Wednesday, December 16, 2015

The States Are Succeeding Where Washington Continues to Fail Miserably, Part 2

We are always pointing out the the overwhelming and wasteful spending of the Federal government and the Washington political class have us on a debt trajectory that will likely crash the financial stability of the Federal government, our economy and our freedoms in a relatively short time frame unless government spending and waste can be brought under control very soon. Just in the seven plus years of the Obama administration, the national debt has grown about $8 TRILLION and 80%. By the time Obama leaves office, his administration will likely have incurred debt levels equal to ALL previous Presidential administrations COMBINED.

This debt accumulation cannot go on forever. The best illustration of how bad it will become and how soon it will happen is shown by the following chart from the Cato organization. Keep in mind that according to the White House budget website and spreadsheet, Federal government tax revenues in 2017 from all sources is expected to be just under $3.755 TRILLION:

A few observations:

  • According to chart, by 2017 the Federal government will spend just over $2 TRILLION just on these three government programs. 
  • This is a whopping 55% of the entire Federal tax stream.
  • This leaves only 45% of the tax stream to pay for the rest of the current Federal government’s activities including military, transportation, housing, food stamps/assistance, education, border patrol, etc.
  • But it gets worse. If we assume that the Federal government’s tax stream grows 3% a year, the long term growth in GDP, then by 2025 the Federal tax stream would be about $4.757 TRILLION. 
  • Cato estimates that by 2025 these three programs will pay out $3.337 TRILLION which will eat up a whopping 70% of the Federal government revenue stream. 
  • And this is probably a low ball estimate since the Washington political class has not shown the ability to grow the economy by at least three percent for at least the length of the Obama administration.
Despite this reality, there has been no trace of the ability or willingness to do something about the situation from Washington politicians. No discussion, no debate, no policy proposals, nothing. Nothing on how to change what is being done now, nothing on how to cleanup the massive amount of fraud and inefficiencies in these programs, etc. 

Of course, Washington will likely at some point say that higher taxes, rather than reduced spending and the eliminating of criminal fraud and waste, will resolve all of the problems illustrated above. The problem with that approach is two fold:
  • The more Americans are taxed, the less they have to spend and grow the economy. As economic growth slows down as the tax burden increases, the Federal government tax stream starts to slow down or actually decrease, leaving us exactly where we were to start with.
  • Second, increasing the tax burden decreases the amount of freedom that Americans deserve and desire. You cannot have political and real freedom without financial freedom and as the tax freedom day gets further and further out each year, that restriction on the amount of our earnings and wages we can keep further restricts the amount of everyday freedom we can enjoy.
If all of this sounds pessimistic and fatalistic to you, than you are getting it. Obviously Washington politicians are not getting it even when such harrowing numbers and realities are right in front of their face.

But let’s try to stay optimistic today and tomorrow. Believe it or not, there actually are politicians in this country that are trying to get out of control government spending and entitlements under control. Unfortunately, none of them are in Washington. They are scattered across the country in state government positions who realize that the spending and gouging of taxpayers has to be brought under control soon or the entire economy, financial stability, and freedoms of the country will implode.

Yesterday we started to salute their brave efforts in this area and hope that somehow their efforts eventually take hold in Washington, an effort we continue today.

1) Yesterday, we reviewed how Georgia and Michigan were making great strides in getting welfare fraud and crimes under control to the benefit of taxpayers and those that truly need society’s help and compassion. 

Let’s kickoff today’s salute with a review of what is going on in Wisconsin. Wisconsin governor Scott Walker recently signed an administrative rule that will require drug testing for welfare recipients. According to an article by the Western Journalism website: “The rule was written by the Wisconsin Department of Children and Families and requires testing for "certsain able-bodied adults" receiving welfare benefits — such as food stamps, unemployment insurance, or job training — to pass a drug test, according to The Capital Times."

At the same time, the state put in place drug treatment opportunities for those state citizens that need help kicking the habit. But the message is clear in Wisconsin: welfare is not a career and free ride, there is a degree of responsibility involved in order to take taxpayer wealth. The hope as that by limiting the free ride of welfare and getting people off of drugs, they will be able to pass drug tests that prevent them from filling available employment opportunities within the state. 

Thus, everyone wins when government acts rationally: taxpayers save money, people get off drugs and get healthy, and the economy now has additional workers to fill existing job openings. At least 13 states are following this logical and sound approach to governing in this area: Alabama, Arkansas, Arizona, Florida, Georgia, Kansas, Michigan, Mississippi, Missouri, North Carolina, Oklahoma, Tennessee and Utah. Eighteen other states have similar efforts and legislation pending.

