Free Markets, Free People

CATO

No progress in the War on Poverty and none expected

A new study from CATO has found that despite trillions in spending, the poverty rate hasn’t moved much:

“[S]ince President Obama took office [in January 2009], federal welfare spending has increased by 41 percent, more than $193 billion per year,” the study says.

Federal welfare spending in fiscal year 2011 totaled $668 billion, spread out over 126 programs, while the poverty rate that remains high at 15.1 percent, roughly where it was in 1965, when President Johnson declared a federal War on Poverty.

In 1966, the first year after Johnson declared war on poverty, the national poverty rate was 14.7 percent, according to Census Bureau figures. Over time, the poverty rate has fluctuated in a narrow range between 11 and 15 percent, only falling into the 11 percent range for a few years in the late 1970’s.

The federal poverty rate is the percentage of the population below the federal poverty threshold, which varies based on family size.

A point that needs to be raised here is the poverty rate isn’t going to change no matter how much we spend because revisions to the threshold will always be such that about 15% of the population will be considered poor.

And, in a relative terms, they are indeed “poorer” than the other 85%.

The question is, are they really “poor” in real terms?

It depends on how you measure poverty, doesn’t it?  You can’t spend taxpayer money on poverty unless “poverty” exists, right?  But how many of our “poor” are truly poor?

Well, I’m not sure and neither is anyone else.  That’s because of the way poverty is measured in the US.  Essentially it is based solely on income.

The official poverty measure counts only monetary income. It considers antipoverty programs such as food stamps, housing assistance, the Earned Income Tax Credit, Medicaid and school lunches, among others, “in-kind benefits” — and hence not income. So, despite everything these programs do to relieve poverty, they aren’t counted as income when Washington measures the poverty rate.

So guess what remains the same?  The poverty rate.  If “in-kind benefits” were included in income calculations for those receiving them, a lot fewer of them would be considered “poor”.   And since it’s only based on income, many elderly who receive retirement incomes below the “poverty” threshold are considered to be poor despite the fact that they own paid off assets like houses and cars and live comfortably on that retirement income.  But they pad the stats and help to continue to justify the programs and expenditures.

Do any of us have a problem with giving those who are down a hand up? 

I don’t.  But, I want a fair and reasonable determination of who really needs it before I extend that hand.

That’s something we’ve never, ever gotten since the beginning of the War on Poverty.

Are there real poor in this country.  Yes, there probably are – but not 15%.

I know CATO’s study emphasized a lack of progress.  It has nothing to do with “progress” against poverty – as noted, there will never be any progress made given the constant upward revision of the poverty level and the absurd way poverty is calculated in this country. 

As with most programs the government runs, this is one in dire need of a complete and total overhaul.

And CATO’s study is useful in pointing that out – again.

Not that anything is likely to actually happen to address the problem or anything.

~McQ

Twitter: @McQandO

Reid’s Secret Plan

You gotta love the way Dingy Harry builds faith in his mission:

We have a broad agreement. Now I know that people are going to ask to be given every detail of this.

[...]

We have had a rule here for 40 years or however long we have been in existence, if you start talking about the plan and start shipping it around, it will be made public. And we want not that to be the case because we want to know the score before we start giving all the details even to our own members.

So you are not going to get answers to those questions.

[...]

As I have indicated, we can’t disclose the details of what we have done, but believe me we have got something that is good and that I think is very, for us, it moves this bill way down the road.

That’s right, just “believe” him and his Democrat buddies. You’re gonna love it!

