Tuesday, July 26, 2011

Welfare State

          This is the United States of America, land of the free and home of the brave. We stand for freedom, we stand for justice and we stand for equality. As Americans we earnestly pursue life, liberty and happiness. Our founding fathers built this nation on the premise that every American should have an equal opportunity to succeed and prosper. The economy is in shambles and the entitlement culture inspired by Welfare is a contributing factor to the collapse and slow recovery. I believe the over allocation of Welfare in this great nation diametrically opposes the pursuit of liberty. In our society, Welfare does now allow individuals to escape any injustice or societal segregation; it only compounds the underlying problem of poor education, unemployment, underemployment and lack of values. The Welfare desperately needs reformation: loop holes should be closed, restrictions should be tightened and funding should be capped. Implementing strict reforms now will inspire a new generation of Americans to seek success through diligence, dedication, and a ferocious work ethic instead of relying on the government for handouts.

            Welfare, as we understand it, has been in place since the Roosevelt administration created the New Deal policies. Entitlements exist in many forms and fashions, most notably as, food stamps, income subsidies, housing subsidies, Medicaid, social security, unemployment benefits and several smaller programs. The New Deal was enacted in an attempt to pull the United States out of the Great Depression and in fact, many economists believe these policies actually lengthened the depression. In a 2004 interview conducted by Economists at UCLA, Meg Sullivan, Dr Harold L. Cole and Dr. Lee E. Ohanian describe how the Great Depression lasted an additional seven years due to President Roosevelt’s policies. They conducted an in depth study of the New Deal legislation, signed into law in 1933, and found fascinating results. Essentially the legislation artificially inflated prices and wages by about twenty-five percent. Thus, allowing more money into the economy than would have naturally occurred. What this did was temporally boost the economy but ultimately it was forced to crash harder.  When businesses realized that their tax rates had skyrocketed, they were compelled to dramatically cut the work force.  As a result, the government well started to run dry because fewer workers led an increase in handouts and in turn less government revenue. Without diving into economics too much, what the two professors are suggesting is that the economy does better when more people are employed and make slightly less as compared to when less people are employed and make slightly more. (This is also the starting point for the argument against unions)

            The New Deal is a perfect example of how Welfare adds burden to businesses and forces unemployment rates to rise. "Why the Great Depression lasted so long has always been a great mystery, and because we never really knew the reason, we have always worried whether we would have another 10- to 15-year economic slump, we found that a relapse isn't likely unless lawmakers gum up a recovery with ill-conceived stimulus policies." (Ohanian) The Government over-stepped many economic and social boundaries with the formation of the New Deal and lengthened the Great Depression. The increase in social welfare programs in today’s America is having the same undesired effects. Under the Obama administration, billions of dollars have been allocated to economic recovery, many of which have been ear marked for social welfare programs. The rate of unemployment has continued to rise despite increased funding for Welfare and stimulus programs the observation is simple; welfare holds economic progress hostage.

            Individuals in favor of the Welfare system argue that it’s society’s duty to take care of the less fortunate. These individuals are of the opinion that our founding fathers wanted equality, therefore we should redistribute the wealth to make everyone equal. The most common basis for their argument is that our society is fashioned in a way that disadvantages certain classes or cultures. In Sarah Glazer’s article entitled “Welfare Reform,” she examines working mothers under the new Welfare legislation. Glazer highlights the circumstance of one mother by the name of Connie Rounds. The article discusses how Rounds was disadvantaged after Welfare reform took place in 1996. Rounds was forced to get a job after her Welfare benefits expired; however the only job she could get earned a minimum wage salary because she was uneducated and possessed no skills. Due to the fact that Rounds was gainfully employed and managed to stay out of destitute poverty, she no longer qualified for Medicaid and her employer provided no benefits. She now cannot afford medical care because she earns too much to qualify for social programs and too little to buy insurance.

            When one first learns of Rounds story we feel drawn towards anger and compassion, a perfectly normal response. A common tactic of pro-Welfare literature is to look at Welfare on a case-by-case basis and ignore the underlying causes that created those individual situations. Why did Rounds only qualify for low wage jobs? In America every individual has the ability to attend school and earn an education, why did Rounds fail to become educated and is this societies fault? Rounds surely had the opportunity to attend high-school and apply for Pell grants, student loans and scholarships if she desired to attend college but at some point in her life she chose not to. It should not be the American taxpayers who bear the financial burden of someone else’s poor choices. Where there is a will there is a way.  It appears that Rounds and others like her just have no desire to work hard. Instead of being grateful for the opportunity to work and acquire useful skills, they complain and try to find a way to get back on welfare so that hard working citizens can pay their way through life.
Welfare accounts for approximately thirty-five percent of the US tax dollars collected, most of which goes towards social security. This means that individuals and business make one third less profit than if no Welfare system existed, which in turn means that less people are working, less money equals less employees; it is simple economics. Either side of this argument does not dispute the fact that Welfare is terrible for the economy but the tables do turn when the question of social responsibility surfaces. Is society doing poor people a disservice by giving them handouts? The first instinct of most people is to say no, we should help everyone we can, but are we really helping them? I interviewed a HUD( Housing and Urban Development) property manager he works solely with low-income housing and individuals who depend on social programs. It is his opinion that individuals on Welfare use it as a crutch, which enables a lifestyle of laziness. It is his experience that most people he deals with on Welfare won’t consider looking for a job. Instead, they find ways to squeeze more out of the Welfare system. One popular tactic is for women to have several children to increase their Welfare payments, then they proceed to go to churches and get donated baby supplies and have to spend nothing. These children are then raised in an environment where there is no value or emphasis placed on hard work and the cycle continues to repeat itself. Simply put, why would an individual be motivated to work when they know that should they choose not to work the government will write them a check anyways?

