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  • If Deficit Commission Is Serious, They Ought to Look at Welfare Reform

    Today, Heritage budget expert Brian Riedl testified before the National Commission on Fiscal Responsibility and Reform, more commonly known as President Obama’s “deficit commission.”

    The commission has been tasked to offer suggestions to reduce the federal deficit—a necessity which was proven even more serious today by the release of the Congressional Budget Office’s annual long-term Budget Outlook.  Today’s meeting was the third for the commission, and was intended to serve as an opportunity for the appointees to hear from the public on the topic of deficit reduction.  To paraphrase Senator Kent Conrad (D-ND), the commission was looking for ideas they may not have yet considered.

    The commission has promised to keep all possibilities in mind as it considers how best to accomplish this feat, which include reductions to federal spending and, unfortunately, tax increases as well.  Riedl highlighted his recent research, which shows that it is due to out-of-control spending, not insufficient tax revenue, that deficits are soaring.  By 2020, spending will be 6 percent of gross domestic spending (GDP) higher than its historical average.  Meanwhile, tax revenues, even if all current tax cuts are extended, will also be above their historical average.  Riedl reiterates: “Spending is driving long-term deficits.”

    Because spending is the problem, the solution to mounting deficits should focus on reducing federal expenditures.  Thus far, reformers have focused solely on entitlement programs such as Medicare, Medicaid, and Social Security, as the first place to make cuts.  Entitlement spending is on track to consume all tax revenue by 2052, threatening to devastate the United States economy on its way.  Indeed, fiscal reform must address entitlement programs if it is to be successful, but this is not the only place where spending reduction is possible.

    Riedl chose to focus on another option which the commission may not have hitherto considered: welfare reform.  Riedl explained that, “Since 1990, federal welfare spending has more than doubled, from 2.0 percent of GDP to 4.4 percent.  This 2.4 percent of GDP expansion exceeds the combined 2.1 percent of GDP expansion of Social Security, Medicare, defense, and education spending over the same two decades.”

    The majority of growth in welfare spending occurred before the current recession, and thus represents a persisting trend. To reverse this likelihood, Riedl points to research from Heritage’s Katherine Bradley and Robert Rector, which explains that reforming welfare could save more than $2 trillion over the next decade, while at the same time causing no harm to the poor.

    Bradley and Rector write, “Welfare reform should include at least five components: controlling welfare spending, instilling a discipline of work among welfare recipients, reducing rewards for dependence on welfare by treating a portion of the aid as a loan, promoting healthy marriage as the best way to prevent poverty, and limiting immigration of low-skill immigrants.”

    The welfare reform of 1996, which created the jobs-focused Temporary Assistance for Needy Families (TANF) program, is an example of how best to do this. By discouraging reliance on welfare benefits and encouraging employment, this program helped families to escape poverty, rather than trapping them in it.

    Heritage’s recently released 2010 Index of Dependence on Government shows that dependency on the federal government is growing at an alarming rate.  Reversing this trend would reduce federal deficits while simultaneously keeping American citizens on the upward move that results from self-reliance and a society where incentives lead to growth, not more dependency.

    Posted in Culture [slideshow_deploy]

    18 Responses to If Deficit Commission Is Serious, They Ought to Look at Welfare Reform

    1. Billie says:

      Let people do it for themselves like they were born to do.

    2. J Gordon, Bonita, FL says:

      To establish this commission after squandering nearly a trillion in pork-ulus spending and obligating us to more than a trillion for Obamacare reflects the planned agenda of this administration. If one wants to redistribute wealth, start with the one investment that comprises the majority of one's wealth, their home. By not stabilizing the housing market, values continue to fall eroding equity and establishing a level playing field for future recipients of all of the government owned foreclosed stock. Has an analysis been performed that examines the expected result of reducing the interest rates to a nominal rate, say 3%, across the board? It would have improved individual balance sheets, created dollars for additional spending thereby stimulating the economy and reduced the amount of foreclosed properties and the attendant cost of maintenance. That seemed a better use for the squandered pork-ulus.

