced on dividends, capital gains and businesses filing under the individual tax code.

Of course, that doesn’t fit the ultimate goal of the current narrative – that government should be collecting more money, and once the wealthy have been fleeced they can simply turn to the rest of us – so no chance we ever see that from the CBO. I wonder how many of the usual LSM suspects, like the ones at WaPo mentioned in this article, which was quick to carry water for the collectivists when the rigged numbers worked in the favor of the class warrior/collectivist narrative, will actually report on what this WSJ author points out. I am not taking bets unless I am able to bet against them reporting, BTW. I don’t do stupid. But we can keep pretending that whenever we point out how unreliable these LSM cum CBO collectivist talking points are, that the fault is with those of us that call them out on their lies.

After all, as comrade Obama pointed out in his speech just the other day, what Americans need is more social justice, and if it needs to come at the expense of their freedom, well dog gone it, that’s just dandy. After all, the old slave & land owning doofuses that produced that pesky constitution weren’t as wise as the class warrior class fancies themselves to be. In the mean time we march on to a tyrannical, but “socially just!!!1!!” country molded after Greece. Great.

That’s because they get it Part Deux.

Manwhore issued me an infantile challenge to put up a post about education. I took some of his request and am writing about the value of an education vs. the cost to get it, and to make the point that there are no job guarantees. While doing the research, I came across a timely and telling story, in the NYT of all places, dealing with the fact, despite the NYT blatant attempt to spin this in the most positive way possible, that some of the young people that disproportionately helped elect Obama are finally getting how bad he is for them.

LAS VEGAS — For much of the presidential election of 2008, Barack Obama’s campaign was Emma Guerrero’s life. She was one of a dozen volunteers who showed up at an Obama campaign office here every night, taking time from her studies at the University of Nevada, Las Vegas, to be part of what she still remembers as the most exciting period of her life.

It was largely because of Ms. Guerrero — and hundreds of other college students like her across the country — that Mr. Obama assembled a formidable machine that helped him roll to victory in 2008, a triumph that included putting Nevada into the Democratic column for the first time in 12 years.

“We did everything,” she said. “We went canvassing. Phone banking. Cleaning the offices. Taking out my bosses’ dry cleaning. Whatever they needed. It was such an amazing time because we all believed and wanted him to get elected.”

Ms. Guerrero said that she did not blame Mr. Obama for the 13.4 percent unemployment rate that has gripped this state, and that she was still likely to vote for him. But as she looks to graduation this June and her job hunt ahead, the emotion she feels is fear, and she cannot imagine having the time or spirit to work for Mr. Obama.

“I don’t think I could do it anymore,” she said. “That campaign was an amazing experience. But I don’t think I’m in the same mind-set anymore. He hasn’t really addressed the young people, and we helped him to get elected.”

You got that right Emma: not only did he not “address the young people”, which I suppose means address their needs & concerns, but he made everything worse for them. The thing is that I am certain Emma has no clue how bad her generation and those after are going to have it socked to them. Young people are amongst the ones most disproportionally affected by the high unemployment that the last 5 decades of social engineering gone awry coupled with the last 3 years of Keynesian spending gone mad, have all but stuck us with for the foreseeable future.

Young people are also disproportionately being straddled with the exploded debt caused by the massive deficit spending of the last 3 years as the wealth transfer policies of this administration , which shift the financial burden from the elderly – the big recipients and beneficiaries of SS, Medicare, and most welfare programs – to the young. The left used to complain the youth had it bad in 2006, things are orders of magnitude worse these days, making 2006 look like the golden years. The many fiscal/social obligations of our government continue grow and to climb in cost, while revenue has become stagnant. More frightening is insolvable problem caused by the belief held by some that government should confiscate more wealth, they call it revenue, to keep up the nanny state, and the indubitable negative economic effect that funneling yet more money from the private sector into the public coffers, for a government that would need to take far over 25% of GDP to meet its expenses, will have. Nobody but the ideologues believes that giving government more money will address the problem. Past history should leave no doubt that they would just spend, it and the debt would keep growing. And as the nanny state grows, the wealth transfer needs that keep these politicians in power will get worse, and worse. Many economists already predict that the current generation of young kids, the ones born in the last decade, will be the first to not experience access to the same opportunities to increase their standard of living that was available to their parents.

