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Stimulus Bill Abolishes Welfare Reform and Adds New Welfare Spending

Discussion in 'Political Zone' started by JBond, Feb 12, 2009.

  1. JBond

    JBond Well-Known Member

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    One of the few things Clinton got right has been tossed aside by Porky Obama.

    http://www.heritage.org/Research/Welfare/wm2287.cfm

    Stimulus Bill Abolishes Welfare Reform and Adds New Welfare Spending

    by Robert E. Rector and Katherine Bradley
    WebMemo #2287
    A major public policy success, welfare reform in the mid-1990s led to a dramatic reduction in welfare dependency and child poverty. This successful reform, however is now in jeopardy: Little-noted provisions in the U.S. House of Representatives and U.S. Senate stimulus bills actually abolish this historic reform. In addition, the stimulus bills will add nearly $800 billion in new means-tested welfare spending over the next decade. This new spending amounts to around $22,500 for every poor person in the U.S. The cost of the new welfare spending amounts, on average, to over $10,000 for each family paying income tax.

    Ending Welfare Reform

    The welfare reform of 1996 replaced the old Aid to Families with Dependent Children (AFDC) with a new program named Temporary Assistance to Needy Families (TANF). The key to welfare reform's reduction in dependency was the change in the funding structure of AFDC.[1]

    Under the old AFDC program, states were given more federal funds if their welfare caseloads were increased, and funds were cut whenever the state caseload fell. This structure created a strong incentive for states to swell the welfare rolls. Prior to reform, one child in seven was receiving AFDC benefits.

    When welfare reform replaced the old AFDC system with TANF, this perverse financial incentive to increase dependence was eliminated. Each state was given a flat funding level that did not vary whether the state increased or decreased its caseload. In addition, states were given the goal of reducing welfare dependence (or at least of requiring welfare recipients to prepare for employment).

    The House and Senate stimulus bills will overturn the fiscal foundation of welfare reform and restore an AFDC-style funding system. For the first time since 1996, the federal government would begin paying states bonuses to increase their welfare caseloads. Indeed, the new welfare system created by the stimulus bills is actually worse than the old AFDC program because it rewards the states more heavily to increase their caseloads. Under the stimulus bills, the federal government will pay 80 percent of cost for each new family that a state enrolls in welfare; this matching rate is far higher than it was under AFDC.

    It is clear that--in both the House and Senate stimulus bills--the original goal of helping families move to employment and self-sufficiency and off long-term dependence on government assistance has instead been replaced with the perverse incentive of adding more families to the welfare rolls. The House bill provides $4 billion per year to reward states to increase their TANF caseloads; the Senate bill follows the same policy but allocates less money.

    Unnecessary Changes

    Proponents of the stimulus plan might argue that these changes are necessary to help TANF weather the current recession. This is not true. Under existing TANF law, the federal government operates a TANF "contingency fund" with nearly $2 billion in funding that can be quickly funneled to states that have rising unemployment. It should be noted that the existing contingency fund ties increased financial support to states to the objective external factor of unemployment; it specifically avoids a policy of funding states for increased welfare caseloads, recognizing the perverse incentives this could entail.

    If the authors of the stimulus bills merely wanted to provide states with more TANF funds in the current recession, they could have increased funding in the existing contingency fund. But they deliberately did not do this. Instead, they completely overturned the fiscal and policy foundations of welfare reform.[2]

    Writing in Slate, liberal commentator Mickey Kaus criticizes the stimulus bill welfare provisions as a "liberal conspiracy to expand the welfare rolls."[3] He laments, "Why use the aid specifically to encourage expansion of welfare? … At the very least the extra aid to the states shouldn't be triggered by caseload expansion. (You could, for example, give states aid in proportion to their local unemployment rate.)"[4] These are reasonable suggestions; the authors of the stimulus bills pursued a different policy precisely because they wish to overturn welfare reform and increase dependence on government.

    Welfare Spendathon

    But overturning welfare reform is just the beginning. In his recent press conference, President Obama explained that the stimulus bill would provide "tax relief" and "direct investment" in infrastructure. He neglected to mention that of the $816 billion in new spending and tax cuts in the House stimulus bill--32 percent or $264 billion--is new means-tested welfare spending, providing cash, food, housing, and medical care to poor and low income Americans.[5] (The figure in the Senate bill is about 15 percent lower.)

    In the first year after enactment of the stimulus bill, federal welfare spending will explode upward by more than 20 percent, rising from $491 billion in FY 2008 to $601 billion in FY 2009. This one-year explosion in welfare spending would be, by far, the largest in U.S. history. But spending will continue to rise even further in future years. The stimulus bill is a welfare spendathon, a massive down payment on Obama's promise to "spread the wealth."

    Hidden Welfare Spending

    While $264 billion in new welfare spending may seem like a lot, it is only the tip of the iceberg. If the stimulus bill is enacted the real long-term increase will be far higher. This is because the stimulus bill pretends that most of its welfare benefit increases will lapse after two years. In fact, both Congress and President Obama intend for most of these increases to become permanent. The claim that Congress is temporarily increasing welfare spending for Keynesian purposes (to spark the economy by boosting consumer spending) is a red herring. The real goal is a permanent expansion of the welfare system.