Fortunately, enough of the super-secret, whats-good-fer’ya plan has leaked out that some cogent analysis is possible. Cato’s Michael Tanner, for example, observed that the proposed legislation would basically replicate the Federal Employees Health Benefit Program (FEHBP), through which many government workers and Members of Congress get coverage, as well expand MediCare (and possibly MediCaid) to people as young as 55. He also notes several problems with this proposal:

A few reasons to believe this is yet another truly bad idea:

1. In choosing the FEHBP for a model, Democrats have actually chosen an insurance plan whose costs are rising faster than average. FEHBP premiums are expected to rise 7.9 percent this year and 8.8 percent in 2010. By comparison, the Congressional Budget Office predicts that on average, premiums will increase by 5.5 to 6.2 percent annually over the next few years. In fact, FEHBP premiums are rising so fast that nearly 100,000 federal employees have opted out of the program.
2. FEHBP members are also finding their choices cut back. Next year, 32 insurance plans will either drop out of the program or reduce their participation. Some 61,000 workers will lose their current coverage.
3. But former OPM director Linda Springer doubts that the agency has the “capacity, the staff, or the mission,” to be able to manage the new program. Taking on management of the new program could overburden OPM. “Ultimate, it would break the system.”
4. Medicare is currently $50-100 trillion in debt, depending on which accounting measure you use. Allowing younger workers to join the program is the equivalent of crowding a few more passengers onto the Titanic.
5. At the same time, Medicare under reimburses physicians, especially in rural areas. Expanding Medicare enrollment will both threaten the continued viability of rural hospitals and other providers, and also result in increased cost-shifting, driving up premiums for private insurance.
6. Medicaid is equally a budget-buster. The program now costs more than $330 billion per year, a cost that grew at a rate of roughly 10.7 percent annually. The program spends money by the bushel, yet under-reimburses providers even worse than Medicare.
7. Ultimately this so-called compromise would expand government health care programs and further squeeze private insurance, resulting in increased costs, result in higher insurance premiums, and provide a lower-quality of care.

Let’s be clear. The point of the health-care takeover was never to control costs, but to control the market. Obama and the Democrats are certain that they can transfer the money involved in every health care transaction from the provider/insurer side of the equation to the recipient side. In other words, they simply want to rearrange the entire transaction in a way that seems “fair” to the favored constituency. As long is doesn’t cost those people any more (for awhile at least) then actual costs don’t really matter.

That’s why they draft loss ratio provisions mandating insurers to pay out 85% of the premiums received in benefit claims (i.e. the companies can only “make” 15% over top of premium revenues, which percentage Congress assumes is mostly profit, and not going to overhead costs; most states set the loss ratio somewhere between 65% and 75%). And that’s also why Reid and his band of merry cohorts see fit to hitch the health care wagon to programs that are already money-losing. Accordingly, when the primary goal is simply control, actual costs become irrelevant except when making the sales pitch to a public weary of profligate government spending. Mix in some budget gimmicks (like starting the tax 3 or 4 years before actually beginning the program), and voila! You have a health care bill.

No matter what comes out of the Congress for Obama to sign, you can rest assured that it will (a) cost American taxpayers way more than is promised, and (b) further cede control over the market place to the government.

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The Left: Trying To Make Legitimate Dissent Racist

That’s one of the trends now. If you can’t argue the merits of the legislation, make gross and unsubstantiated assumptions and claims and take off from there. For instance, this from Keith Boykin at “The Daily Voice”, which claims to be “black America’s daily news source”:

In the past few months, we’ve witnessed the unleashing of the radical elements of the Republican Party base. The anti-tax economic conservatives, racist Obama-haters, gun-toting Second Amendment fanatics and birth certificate conspiracy theorists have two things in common: they’re mostly white and they despise President Obama.

With the groundwork laid (one has to wonder – if blacks despised George Bush, was that because they were racists or because they were ideologically and substantially opposed to his agenda?), however loosely with everyone lumped into the same category and characterized by race, Boykin finally gets to his point:

And it doesn’t matter that the president’s domestic policies of providing universal health care, middle class tax cuts, and economic stability will benefit the very people who cry the loudest. This is not about policy. It’s about politics. The politics of rage and race.

Of course Boykin again assumes things not in evidence to make his claim that it is all about race. First, he dismisses the legitimate arguments which have been brought forward about health care, secondly he seems to believe that the spending spree the administration has been on won’t have to paid off and third, he’s apparently blind to the fact that the “economic stability” he touts has been purchased with a future debt which will cripple us economically. Notice I made those points easily and without once even hinting about the race of the president.

