Fighting to Preserve Liberty in America
2010 was a tumultuous year. The Tea Party really found its voice and let it be heard. A huge shift in power in Congress came on Election night, but Pelosi, Reid and company tried to do in four weeks what they couldn’t do in two years. But that shouldn’t be surprising; they didn’t respect the will of the people when the people rose up against ObamaCare, why should they respect the voice of the people on Election Day?
A recent article in the New York Times, “Once Stigmatized, Food Stamps Find Acceptance,” talks about how Food Stamps are now, thankfully, accepted and people can get the help they deserve.
I remember the first time I encountered food stamps. I was in line at the grocery store behind a woman with a cart piled high and among its contents were soda, potato chips, and other tasty luxuries. When the bill was tallied, she took out her book of food stamps and handed them to the cashier. I related this story to a friend who told me that you can’t use food stamps on junk food so it must have been applied against the other items in the cart. Even so, I thought back to when I grew up. We weren’t poor but we were no where near rich. Things like soda and potato chips were a rarity reserved only for those times when relatives were coming from a distance for a visit. Otherwise it was home brewed ice tea and supermarket generic cookies. But even those treats weren’t purchased through a subsidy of our food staples.
New York is now actively recruiting new food stamp recipients in all languages imaginable. It seems that it is not enough to provide the service but you have to make sure that everyone who can get food stamps is taking advantage of them. Let’s see, government employees paid by taxpayers going all out to make sure that a taxpayer funded program is using as much taxpayer money as possible including a program on Rikers Island (the city jail) to enroll inmates as they leave. The article describes one woman who was actively recruited to join the program:
A big woman with a broad smile, Ms. Bostick-Thomas swept into the group’s office a few days later, talking up her daughters’ college degrees and bemoaning the cost of oxtail meat.
“I’m not saying I go hungry,” Ms. Bostick-Thomas said. “But I can’t always eat what I want.”
Okay, I’m going to go out on a limb here. By a “big woman” can we take that observation to mean she is not lacking in caloric intake? She says she doesn’t go hungry. She talks about her daughter’s college degrees. So why are taxpayers tasked with helping her eat what she wants? And what is that anyway? Steak? Lobster? Twinkies? Ice cream? Why aren’t the daughters with their college degrees helping their mother? Maybe they could invite her over once a week and feed her the foods she favors? And if they are not local, why not ship her a box of Omaha Steaks? Why does some other taxpayer have to pick up the tab for her after they worked hard to feed their own family?
The Other Side of the Coin
On the other side of the coin, from the budget of the same Department of Agriculture, we pay farmers not to grow food in the form of farm subsidies. Why? Well, if we didn’t, the prices of farm products, aka food, would become too cheap for the farmers to make a decent living. In my simple economic model of supply and demand that would seem to indicate that maybe we have more farmers than we need. But you see farming is a way of life as much as it is an occupation, and taxpayers must be sensitive to preserving that way of life whether or not it is economically justified. I am sure there are several million unemployed people in this country who would like to have their jobs subsidized. Unemployment compensation is when the government gives you a check (actually its funded by your employer) when you lose your job. Farm subsidies are when the government (no employer funding here) pays farmers to keep working at their job.
Add to that another government program to pay farmers to produce corn to make ethanol, another uneconomic subsidy. Ethanol is pitched as a substitute for gasoline, but it takes a lot of energy to make it, it cannot be transported via pipeline like petroleum products, and when the corn is diverted to produce ethanol, the cost of almost all food goes up. Corn is used for feed for cattle, as seed to produce corn, for corn syrup as a sweeter. So on top of regular farm subsidies, we have ethanol subsidies to further drive up food prices. In the case of corn syrup, sugar could be a substitute, but our government places a very high tariff on imported sugar, to protect our domestic sugar producers.
Coming Full Circle
So, on the one hand we have several government programs, funded by taxpayers, that drive up the price of food. Then we have another program, taxpayer funded, to help people buy food because food is too expensive. And then we have government workers and programs, taxpayer funded, that are actively marketing the food stamp program to overweight people, who never go hungry, have college educated children who could help them but don’t seem to, so that the recipient can eat the things she wants to. But if you see a problem with this, don’t worry. Michele Obama is about to use more taxpayer dollars to launch a program to fight childhood obesity. Can we get off this Merry-Go-Round?
How about we shut down the Department of Agriculture? It’s function is not in the Constitution and so it should not exist at the federal level. End farm subsidies. If that means we have a few less farmers, so be it. The American people do not owe anyone other than themselves a way of life. To the farmer who can make it, you have my complete admiration. End ethanol subsidies. If ethanol is a viable fuel, it should be able succeed on its own, not because Archer Daniels Midland spends millions on agricultural lobbyists. Negotiate free trade agreements so that our successful farmers, instead of being paid not to produce, produce and sell their goods around the world. Likewise end high tariffs that protect our farm products. These steps should lower the cost of food.
With lower food costs we shouldn’t need a food stamp program. End it at the federal level along with the Department of Agriculture. If there continues to be a need it will probably be a much smaller one and let each state decide if it wants to start its own program. Also, with everyone saving on food there is a greater likelihood for people to contribute to food banks to help the truly needy. But to have one government program create a problem and another government program to try to solve it is lunacy.
