Thursday, October 11, 2012

American Exceptionalism, Big Bird, Government Leadership's Immaturity and How to Really Help the Poor

Tonight's debate between the vice-presidential candidates probably won't center around Big Bird's long term viability as a ward of the state, although perhaps it should. It probably won't center around how much we're spending on the oldsters relative to the youngsters either, although perhaps it should.

And it probably won't include much of a discussion about how to move the poor out of poverty either, although that's a serious topic as well. And to do that, growing the economy has to be job #1. Not growing the government but growing the economy.

In my view, subsidizing Big Bird and practicing our unique brand of American Exceptionalism don't seem to be a good fit today. To me American Exceptionalism is essentially based on a society which is largely anti-statist and which stresses the importance of individualism.

Maybe once upon a time we could take care of Big Bird and stress individual self reliance in the context of limited government. If so, that was when we had unlimited money available to government in the years subsequent to World War II when our economy was the only game "in town."

Today, however, there's a limit on how much government can spend, assuming we still believe in the wealth creating capability of the private sector. Thus, we can't spend the same dollar twice, and wealth generation is essential if we are to remain the uniquely prosperous and exceptional nation we've always been. And this is true regardless of whether our feckless and self centered politicians are willing to talk about it or not.

So here's my question: Should we do what we can to grow the U.S. economy and thereby help others, including ourselves, before government spends any more borrowed money from China on subsidizing Big Bird and similar nice to have programs?

President Obama's emphasis on government spending simply confuses what is admittedly "nice to have" with with what we need to have. It would be nice to have unlimited funds and borrowing power, for instance, but those days are long gone.

Yet he obviously doesn't want to establish priorities (other than raising taxes on what he calls the millionaires and billionaires and what the rest of us call job creators). Nor does he want to be pinned down to establishing a pecking order of government spending initiatives.

In this regard, Big Bird is a great example of his "nice to have" unlimited government spending presidency. But where would the "bird" fit on the currently non-existent list of government spending and borrowing priorities, Mr. President?

It's nice to have PBS, Solyndra, door-to-door post office deliveries, charitable deductions, deductions for mortgage interest charges, local property tax deductions, a few hundred thousand more school teachers, the ability for our government workers to retire with full pensions at an early age, Pell Grants, low interest and available to all who apply student loans, generous Social Security benefits with COLA provisions, Medicare benefits and Medicaid benefits for things such as nursing home care, too. Just like it's nice to have Big Bird around. But how to pay for all this? Well, let's just say that's definitely not a priority for our politicians. At least not yet. But that day is coming and it's going to get here real soon, too.

On the other hand, what's not so nice to have is an enormous and spiraling national debt, annual trillion dollar deficits and high unemployment combined with essentially stalled economic growth. Something else that is not nice to have is for savers to receive less than 1% annually on their savings and for Ambassadors to be assassinated on the anniversary of September 11 either, and then blaming it on a video instead of terrorists. And it's not nice to have less oil than we would have if our government allowed oil companies to drill and build pipelines and create jobs.

But herein let's limit the conversation to our government knows best role in "helping" the poor. How are we doing? Really bad at helping and even worse at how much we're spending to do the "helping."

The Wrong Way to Help the Poor sets forth the issue this way:

"THIS evening, Vice President Joseph R. Biden Jr. and Representative Paul D. Ryan will meet in their only vice-presidential debate. Without a doubt they’ll square off on jobs, taxes and Medicare.

But in all likelihood, one key issue will be lucky to merit even a passing remark from either side — the question of how to lift 46 million Americans out of poverty. It’s an issue crying out for serious debate.

Each year, American taxpayers spend nearly $1 trillion trying to help the poor, according to a recent study by the Cato Institute. It’s easy to miss that headline number, though, because the money flows into and out of scores of federal, state and local government programs. In April, Michael D. Tanner, a senior fellow at Cato, a libertarian research group, compiled a list of 126 federal programs for low-income Americans, which together spend $668 billion of taxpayer money annually. State and local governments allocate an additional $284 billion, he estimated. . . .

Are we spending this money in truly the best way to help the poor?