They all are legitimate reasons to speak out, all legitimate reasons to be a bit enraged about the direction of the country. But, with his grand generalities and false assumptions in place, Boykin continues to build his case for this all being about race:

The town hall meetings have been branded “town brawls” by the media, but they are really “town mauls” where angry mobsters silence dissent and discourse. And despite the denials from the right, race is a deciding factor here.

So now, Americans acting like Americans are not only un-American for doing so, they’re racist.

And Boykin isn’t the only one pushing this line. David Boaz at CATO has a couple more examples. Paul Krugman, whose arguments for the health care legislation have been weak at best, also pulls the race card to lump “town hall mobs” in with “birthers”:

But they’re probably reacting less to what Mr. Obama is doing, or even to what they’ve heard about what he’s doing, than to who he is.

That is, the driving force behind the town hall mobs is probably the same cultural and racial anxiety that’s behind the “birther” movement, which denies Mr. Obama’s citizenship.

Philip Kennicott throws race around in a Washington Post piece entitled “Obama as the Joker: Racial Fear’s Ugly Face”::

[T]he poster is ultimately a racially charged image. By using the “urban” makeup of the Heath Ledger Joker, instead of the urbane makeup of the Jack Nicholson character, the poster connects Obama to something many of his detractors fear but can’t openly discuss. He is black and he is identified with the inner city, a source of political instability in the 1960s and ’70s, and a lingering bogeyman in political consciousness despite falling crime rates…

Superimpose that idea, through the Joker’s makeup, onto Obama’s face, and you have subtly coded, highly effective racial and political argument. Forget socialism, this poster is another attempt to accomplish an association between Obama and the unpredictable, seeming danger of urban life.

This is a building theme which is a classic diversion by the left. Using it allows them to play the powerful “politically correct” card they’ve so lovingly cultivated for decades. And it is something which needs to be nipped in the bud right now.

The assumption that this is all about race attempts to plaster that claim over the obviously horrendous problems evident with government taking control of health care and the history of Americans of all races protesting such attempts at government expansion. It is, in reality, a classic move by the left to use political correctness as it was intended to be used – to stifle debate. And what we see coming out of the likes of Boykin, Krugman and Kennicott are the racialists laying the ground work to make the charge.

Their arguments are weak, but their intent is clear – broad-brush tarring of those who oppose this administration as nothing more than racist whites opposing the administration’s plans for no other reason than the president is a black man. That, of course, makes dismissing their arguments much easier to do and that is precisely the intent of playing the race card.

~McQ

Conference on Health Care Reform

Cato Institute is hosting a conference on health care reform today that will be webcast live. It will feature the following speakers:

* Rep. Paul Ryan (R-WI)
* Rep. Michael C. Burgess, M.D. (R-TX)
* Rep. Jason Altmire (D-PA)
* Karen Davenport, Director of Health Policy, Center for American Progress
* Douglas Holtz-Eakin, Former Director, Congressional Budget Office, and Director of Domestic and Economic Policy for the McCain presidential campaign
* Tom G. Donlan, Barron’s
* Karen Tumulty, Time Magazine
* Susan Dentzer, Health Affairs
* John Reichard, Congressional Quarterly

This represents a wide range of views and promises to be much more interesting and informative than the White House/ABC News infomercial scheduled for next week. so if you’re interested in this topic at all, take some time to check it out.

Quote Of The Day

From Jim Harper of CATO speaking of the Obama on-line “Townhall meeting” yesterday:

President Obama promised to make his administration the most open and transparent in history, and taking questions from the public kind of looks like that. But it also kind of looks like gimmicky, a canned publicity stunt, rather than true openness in government.

Real transparency would include fulfilling his campaign promise to post bills online for five days before signing them. The President has now signed ten bills into law and not subjected any of them to that five-day public review.

Ten bills.  That’s zero for ten in the transparancy department.

Yup, we’re just in too much of a hurry to really be transparent, apparently.  And the press is doing such a great job of keeping Mr. Transparancy’s feet to the fire, isn’t it?

~McQ