With our economy hurtling toward a cliff with out of control spending, we don’t need to be on both sides of a problem.
The New York Times had some, what was to me, shocking news today. The article said that there was now consensus that the Obama stimulus plan was working. Is this the same kind of consensus that man-made global warming was settled science, despite the glaring evidence that carbon dioxide emissions continue to grow while the globe stopped warming ten years ago? This is also close on the heels of breaking stories of extraordinary misinformation if not outright deceit on how the $787 billion is being spent.
Smoke and Mirrors
Early on in the article we have this gem:
“The legislation, a variety of economists say, is helping an economy in free fall a year ago to grow again and shed fewer jobs than it otherwise would. Mr. Obama’s promise to “save or create” about 3.5 million jobs by the end of 2010 is roughly on track, though far more jobs are being saved than created, especially among states and cities using their money to avoid cutting teachers, police officers and other workers.”
There is no mechanism that exists to measure a job saved. None. So how do they do it? It goes something like this:
“Here, Mr. Stimulus Funds applicant, I have this check for you for $642,000. No can you tell me, if I give this to you, how many jobs would you create or save?”
“Create? Er, none.”
“Hmmm,” the bureaucrat mutters, staring down at the check in his hand, “what about jobs you would save? You know, if I don’t give you this nice, rather large check, how many of your people would you be forced to lay off?”
“Oh, I get it,” the potential recipient says with a wink and a smile, “probably all of them!”
The bureaucrat scribbles down a number, and hands over the check, walking away shaking his head.
That’s about how it’s done. The government surveys the people getting the money and asks them what would have happened if they didn’t get the stimulus. And what would you expect them to say? Keep the check?
Revenue Starved States
What a concept, “Revenue Starved States.” The article complains that not enough money was provided to “Revenue Starved States.” Does he mean states like California and New York? I believe the correct term is states where spending is out of control. It means states where taxes are so high that people are moving out in droves, and among them the “wealthy” people they love to tax to the eyeballs, meaning a dramatically shrinking revenue base. After all, if one of the wealthiest people in the state, who is part of the group that pays 70% of the taxes, moves out of the state or (out of the country when it gets bad enough), that means a lot of people are going to see their taxes raised to make up for it. So the statists seem to think a stimulus package that keeps these bloated bureaucracies fat, dumb and happy is the way to go, until when exactly?
The Multiplier Fallacy
The other great fraud being foisted on us is the multiplier effect, where for each dollar of stimulus money spent more than a dollar of economic activity results:
That sort of impact is what makes federal aid to state governments rank high in economists’ reckoning of the stimulus value of various proposals. Every dollar of additional infrastructure spending means $1.57 in economic activity, according to Moody’s, and general aid to states carries a $1.41 “bang” for each federal buck.
Even more effective are increases for food stamps ($1.74) and unemployment checks ($1.61), because recipients quickly spend their benefits on goods and services.
Okay, then how is this for a solution. Let’s spend $10 trillion on infrastructure, food stamps and unemployment checks, since they will result in $15 trillion or so in economic activity, because of the multiplier, right? For that matter, let’s have the government spend $100 trillion and we’ll really be rocking.
Where’s the So Called Consensus
From what I read in the article, there was only one economist that could be called a conservative, Martin Feldstein, that they were willing or able to quote, and this was his take on the stimulus.
While some conservatives remain as skeptical as ever that big increases in government spending give the economy a jolt that is worth the cost, Martin Feldstein, a conservative Harvard economist who served in the Reagan administration, said the problem with the package was that some of its tax cuts and spending programs were of a variety that did little to spur the economy.
“There should have been more direct federal spending that would have added to aggregate demand,” he said. “Temporary tax cuts and one-time transfers to seniors were largely saved and didn’t stimulate spending.”
That’s it? That’s the consensus? It seems to me that he is pointing out what was wrong with the package rather than what was right. He was in the Reagan administration and he knows what works: permanent cuts in marginal tax rates. Those dreaded tax cuts for the “rich.” The thing is that when the people above the subsistence level get to keep more of what they earn, yes it does belong to them and not to the government, they tend to invest it, which means the provide capital to businesses that grow and create jobs. Yes, capitalism. What the stimulus does is take money away from these people, or borrows it and steals it from future generations, and gives that money, as in the example above, to highway projects, food stamps and unemployment checks. The first of these may create jobs until the road project is completed, but the latter two only increase the dependency of those recipients on the government. So how exactly does the stimulus plan that puts money into a highway project and unemployment benefits, help a banker who got laid off? How does it help the unemployed executive from United Technologies? It doesn’t. It’s like a drug fix. You may feel good for a while, but then it wears off and you need another fix.
The Genius of Government
You would think that with all the examples of government planning lying on the waste heap of history, the statists will finally catch on that they can’t successfully pick the winners and losers in an economy. Government has to get out of the way and let the market work.
Government must be drastically cut down to size. Think of the popular TV show “The Biggest Loser.” Picture the governments of the United States, California, New York, New Jersey, Rhode Island, Michigan, Nevada, for starters, as contestants. Let’s see who can lose the most weight. Ready? Go.
