Jeff Frankels has some interesting oberservations about the effects of welfare policies in the United States, particularly the Earned Income Tax Credit and the Child Tax Credit:
A woman called me out of the blue last week and told me her self-sufficiency counselor had suggested she get in touch with me. She had moved from a $25,000 a year job to a $35,000 a year job, and suddenly she couldn’t make ends meet any more. I told her I didn’t know what I could do for her, but agreed to meet with her. She showed me all her pay stubs etc. She really did come out behind by several hundred dollars a month. She lost free health insurance and instead had to pay $230 a month for her employer-provided health insurance. Her rent associated with her section 8 voucher went up by 30% of the income gain (which is the rule). She lost the ($280 a month) subsidized child care voucher she had for after-school care for her child. She lost around $1600 a year of the EITC. She paid payroll tax on the additional income. Finally, the new job was in Boston, and she lived in a suburb. So now she has $300 a month of additional gas and parking charges. She asked me if she should go back to earning $25,000. I told her that she should first try to find a $35k job closer to home. Also, she apparently can’t fully reverse her decision to take the higher paying job because she can’t get the child care voucher back (the waiting list is several years long she thinks). She is really stuck. She tried taking an additional weekend job, but the combination of losing 30 percent in increased rent and paying for someone to take care of her child meant it didn’t help much either.
This problem illustrates the fundamental difference between the Republican and Democratic Parties. It was Democrats via the New Deal and the Great Society who implemented many of the welfare state policies that have created the problems we see today. It was Republicans who tried to fix it; only to be blocked by Democrats.
Democrats, despite their assertions to the contrary, are unwilling to make and implement real change. The ineptitute of the current Democratic Congress is a perfect example.
They refuse to put all options on the table when it comes to dismantling the welfare state for fearing of disturbing the policies of their predecessors. Consequently, this nostalgic thinking runs the government deeper into debt and traps poor Americans in a cycle of poverty. One only has to look past the language (and the hyprocrisy of John Edwards) and at the specific policy proposals of the Democratic front runners to realize the potentially diasastrous consequences of a Democratic Presidency.
Democrats are unable to take into account the health of the nation as a whole. Poverty is a problem and, with the exception of restoring the right to life, is the most pressing issue facing not only the United States; but the world as a whole. The solution is not taxes and government programs; but deregulation of the market and a commitment to free trade.
Hat tip:
Greg Mankiw
The democrats are keeping welfare intact because they are "afraid of disturbing past policies???" That is the biggest bunch of hooey I have ever heard.
Democrats are trying to give people at the lower end of the income scale a bit of a safety net until they get on their feet. The situation you describe simply illustrates the need for more graduated programs until people (especially those in large cities) can get a toehold to self-sufficiency. Every penny spent on getting a single mother back into the workforce and on education pays off for society as a whole, ten-fold.
The republicans not only don't have solutions, but only have their "free-market at-all-costs" tired drum that they have beaten to death. The recent mortgage crisis perfectly illustrates profits and capitalism gone completely amuck.
Posted by: Claire Celsi | February 11, 2008 11:08 AM | Permalink to Comment