    3. Jack E Lohman says:

      Yea, but first they must cut congressional pensions! And then — if revenues still fall short of spending — CUT spending and RAISE taxes on the wealthy jerks that are ripping off the public. You know, the $10 million to $4 billion per year salaries. And then, consider whether we really want to fund these foreign wars with our cash and troop lives, regardless of how much the defense manufacturers want us there. And of, stop the campaign bribes from the defense, banking, energy, and healthcare industries. Actually, ALL industries and special interests should quit bribing politicians and our trashed economy will return to life!

    4. Jeanne Stotler, Wood says:

      My mother always said "Charity begins at home" Well the charity here at home goes on for generations who procreate so to keep getting checks. Any help should be temporary unless person is rendered handicapped. We jump to help every clamity in the world and turn a deaf ear to those who need it most here at home, yet we keep giving welfare to families generation after generation and do nothing to teach them how to be independent. I am not ashamed to have used food stamps after my husband died, from May until Oct. my income was the only money coming in and it barely covered mortgage and utilities. Once the Soc. Sec. checks came in I stopped using food stamps. I used them to feed my children during the time I was waiting for the checks, then I went back to school to be able to earn more, still working full time, not easy but it can be done.

    5. B & T Flyover says:

      Why did I get a message to slow down and not post comments so quickly? Other people posted before I did.

      I said:

      I had Medicare extracted from my salary all these years and now I am close to collecting it! So keep yuor hands off of MINE! Go after the welfare recipients who haven't paid into the system.

      Most of all — give me back the medical benefits that I earned as part of my Evil State Pension. I chose that line of work so that I would have these benefits in my "golden years." I will add that Evil State Pensions were available to anyone who applied for State jobs and could do the work. We were looked down on back then because we were considered boring civil servants. Now that we have the retirement packages that we earned, we are looked down on as "bloodsucking."

      We had to work to earn them. I did. I worked hard at my job. Can only speak for myself, tho.

      B & T

      I hope this was typed slow enough for whatever it was that told me to slow down before!!!

      Dumb machine!

    6. Lloyd Scallan (New O says:

      Another pipe-dream! Can anyone imagine what will happen in this nation if

      one penny of welfare money (our tax dollars) be taken away from recipients.

      What's happening in Greece is just a warm-up to what will happen here. Remember, Greeks don't have guns. But, on a more cheerful note, it's going to happen sooner or later, or we loose our American way of life.

    7. Homer N. Jethro says:

      Greetings Jack,

      I am glad that you are reading a good conservative journal. From your comments it is clear that you know very little about real economics, but not to fail! Thomas Sowell has written a wonderful text book on economics and I would recommend it to you and all of the other readers of The Foundry. Find it at your favorite book seller under author search.

    8. Randall Holland, Ari says:

      I fear your words are falling on deaf ears. The only solution this commission will come up with is to slap a big fat VAT tax on our economy.

      Here are a few ideas:

      Eliminate the Dept of Education.

      Contract out the operation of our National Parks.

      Cut the size of government by 5% per year for 10yrs.

      Cut earned income tax credit.

      Cut entitlements spending by 5% per years for 5yrs

      Flat tax for everyone.

      Cut business taxes.

    9. Jack E Lohman says:

      Thanks for the advice, Homer. My "economics" came from being a CEO of my own company for 25 years, but I do have Sowell's book. I'm glad you're looking out after me.

      And Randall, I like some of your list. Yes, eliminate the DOE and leave education to the states. Yes, cut the size of government by 5% per year for 10yrs.

      But privatizing our National Parks and turning them over to the campaign contributors makes no sense, nor does cutting entitlements. Ah, pay the old codgers in food stamps instead? I don't think so.

      Cut business taxes? No, eliminate them totally. They are regressive as hell because they are passed on to the consumers at the cash register, and they simultaneously causes corps to outsource their manufacturing to other countries with lower employee costs. WE need those jobs more than they.

      Same is true for health care costs, but the $125 million in industry bribes kept single payer off the table.

    10. david,newnan says:

      welfare entitlements being given to black unwed mothers and income subsidies being given to blacks are never mentioned in the cuts;; why not?

    11. Lynn Bryant DeSpain says:

      It belies common sense to believe that one can spend their way out of debt.

    12. Drew Page, IL says:

      That Obama has assembled an 18 member "Deficit Commission", to tell him how to reduce the deficit is a laughable farce. The "Commission" has already appealed to Mr. Obama for more funds to continue their "work". Those in America who pay income taxes are shouting the answer he allegedly seeks –STOP SPENDING.