Consider a thought experiment: Divide $1 trillion by 46 million and you get around $21,700 for each American in poverty, or nearly $87,000 for a family of four. That’s almost four times the $23,050 per year federal poverty line for that family. It’s intriguing to think about converting all of this to a cash payment that would instantly lift everyone in poverty up to the middle class.

For a variety of reasons, of course, that’s not possible, either logistically or politically. But a middle path might resemble what Mr. Ryan has proposed for Medicaid — converting the behemoth program to block grants for each state, an idea that in some ways parallels the successful welfare reform plan of the Clinton era.

Most Americans agree that it’s in all of our interest, for both humane and economic reasons, to help people move from dependency to self-sufficiency. The challenge is how to do it effectively while minimizing waste. Currently, our various antipoverty efforts are both fragmented and overlapping.

A study by the Institute for Educational Leadership, for example, identified 7 Senate committees and subcommittees, 11 House committees and subcommittees, 7 cabinet departments and 8 other agencies that had a hand in overseeing one antipoverty program or another. The authors described a typical family eligible for 20 separate programs, each with its own set of complex eligibility forms and often managed by separate government offices. . . .

The help most families need should be provided with a holistic one-stop approach at the local level. For example, if an element like transportation, job placement, child care or substance-abuse treatment is missing, much of the rest of the taxpayer investment is often wasted.

Another factor is the natural reluctance of advocates, Congressional staffers, think tanks and providers of services for the poor to see their favorite programs cut or consolidated. Few are willing to give up authority over their piece of the program pie.

Even without converting all of our federal antipoverty dollars to state block grants, however, we can still do more to combat this fragmentation and zealous protection of fiefs. We can start by measuring outcomes (results) rather than inputs (how much money can we throw at the problem). Our effectiveness should be assessed, in part, by the per-person cost of moving individuals from dependency to self-sufficiency.

Most Americans understand that people enter poverty for many reasons and that we have an obligation to help them get out of it. A “conservative” path of just slashing budgets isn’t going to meet that obligation, but neither is the “liberal” path of embracing every program and spending more on each. We need a third way. The changes to spending on human services and Medicaid in Mr. Ryan’s budget proposal, if not a perfect template, could be a catalyst for starting the conversation. If only it would come up at tonight’s debate." 

Summing Up 

My admittedly somewhat skeptical view of government officials (perhaps even cynical) is that most of them are there to protect and perpetuate the jobs, power and fiefdoms of the government officials themselves. Thus, they want to keep the programs they have and expand them wherever possible. And that takes lots of money from either or both taxpayers and lenders.

Another view I hold strongly is that if we in fact gave each person designated as poor a choice beteen accepting government programs and cash of $21,700 to spend as the individual chose, two things would happen: (1) government officials would strenuously object to this direct approach while (2) the poor person would vote overwhelmingly in favor of the cash award.

And that would accomplish two more things: (1) fewer government knows best bureaucrats and programs would be needed and (2) the poor would make better MOM choices than the government OPM approach.

Today far too many of our government redistributionist programs exist due to initially "bribing" or otherwise inducing the middle class to favor the program by including all citizens in the list of beneficiaries and not just those in need. Here's why I say that.

Established in 1935, Social Security is the first such "all-in" program and served as the model for Medicare 30 years later. FDR believed at the time that it would be easier to get the needed votes for Social Security by including everybody as a beneficiary, whether the individual person needed the benefit or not. He also believed, and correctly it seems, that once in place, later members of Congress wouldn't dare tinker with these government "nice-to-have" entitlement programs. So far he's been right about that, of course.

And as with Social Security, Medicare and others, it's the same thing with Big Bird, the post office and other currently unaffordable government "nice to have" government subsidies and "investments" these days.

However, soon we'll have to prioritize Big Bird, Solyndra, government workers' pensions, public school spending, Social Security, Medicare, Medicaid, ObamaCare and all the other programs as part of deciding how much we can spend on helping the young and the poor, for example. We're out of money for all the "nice to haves" we have.

Thus, the nice to haves will have to make their case against the need to haves, and our President, whoever he may be, will no longer be laughing off the matter of whether or not to borrow from the Chinese or tax the "middle class" American taxpayers to feed Big Bird

As the President likes to say, "It's just math. It's just arithmetic. Add it up."

Thanks. Bob.

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