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This week, the House of Representatives is expected to vote on the partisan Build Back Better Act. This legislation, if enacted, would generate the largest increase in means-tested welfare spending in U.S. history.
House leadership has allegedly cut the 10-year costs of the bill in half. But these “savings” are almost entirely due to the gimmick of terminating or curtailing the bill’s enormous spending initiatives halfway through the 10-year budget window or sooner.
Have you ever seen the federal government pull the plug on a welfare program after five years?
New means-tested spending alone will cost over $800 billion in the first five years. If this new spending were fully funded through the entire 10-year budget window, the total cost would exceed $2.5 trillion.
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This mountain of spending would be piled atop the current means-tested welfare system that already spends $1.16 trillion per year providing cash, food, housing, medical care, and social services to poor and low-income people.
In 2018, before the COVID-19 pandemic, the average family with children that was defined as poor by the government received $20,700 in cash, food, and housing benefits, and another $17,000 in medical care and $5,000 in social services.
Taxpayers also spent $22,500 on non-means-tested public education for the family’s children. Total government resources came to $65,200 per family per year.
The average poor family also had $18,100 in earnings and other private resources. Adding this to the government assistance brought the average total resources to $83,300 per poor family. Even if the count were restricted to earnings, private resources, as well as government cash, food, and housing, the average would total nearly $40,000 per family, well above the average official poverty threshold of $26,400.
How does the government determine that a family with $83,300 in annual resources is poor? It systematically ignores nearly all the benefits and resources the family actually has.
For starters, the government undercounts earnings in low-income families by a third. Then, government deliberately excludes nearly all of the current 89 means-tested welfare programs when calculating its official measures of poverty and inequality. Of the $65,200 in government benefits and support received by the average poor family, Washington counts only $3,125 as income in its official poverty measure.
Omitting almost the entire welfare state from the poverty measure creates the misperception that the U.S. has a meager welfare system. The Biden administration is capitalizing on this misperception to demand the largest expansion of means-tested welfare in U.S. history.
The Build Back Better Act would add another $11,300 in annual benefits to the average poor family, bringing total government support to $76,400 per family.
Total government and private resources combined (including education and services) would rise from $83,300 to $94,600 per year. Private resources plus government cash, food, and housing would average $48,200 per year, nearly twice the official government poverty level for these families.
Ironically, not one penny of this new spending would be counted as income for the purposes of the government’s official poverty measure. Measured poverty would remain unchanged, or would worsen if work and marriage decline, as is likely.
The system is rigged. The taxpayer is trapped like a hamster in a running wheel. No matter how fast the hamster runs, he never gets anywhere. No matter how much the taxpayer spends on welfare, official poverty will remain unchanged.
Even worse are the harmful incentives built into the legislation. The bill raises the rewards for teen pregnancy and childbirth and increases the penalties for marriage. It overturns the foundations of the Clinton-era welfare reform, which required able-bodied recipients to work or prepare for work in exchange for cash benefits. Instead, the bill resurrects the long-failed policy of paying families not to work.
Taxpayers, society, and the poor would all suffer from the enactment of this legislation. Instead, policymakers should provide an accurate count of welfare spending and benefits received, maintain work requirements, and decrease, not enlarge, marriage penalties.
The Washington Times originally published this article.
Is Venezuela a Warning for the United States?
Thanks to socialism, Venezuela is a basket case.
This video from John Stossel asks if the United States can and should learn from this bad example.
The easy answer is yes. Indeed, you can click here and here to get 56 examples of why we should not copy Venezuela’s descent to statism.
The main thing to understand is that the world is an economic laboratory and the various countries are experiments showing what works and what doesn’t work.
Nations such as Venezuela clearly are wretched examples of what happens if there is a large amount of bad policy.
Other nations, by contrast, are examples of what happens if there’s a medium level of bad policy. Think Greece, Argentina, and Italy.