Despite how simple and elegant this solution is, believe it or not, Federal government officials are trying to block the Wisconsin effort in Federal court. Guess they think it is best for people to stay drug addicted, unemployed and welfare dependent.

2) Missouri politicians are attacking food stamp/assistance waste by trying to prevent food stamp recipients from using taxpayer wealth via the food assistance program from buying lobster and sushi with their food stamps. A proposed piece of legislation would prevent the purchase with food stamps of "cookies, chips, energy drinks, soft drinks, seafood or steak."

Rick Brattin, a state politician who is sponsoring the legislation says that, "The intention of the bill is to get the food stamp program back to its original intent, which is nutrition assistance." His intent is to ban the buying of luxury foods with food stamps that are financed by taxpayers who themselves might not be able to afford luxury food items. 

Banning the purchasing of junk food like cookies, soda, and chips is also consistent with Michelle Obama’s attempt to have Americans eat healthier, something that does not include cookies, soda, and chips.

Again welfare, including food assistance, should not be a lifestyle choice, it should be a support mechanism to help people facing a rough patch in their lives. Crab legs, lobster, sushi, and junk food should not be part of a diet that is supported by taxpayer money. 

3) Pennsylvania politicians are also getting involved in the whole food assistance program review and tightening. Their recent efforts include the following aspects:
  • The state government is about to start enforcing existing regulations that require food stamp beneficiaries to work if they are able bodied to do so in order to stay in the program.
  • This could affect upwards of 30,000 state residents who currently are able to work but don’t and still get food assistance every month.
  • The work requirements were suspended as a result of the Great Recession but since Obama and other liberals state the economy is in fine shape, Pennsylvania is now starting to re-enforce the existing work requirements.
  • These requirements mean that certain individuals will again be subject to a three-month limit on food assistance, after which they would be required to work, volunteer or attend a work-training program for a minimum 20 hours a week in order to maintain benefits.
  • The requirements exclude anyone who is over age 50, who are disabled, or caring for minor children.
  • The action will not be enforced evenly across the state since it will be more lenient in geographic areas that still struggling with higher unemployment.
  • North Carolina is doing the same thing, starting in 2016, and is also being sensitive to high unemployment areas.
  • In North Carolina, upwards of half of the state's food assistance recipients could be affected.
Again, two examples of state politicians stepping up and trying to get out of control government welfare spending under control by enforcing existing laws to get able bodied people to take control of their lives and start contributing to society rather than living off of society. These efforts are being done with a degree of compassion, considering geographic realities and family and age realities.

4) And finally, conisder what a local politician in Maine is trying to doing relative to welfare recipients. Mayor Robert Macdonald of Lewiston, Maine says that the taxpayer public has a right to know who is living of off taxpayer wealth via welfare programs and how much they are making in welfare payments. Besides putting a 60 month lifetime cap on welfare recipients, he wants to publicly publish what those welfare recipients are receiving.

His reasoning is logical and actually quite elegant. Given that the information of everyone in the state of Maine who receives a state pension has that income information published in the public domain, his reasoning is why should welfare recipients not face the same scrutiny? Why should their welfare income information be protected and kept secret while the income information of state pensioners be public information? 

He put forth his reasoning as follows: “Yes, I am referring to those known as welfare recipients. Why are they treated differently than pensioners? Our liberal, progressive legislators and their social-service allies have made them a victimized, protected class. It’s none of your business how much of your money they get and spend. Who are you to question it? Just shut up and pay! Well, the days of being quiet are gone, After all, the public has a right to know how its money is being spent.”

He wants a state law passed that would create a website listing every recipient’s name, address, time on assistance and amount received. His reasoning is that making this information public would also help identify and crackdown on welfare program abuse. He feels that it is a government transparency issue, a view that is certainly consistent with Obama’s promise to operate the most transparent Presidential administration ever.

That will do it for now. Two days of actual state and local politicians actually trying to do the right thing: protect taxpayer wealth, aid people who are down on their luck while encouraging them in various ways to become contributing members of society again vs. continuing dependents of society. They are doing it in stern but fair and compassionate ways. 

If only Washington politicians had the moxy and guts to do the same on the massive Federal government welfare programs that are about to implode our democracy and financial way of life, sooner rather than later, while creating a permanent dependent class of citizens and unfortunately, voters.

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