    The House and Senate bills contain a half dozen or more new welfare entitlements or expansions to benefits in existing programs.[6] The pretense that these welfare expansions will lapse after two years is a political gimmick designed to hide their true cost from the taxpayer. If these welfare expansions are made permanent--as history indicates they will--the welfare cost of the stimulus will rise another $523 billion over 10 years.[7]

    Once the hidden welfare spending in the bill is counted, the total 10-year cost of welfare increases will not be $264 billion but $787 billion. This new spending will amount to around $22,500 for every poor person in the U.S. The cost amounts, on average, to over $10,000 for each family paying income tax in the U.S.

    The overall 10-year fiscal burden of the bill (added to the national debt) will not be $814 billion but $1.34 trillion. To this figure must be added the interest on the debt issues to finance this spending deluge.

    A Trojan Horse

    Both the Senate and House stimulus bills are Trojan horses that deliberately exploit anxiety about the current recession to conceal their destruction of the foundation of welfare reform and a massive expansion of the welfare system. Since its enactment in the mid-1990s, such reform has proven to be a very successful policy that dramatically reduced welfare dependency and child poverty. The fact that the stimulus proponents seek to conceal the bill's massive permanent changes in welfare is a clear indication that they understand how unpopular these changes would be if the public became aware of them. Far from an exercise in "unprecedented transparency"--as President Obama claims--the stimulus bills are an example of unprecedented deception.
  2. Jordan55

    Jordan55 Active Member

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    All of the major news outlets are reporting that the stimulus bill voted out of conference committee last night has a meager $789 billion price tag. This number is pure fantasy. No one believes that the increased funding for programs the left loves like Head Start, Medicaid, COBRA, and the Earned Income Tax Credit is in anyway temporary. No Congress under control of the left will ever cut funding for these programs. So what is the true cost of the stimulus if these spending increases are made permanent?

    Rep. Paul Ryan (R-WI) asked the Congressional Budget Office to estimate the impact of permanently extending the 20 most popular provisions of the stimulus bill. What did the CBO find? The true 10 year cost of the stimulus bill $2.527 trillion in in spending with another $744 billion cost in debt servicing. Total bill for the Generational Theft Act: $3.27 Trillion.
  3. JBond

    JBond Well-Known Member

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    Add to that the trillions the tax payers are on the hook for to the idiot bankers and we have some serious problems.

    If you are completely broke and owe more than you earn in a year the best thing you could do is spend even more. The liberal way!

    Not one person on this board has been able to explain where all this money is going to come from. It's been shut up and vote for it from Obama. Now that is true leadership.
  4. BrAinPaiNt

    BrAinPaiNt Bad Santa Staff Member

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    Actually I have seen people explain where this money is coming from. Now maybe what you should have wrote is...I don't like where they say the money is coming from so I am going to pretend I don't hear them saying where the money is coming from.
  5. JBond

    JBond Well-Known Member

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    I stand corrected. Let me go get the checkbook as I bend over and spread my cheeks.
  6. BrAinPaiNt

    BrAinPaiNt Bad Santa Staff Member

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    I might donate to a cause that keeps you from bending over and spreading your cheeks.

    I don't care to see any peanut butter.

    (think of the movie training day)
  7. DaBoys4Life

    DaBoys4Life Benched

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    [IMG]
  8. Real1st

    Real1st Nikola Tesla

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    They are printing this money. Print and press money all the way.
  9. Kangaroo

    Kangaroo Active Member

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    Kind of like Monopoly money and some IOU's
  10. Jordan55

    Jordan55 Active Member

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    Brain, why have you been sick recently from a bad peanut butter and jelly sandwich? You know it's going around



  11. BrAinPaiNt

    BrAinPaiNt Bad Santa Staff Member

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    I'm sick...but not from PB&J :laugh2:
  12. ABQCOWBOY

    ABQCOWBOY Moderator Staff Member

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    Pea Soup and DPs, I think it is.

    ;)
  13. BrAinPaiNt

    BrAinPaiNt Bad Santa Staff Member

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    The wife is the Doctor Pepper addict in my house.
  14. ABQCOWBOY

    ABQCOWBOY Moderator Staff Member

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    So you admit to the Pea Soup then?
  15. BrAinPaiNt

    BrAinPaiNt Bad Santa Staff Member

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    Peas ok...pea soup or pea salad...nah not my thing.
  16. ABQCOWBOY

    ABQCOWBOY Moderator Staff Member

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    Somehow, I feel as if your not telling me the whole story here. Are you sure you are independant and not a Democrat?

    ;)
  17. BrAinPaiNt

    BrAinPaiNt Bad Santa Staff Member

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    I'm Every Woman - Chaka Khan.

    Wait...what the bald headed hades.

    Never mind.

    :p:
  18. ABQCOWBOY

    ABQCOWBOY Moderator Staff Member

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    No truely good discussion is complete without some mention of bald headed hades. Not telling you this, more of a confirmation of same.

    [IMG]
  19. BrAinPaiNt

    BrAinPaiNt Bad Santa Staff Member

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    VGER!! VGER!!

    What does VGER mean?!?!
  20. ScipioCowboy

    ScipioCowboy More than meets the eye. Zone Supporter

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    BP is waiting for me to comment on this image. Don't deny it, BP. You know it's true.:D

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