While countries such as the United States and Denmark show what happens if there is a (comparatively) modest amount of bad policy.
All this is depicted in the “socialism slide,” which I created back in 2019 to show how nations score in the Fraser Institute’s Economic Freedom of the World.
The good news is that the United States would have to fall a long way down the slide before approaching Venezuela-style economic despotism.
Even Biden’s plan would represent just a small step in that wrong direction.
P.S. I’m focused on the dangers of copying Venezuela’s bad economic policies, but I agree about the downsides of the other two policies – gun control and speech control – mentioned in the video.
P.P.S. I’ll never stop being amazed that the New York Timeswrote about Venezuela’s economic crisis and never once mentioned socialism.
Defending Capitalism, Part I
I was a big fan of (and occasional guest on) John Stossel’s TV show, and I’m now a big fan of his videos (see here, here, here, here, here, here, and here).
So it was an honor to appear in his latest video about “Capitalism Myths.”
It’s a two-part series. In this first video, we discussed three myths about free enterprise.
Myth #1 – Capitalists get rich by ‘taking’ money from others.
Since voluntary exchange, by definition, is mutually beneficial, this is a truly absurd argument. Indeed, only the most vapid politicians and pundits suggest otherwise.
The most definitive research in this area came from Professor William Nordhaus of Yale, who estimated that, “innovators are able to capture about 2.2 percent of the total social surplus from innovation.”
Translated from economic jargon, that means the rest of society gets nearly 98 percent of the value created by rich entrepreneurs.
Myth #2 – The rich getting richer, and the poor getting poorer.
This is an issue I’ve repeatedly addressed, showing how poverty was the natural state of humanity until capitalism appeared a few hundred years ago.
Now we are incomprehensibly rich by comparison. At least in market-oriented nations.
Focusing on more-recent data, I’ve shown that living standards have dramatically increased in the post-World War II era.
In the video, John and I also discussed the Census Bureau’s data showing that the middle class is shrinking, but only because more people are becoming rich.
Myth #3 – Monopolies destroyed the free market.
Supporters of government intervention commonly argue that capitalism produces monopolies, meaning big producers capture the market and exploit consumers.
This is a rather puzzling argument since monopolies almost always are the result of government favoritism.
Even if we go back to the days of the so-called Robber Barons, we find that the consumers were only exploited when politicians decided to prohibit competition.
P.S. Next week, the second video will look at four other myths about capitalism.
P.P.S. On a related note, I have a five-part series (Part I, Part II, Part III, and Part IV, and Part V) on “The Case for Capitalism.”
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The climate-change hustle
John Stossel: Through 50 years of reporting on scares, only COVID proved true
I hear that climate change will destroy much of the world.
“There will be irreversible damage to the planet!” warns a CNN anchor.
Joe Biden says he’ll spend $500 billion a year to fight what his website calls an “existential threat to life.”
Really?
I’m a consumer reporter. Over the years, alarmed scientists have passionately warned me about many things they thought were about to kill Americans.
Asbestos in hair dryers, coffee, computer terminals, electric power lines, microwave ovens, cellphones (brain tumors!), electric blankets, herbicides, plastic residue, etc., are causing “America’s cancer epidemic”!
If those things don’t get us, “West Nile Virus will!” Or SARS, Bird Flu, Ebola, flesh-eating bacteria or “killer bees.”
Experts told me millions would die on Jan. 1, 2000, because computers couldn’t handle the switch from 1999. Machines would fail; planes would crash.
The scientists were well-informed specialists in their fields. They were sincerely alarmed. The more knowledge you have about a threat, the more alarmed you get.
Yet, mass death didn’t happen. COVID-19 has been the only time in my 50 years of reporting that a scare proved true.
Maybe you accepted the phrase I used above: “America’s cancer epidemic.” But there is no cancer epidemic. Cancer rates are down. We simply live long enough to get diseases like cancer. But people think there’s a cancer epidemic.
