Monday, May 14, 2012

The GOP's War on Americans

Today I re-posted two articles that I think are significant to the unemployed if they rely on any type of government assistance. One article debates what the Republicans define as "welfare" and the other article refers to the Republican's proposed cuts in spending next year.

Also read "The Human Disaster of Unemployment", posted in the New York Times by Dean Baker and Kevin Hassett on May 12, 2012:

"Older workers have seen the largest proportionate increase in unemployment. The number of unemployed people between ages 50 and 65 has more than doubled. A worker between ages 50 and 61 who has been unemployed for 17 months has only about a 9 percent chance of finding a new job. Economists estimates a 50 to 100 percent increase in death rates for older male workers in the years immediately following a job loss. There are various reasons for this rise in mortality. One is suicide."

I am the 'Beast' the Republicans want to 'Starve': Starve the Beast is the well-documented and radical 34-year-old plan that Mitt Romney, the Republicans, and the Tea Party endorses for deliberately bankrupting the government."

Define ‘Welfare State,’ Please

Even those who denounce our “unsustainable welfare state” don’t agree on what it is or how its spending should be measured. Brandishing the phrase in his recent call for a structural revolution, David Brooks of The New York Times didn’t get specific.

The Heritage Foundation sometimes offers a narrow definition of the “unsustainable welfare state,” based on means-tested programs – benefits directed to those with income below a poverty threshold, like Temporary Assistance to Needy Families, food stamps and Medicaid.

Like many conservative Republicans, however, the Heritage Foundation often includes bigger entitlement programs that are not means-tested, like Social Security and Medicare, within its unsustainable category.

The ball seems to get bigger as it rolls downhill. Some critics consider the entire government payroll part of the unsustainable welfare state. Others use government spending as a share of gross domestic product as a warning sign. By these measures, military expenditures also count.

Academic researchers also disagree about specifics. The economists Irwin Garfinkel and Timothy Smeeding, for instance, assert that spending on education should be considered part of the welfare state, emphasizing its productive contributions to the development of human capital.

Like many other researchers, including Christopher Howard, author of “The Hidden Welfare State,” they insist that analysis of government spending alone provides an incomplete picture, because tax expenditures, such as the costs of tax breaks for employer-provided health insurance, or for children, should also be counted.

It seems odd to give the same “welfare state” label to all these different categories of spending. Their distributional impact varies enormously. Means-tested government spending on low-income families is small relative to other transfers. Social Security and government employment tend to benefit the middle class. Tax expenditures, in particular, tend to benefit the rich.

Spending trends also vary enormously. Spending on means-tested programs other than Medicaid has not increased much over the long run. According to the Budget of the United States Government for fiscal 2011, it represented about the same percentage of G.D.P. in 2007 as in 1976 – about 1.3 percent. It increased to 1.7 percent in 2009 as a result of the great recession.

When unemployment goes up and stays up, spending on programs like food stamps and the earned income tax credit goes up, helping people who can’t find a job and buffering the economy from the effects of income loss.

Spending on Social Security, often treated as the greatest bugaboo of our aging society, has remained at 4.5 to 5 percent of G.D.P. since 1985. The already carried out transition to a higher retirement age is contributing to cost containment.

The scary increases in government spending have come in Medicaid and Medicare. These two programs, which consumed 1.2 percent of G.D.P. in 1975, reached 4.1 percent of G.D.P. in 2008.

These increases have less to do with government spending than with the increased costs of health care, regardless of who is paying the bill.

The Center for Economic and Policy Research offers an online calculator showing how much lower our projected deficits would be if we could reduce health care spending per person to levels comparable to those of other affluent countries. The center also graphs the improvement that would result from successful fulfillment of the Affordable Care Act.

If you distrust these calculations, consider that government spending on retirement and health security is largely a substitute for private spending. Try projecting your personal expenditures on retirement and health care if Social Security and Medicare are downsized. Your taxes might go down, but you might need to spend more out of your own pocket to buy the services you need.

All government programs deserve critical scrutiny, and there is plenty of room for meaningful debate over the relative efficiency of public versus private provision. But there is no evidence that social spending in the United States is approaching some upper limit of feasibility.

What is unsustainable (or should be) is the current level of confusion, misinformation and paranoia about the future of the so-called welfare state.

My Post: Obama's 'Welfare State'

  • "Define Welfare State Please" posted in the New York Times by Nancy Folbre on May 14, 2012

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