And then we come to the whole educational morass Manwhore wanted addressed. The cost of all education has grown drastically. Since 1978 its up an unbelievable 900 percent. It continues to grow at a drastic pace, while most of us see that the quality has continued to drop. No where is this more evident than in secondary education. There the cost of a degree has skyrocketed at several times inflation – which now is rearing its ugly head, but that is another topic for another post – and way too many students these days, It costs too much, delivers too little, and is more of a fun ritual that leaves people indebted and way in over their heads. Now add to that the dying Keynesian economy we are living with, and things look really bad. Lets not forget that College has been oversold.

Don’t worry your pretty head though. The Community Organizer in Chief has a plan Basically it allows students to consolidate their loans with the government, portends to lower their monthly payments – which might be impossible if the rates are going up next year as some pointed out – and forgives them their debt in 20 or 25 years, depending on who is talking about it. In its simplest form it is just another wealth transfer scheme really, as government makes tax payers suck up the difference. I wonder who will pay for that, considering how many other outstanding – like Obamacare – we already have. The students have not been too enthusiastic about it though, because most want to have their debts forgiven completely considering they can’t even discharge the damned things in bankruptcy. To me this is just another bubble being created so it can burst, and I am not alone there.

Lucky for us some get that this plan is more of the same stupid of the last 5 decades. Student debt has surpassed credit card debt. Students owe someone or another close to $1 trillion dollars, and the number is growing. Bear in mind that his plan does nothing to address the problem itself: the unholy alliance between government regulations, the loans they provide, and the teaching institutions that have no incentive to control costs when the gravy train is backed by Uncle Sam. Does this sound familiar to anyone? If it doesn’t I would encourage you to look at the whole housing bubble and the role government regulations that forced lenders to give loans to unqualified people, because that was “social justice”, affected home prices and worked out for us all.

And that brings us to the last topic I wanted to cover: not all degrees are created equal. I could probably write the most here, but simply will leave you with STEM. In case you don’t know about that it is a government program to encourage people to pursue technical degrees. That’s because we in the US have a big gap in these fields.

Hope you have fun with it Manwhore. I even left out the OWS whiners, but you can bring them up if you want.

The Efficiency of Fraud

Remember, friends: Medicare is the model for how we should reform healthcare. Medicare for all is what Van Jones Propaganda Party, among others, is demanding.

On Tuesday, a jury found Iruke, his wife and an employee who worked for the couple guilty of healthcare fraud and conspiracy to commit fraud in a scheme that involved more than $14 million in illegitimate Medicare claims.

Authorities said Iruke and associates often supplied power wheelchairs to Medicare patients perfectly capable of walking on their own —including one who did jumping jacks to show agents he never needed one. Also among the patients Iruke and his associates filed reimbursement claims for were two people who were deceased, according to court papers.

fter purchasing the wheelchairs at about $900 wholesale and paying for the prescriptions, he pocketed the remainder of about $6,000 in taxpayer money he received as Medicare reimbursements, according to court documents. The pastor operated four medical equipment supply companies between May 2002 and September 2009 as part of the scheme, according to authorities.

A few things to pull out of this. First, how easy it was for these guys to defraud Medicare. Their fraud was so simple and straight-forward but it took the government seven years to spot it. The Feds are boasting about finding $2.3 billion in Fraud with their new strike force. But it’s clearly this is the low-hanging fruit of a crime spree that amounts to tens of billions. Notice also how efficient Medicare is. Surgeons haven’t had price increase in 30 years. But Medicare is shelling out six times the going price for a wheelchair.

This is just another illustration of how dysfunctional the liberal model for healthcare is. As I have argued here and Reason argues here, Medicare isn’t efficient, even if you ignore the massive fraud they tolerate. When you include it, Medicare becomes a boondoggle of epic proportions.