The opposite is true. As we’ve been exposed to more plastics, pesticides, mysterious chemicals, food additives and new technologies, we live longer than ever!
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That’s why I’m skeptical when I’m told: Climate change is a crisis!
Climate change is real. It’s a problem, but I doubt that it’s “an existential threat.”
Saying that makes alarmists mad.
When Marc Morano says it, activists try to prevent him from speaking.
“They do not want dissent,” says Morano, founder of ClimateDepot.com, a website that rebuts much of what climate activists teach in schools.
“It’s an indoctrination that’s so complete that by the time (kids) get to high school, they’re not even aware that there’s any scientific dissent.”
Morano’s new movie, “Climate Hustle 2,” presents that dissent. My new video this week features his movie.
Morano argues that politicians use fear of global warming to gain power.
“Climate Hustle 2” features Sen. Chuck Schumer shouting: “If we would do more on climate change, we’d have fewer of these hurricanes and other types of storms! Everyone knows that!”
But everyone doesn’t know that. Many scientists refute it. Congress’ own hearings include testimony about how our warmer climate has not caused increases in the number of hurricanes or tornadoes. “Climate Hustle 2” includes many examples like that.
“Why should we believe you?” I ask Morano. “You’re getting money from the fossil fuel industry.” After all, Daily Kos calls him “Evil Personified” and says ExxonMobil funds him.
“Not at all,” he replies. “I’m paid by about 90% individual contributions from around the country. Why would ExxonMobil give me money (when) they want to appear green?”
Morano’s movie frustrates climate activists by pointing out how hypocritical some are.
Actor Leonardo DiCaprio says he lives a “green lifestyle … (using) energy-efficient appliances. I drive a hybrid car.”
Then he flies to Europe to attend a party.
I like watching Morano point out celebrities’ hypocrisy, but think one claim in his movie goes too far.
“Stopping climate change is not about saving the planet,” says narrator Kevin Sorbo. “It’s about climate elites trying to convince us to accept a future where they call all the shots.”
I push back at Morano: “I think they are genuinely concerned, and they want to save us.”
“Their vision of saving us is putting them in charge,” he replies.
And if they’re in charge, he says, they will destroy capitalism.
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State of the Union 2013
Published on Feb 13, 2013
Cato Institute scholars Michael Tanner, Alex Nowrasteh, Julian Sanchez, Simon Lester, John Samples, Pat Michaels, Jagadeesh Gokhale, Michael F. Cannon, Jim Harper, Malou Innocent, Juan Carlos Hidalgo, Ilya Shapiro, Trevor Burrus and Neal McCluskey respond to President Obama’s 2013 State of the Union Address.
Video produced by Caleb O. Brown, Austin Bragg and Lester Romero.
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In the past I have written the White House on several issues such as abortion, medicare, welfare, Greece, healthcare, and what the founding fathers had to say about welfare programs, and have got several responses from the White House concerning issues such as Obamacare, Social Security, welfare, and excessive government spending.
Today I am taking a look at the response of the scholars of the Heritage Foundation and the Cato Institute scholars to the 2013 State of the Union Address.
February 13, 2013 at 8:22 am
State of the…Climate?
Swept into office four years ago based, in part, on promises to slow sea-level rise, President Obama initiated a radical climate agenda. It seems we are seeing a rerun in 2013. It is worth asking what is different four years after his first State of the Union Address?
There have been four more years of no global warming. In 2010, there had been no significant world temperature increase for over a decade. The streak is now 16 years long. We have four years of costly lessons on the waste and inefficiency of green-energy subsidies.
The scientific basis for catastrophic climate change gets weaker and weaker. The economic argument for green subsidies has already collapsed. It is time for the administration to quit using both arguments to justify a regulatory and fiscal power grab.
– David W. Kreutzer, PhD, research fellow in energy economics and climate change, Center for Data Analysis
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