            Many Democrats, staunch supporters of Welfare, and social entitlement policies relentlessly criticize former President Clinton for his support of the Welfare Reform Act. Clinton signed the act into law because he realized that America was hemorrhaging money, loosing productivity and creating a cycle of dependency. In his radio address to the American public on the Welfare Reform Act he states “This law dramatically changes the Nation's welfare system so that no longer will it fail our people, trap so many families in a cycle of dependency, but instead will now help people to move from welfare to work.” Clinton understood that in order for America to remain prosperous our welfare system required dramatic reform. To this day, Clinton is looked at in a negative light by many liberals for this social policy. Liberals and pro-Welfare activists cried out in anguish after the Welfare Reform was signed, saying that women and children were going to starve and die on the streets of America. Robert Cherry wrote an insightful article entitled But it Works. Cherry is a self-proclaimed liberal who after close examination came to the conclusion that reforming the Welfare system was the right move for the United States. Cherry discusses how most liberals felt that Clinton’s Welfare Reform policy was malicious and cruel. He then goes on to prove his colleagues wrong. Under Clinton’s policy teen birth rates dropped, single mothers’ incomes increased over twenty-five percent, fewer families lived below the poverty line than any point in previous U.S history, the budget was balanced for the first time in history and unemployment dropped to less than four percent. Clearly Welfare before Clinton’s changes was a detriment to the economy and in turn, to American society. Cherry has changed his perspective on social programs as a result of witnessing what Welfare Reform accomplished. Social programs always lean in the direction of giving hand outs as opposed to a hand up. Cherry enlightens his readers to this age-old adage.

            While the Welfare Reform Act made great strides in limiting Welfare payments to individuals it did not do anything to reform the mindset of those on Welfare. Many families continue to live on Welfare by finding loopholes in the law or engaging in welfare fraud. The most prolific loophole is children. Kids mean money and an extension of benefits and in response to the Welfare Reform Act many women got pregnant instead of getting a job so that their benefits would not expire. This is the largest loophole in today’s welfare system and dramatically needs changed. The state of Wisconsin took a proactive approach to this problem and passed a law that states if you are on food stamps and you have a child, you will not qualify for increased benefits or an extension of benefits. States are able to do this because food stamps are funded by their governments and are only subsidized when necessary by the federal government.  As a result of this law, several states followed Wisconsin’s lead. A similar law should be passed on the federal level, which would result in women no longer using their children as a commodity. This law would be in the best interest of everyone involved. The women would work in the marketplace instead of the bedroom, kids would not be present to continue the cycle of living on Welfare, the government would increase its revenue because employment would increase and taxpayers would not bare the burden of paying for this egregious behavior.

             In my opinion, Welfare is an unfair practice that rewards individuals for nothing and causes an entitlement attitude; however my personal opinion on the matter has no academic strength.  The most logical argument for the elimination of Welfare is the economic argument. The top one percent of wage earners in the Unites States bare approximately eighty-percent of the tax burden of this nation. The top one percent of wage earners in this nation also employs over half of America’s labor force and contributes more to our economy than the bottom ninety-five percent of wage earners combined. It seems that nearly every liberal supports the ‘take from the rich mentality’ and it is easy to support the Robin Hood agenda. I will enlighten you as to why this belief is economically unsound and just stupid. A client of Meryl-Lynch recently desired to purchase a yacht, however after he realized his taxes were set to increase under the Obama administration, he elected not to complete the purchase. The uneducated response is “so what, the rich man didn’t get a yacht, big deal” However an educated individual will understand why this is economically detrimental. The yacht would have cost six million dollars and if purchased, the government would have made 480,000 dollars worth of sales tax, far more than they are now collecting from his increased taxes. The company that would have manufactured the yacht is loosing productivity. The numerous individuals who would have been employed to build the yacht missed out hundreds of hours of paid employment. The marina where the yacht was to be stored is missing out on an extra 20,000 dollars of revenue. The maid and chef who would have been employed full time on the yacht are out of work. The gas station where the Yacht would fill up is missing out on an estimated 100,000 dollars additional revenue per year. You see the initial reaction of “who cares if the rich guy doesn’t get his yacht” is ignorant. That six million dollar yacht would have contributed multiple millions to the economy over time. The federal government is taking a huge loss in revenue because the rich man did not purchase his yacht. It is no coincidence that the government has always been fiscally more prosperous when the individual tax rates were low. Welfare is a massive tax burden on individuals and is economically detrimental to our nations fiscal security.

           Our nation was once an economic powerhouse, a beacon of industrial strength, now we are in debt some twelve trillion dollars, unemployment is hovering steadily at eight percent, we account for less than one percent of the worlds exported goods, our factories stand empty, the industrial engine that was once the United States is only a shell of what it once was. We are still the world’s largest economy however we are on track to loose that standing. Nations are on our coat tails and set to overtake us. If no changes are implemented we will be insolvent by the year 2019. Yet in these dire times we as a nation continue to spend upwards of thirty-percent of our revenue paying those who will not work, feeding those who idly stand by and do nothing but suck the prosperity out of my beloved land. This is America, no one in this nation is going to starve on the street corner, and if you want to work you are free to do so. If we eliminated Welfare corporate profits would rise dramatically, unemployment would fall to historical lows, without the burden of paying for those who contribute nothing our land would once again rein supreme as the beacon of prosperity. Not only is Welfare morally wrong, it is economically unwise. In today’s global economy we simply cannot afford to bare the burden of Welfare.

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