      Undaunted, Mr. Obama and his Congress continue spending money as though we have it. At the recent G20 world economic summit, Mr. Obama encourages the European socialist countries he so aspires America to emylate, to keep spending their way out of recession. The European socialist countries tried, in vain, to tell Mr. Obama they could no longer afford to do so.

    13. Pingback: Heritage Foundation is terrible » Geodex.org - Things you should perhaps be casually aware of.

    14. Corky, Howey in the says:

      "Deficit Commission?" The obama administration AND Congress, for over a year now, have spent tax dollars through lies, back room deals, kickbacks and anyother way they could and now they want to know why we are having a problem with the DEFICIT! You add up obama, reid, pelosi and the BACK STABBING Democraps and a few low life repubican't and there you have it. A third world wannabe dictator and his crooked policy makers……………..

    15. Jack E Lohman says:

      Lynn, as a former business owner I found that I sometimes had to spend money to make money. And though I didn't agree with bailing out wall Street I do believe that bailing out main Street would have been wise. That could have been done with a single payer healthcare bill that would have provided first-class Cheney-care to 100% of the public, all while saving $400B per year and removing health care costs from 100% of our businesses and helped them keep jobs in the US. But campaign bribes from the insurance industry kept that "off the table."

    16. David, PA says:

      Urine tests prior to reception of welfare benefits. If one gets a dirty urine indicating use of illegal substances, welfare benefits should be withheld.

    17. Jack E Lohman says:

      NOT FOR PUBLICATION! : Folks, I made a comment 12 hours ago and it is still "awaiting moderation." You have an excellent site but is being trashed by slow moderation. Readers give up and move on to the next story. You could generate great interest in your site by converting to a semi-moderated site. Once a commenter posts a legitimate comment they go onto an approved list that requires no further censoring. But allow people to "flag" bad comments that (only then) are reviewed by your censors.

    18. Drew Page, IL says:

      To Jack E. Loman — As a business owner you must certainly know that while employers are required to provide Workers Compensation coverage to employees, they are not required to provide non-occupational health insurance.

      You may tell me employers must offer health insurance to attract and retain employees. That may or may not be the case. Many employers have chosen to offer high deductible HSA or HRA health plans, with employees still paying some of the cost. Right now, with as many people as there are out of work, people would gladly take a decent paying job even if there were no health insurance benefits available.

      I agree with you that if the government is the only source of health insurance, that employers would escape the cost of providing health insurance, except for the government fines imposed on employers for not providing it which, at least for now, is much less than the actual cost of health insurance. However, covering another 30 million people isn't going to many health insurance cheaper for the American taxpayer.

      As an employer, you must certainly know that one of the main reasons that the cost of health care has risen so sharply is that every year, for the past 50 years, both state and federal governments have imposed mandates on health insurance which continually expand benefits and eligibility for those benefits. What does compliance with ERISA, COBRA and HIPAA cost you as an employer? What will the additional cost to your health plan be now that the Mental & Nervous conditions be covered the same as any illness? What does coverage of infertility treatments cost? What does compliance with FLMA, the Americans with Disabilities Act and the Age Discrimination in Employment Act cost? These are only a few of the federal mandates applicable to group health insurance.

      Every year since Medicare was introduced, the government has increased the deductibles of parts A and B and cut back the amounts paid to doctors and hospitals, which leads to those doctors and hospitals shifting the costs from Medicare patients to private sector patients.

      Now, do you seriously believe that the federal government that has constantly mandated increased health insurance benefits and eligibility for those benefits paid for by employers, and which has continually cut benefits that it pays for, will be able to reduce costs without cutting benefits? Could you as an employer provide the same quality goods or services to 30 million more people than last year, using the same number of employees? If only one-third of those additional 30 million customers paid for those goods or services, would it be fair to say that you would have to increase your prices.to those who do pay to cover the cost of those who don't?

      Mr. Obama and his crew are trying to tell everyone they are going to cover more people, many of whom can not or will not pay, but they will create savings by "making it up in volume". If you sell something for $100 less than it cost you, can you make a profit by selling more of those items?

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