03.07.2012 20

The destructive web of government welfare

Our National DebtBy Rebekah Rast — A hypothetical single mother of two lives in Virginia and brings home $20,000 a year after the government takes out Social Security and other state and federal deductions.  However, because of her low income she is able to collect Earned Income Tax Credit (EITC), food stamps, Medicaid/SCHIP and Section 8 housing.

In another scenario a recent college graduate is fortunate enough to find a job and makes a starting salary of $39,900.

Who makes more money — the single mother or the recent college graduate?

If you guessed the single mom, you’re right.  With her income less taxes plus subsidies, she brings home just about $40,000, according to economist Clifford Thies.

When applying Thies research that the relationship of earned income and after-tax income plus subsidies is basically flat from $0 to $40,000, it paints a grim picture for today’s working class. During the fourth quarter of 2011 median weekly earnings for full time wage and salary workers in the U.S. was $764 — a yearly salary equal to $39,728.  This means those who make this median amount or less essentially have less spending power than those who make a much lower salary and live off the government’s myriad welfare programs.

How can this be?

It’s simple really, when you consider that there are about 70 means-tested welfare spending programs overlapping in the U.S. today.  These means-tested programs have nothing to do with Social Security, or other entitlement programs.  Though they phase out as income increases, they keep people dependent on the government — even when they don’t want to be.  They also discourage workers from moving up the ranks or from finding a job at all.

You see, someone making less than $40,000 a year might be penalized for accepting a raise or agreeing to work more hours because it might result in a much smaller personal budget.  When low-income Americans move up in the tax code, they don’t just face a higher tax bracket, they also see their government benefits begin to disappear.  Unfortunately for many, it economically makes more sense to stay at their current level and turn down that raise or extra hours of work.

This government trap ensures that the poor in America stay poor.

“It is no surprise that these overlapping programs only perpetuate the growing welfare state in America,” says Bill Wilson, president of Americans for Limited Government (ALG).  “This affects all low-income Americans and essentially keeps them in a government-run benefits prison.”

A policy brief by the Republican Study Committee states, since 1964, “Americans have spent $16 trillion on means-tested welfare.  All levels of government may spend another $10 trillion over the next decade based on recent projections.”

The brief also highlights the fact that no agency has the responsibility to figure out how all these welfare programs interact with each other and how, despite their original purpose, they often deter people from working altogether.

Since $40,000 has been labeled as the breakaway point for many of these government welfare programs, what exactly does $40,000 a year look like?  Breaking it down to an hourly rate, it’s a little less than $20 an hour.

That’s a far cry from today’s federal minimum wage requirement of $7.25 an hour. Of course this number also varies by state, but no state comes close to a $20-an-hour requirement.   So what does this mean to America’s youth?

Year after year Democrats petition for the minimum wage requirement to go up.  This hurts young workers as businesses decide paying the minimum wage requirement is too burdensome and so they don’t hire young, inexperienced workers anymore.  This is where the government steps in and young people begin falling into the government’s welfare trap — often times they have no other choice.

The cries from the Left asserting America needs to do more for its youth and low-income citizens by strengthening current welfare programs, establishing new ones and even raising minimum wage laws, is only abetting the problem.

What would be beneficial for all Americans is the reduction and repeal of many of these programs.  It should never be the case that someone could potentially be made financially worse off for earning more money.

And when you have a system where people have to ask themselves if working more hours or accepting a raise will result in less money in their pocket then you know the system is the problem.

A low-income earner, a recent college graduate or an 18-year-old working his first job should never be better off living off the government than by their own abilities.

Rebekah Rast is a contributing editor to Americans for Limited Government (ALG) and NetRightDaily.com.  You can follow her on twitter at @RebekahRast.

  • Darth Mom

    The government bureaucrats that
    administer most means-tested entitlement programs qualify a person’s
    eligibility for benefits based on that person’s annual household income
    compared to federal poverty guidelines. Federal poverty guidelines are modified on at least an annual basis. The most current ones were adopted in August of 2011 and are as follows:

    In considering these guidelines, it’s important to understand that only 4% of total government welfare spending is considered when determining if someone meets them.
    In other words, the dollar value of Medicaid benefits, food stamps,
    federal housing assistance, and even government aid paid to a person in
    cash is not typically counted as “income” for the purposes of
    determining whether that person qualifies as poor under the federal
    poverty guidelines. A single person can earn up to $10,830 per year in
    addition to the cash value of all the government benefits he receives
    and still be identified as “poor.” As a result of defining poverty in
    this manner, total means-tested welfare spending in fiscal year 2008
    amounted to around $16,800 for each poor person, defined as at or below
    100% the federal poverty guidelines, in this country.

  • Hold Politicians Accountable

    We the People Demand a Full Scale Investigation into the Eligibility Requirements of President Obama to be President and to run again for a second term.

  • Hold Politicians Accountable

    All of our politicians need to be held accountable including candidates. We can start by holding Congress responsible for not standing up for american citizens that they are suppose to serve.
    What we need is http://www.petition2congress.com/6195/congressional-reform-act-to-fix-congress/

  • Church CPA

    We are a large church and we run into this all the time.  There are so many people out there that will not accept full time employment or increase their hours because it really does reduce their state/federal benefits.  So many everyday examples that people would really blow a gasket if true numbers of these individuals are ever printed.

  • My daughter is a college grad, has 3 children she raises alone since her husband was murdered in Mexico about 3 years ago, his money gone, his car gone and they said he committed suicide?  A man 6’3″ hung himself in a closet on a rod 3 1/2′ high, yea and santa claus brings easter eggs?  She can’t get much help from the government because all the illegals get all the benefit’s plus they want a free education and health care, food stamps, cell phones and be first in line for jobs.  We need to get rid of all illegals, starting with the one in the White House with 21 SS numbers, passports from other nations who flys for free on our tax money, bowing to other rulers and always saying we are wrong about everything.  Won’t slaute the flag and holds his crouch in discussed of the American flag.  This pretender-in-chief should be the first to go.  God Bless America and those who are proud of this nation.  Build a wall, like the ones Israel has built for protection and put true Americans to work, drill and sell oil instead of buying it from our enemies.

  • Fbronson7

    I have worked about 40 years, and made more back in 1990 then I do now due to hispanics here illegally. After taxes, insurance, and SS I bring home less then that single mother does and I still have to support the children I have at home. They say prostitution is illegal, it’s alive and well and what I pay in taxes is supporting it.
    Frederick Bronson NC

  • Fbronson7

    I have worked about 40 years, and made more back in 1990 then I do now due to hispanics here illegally. After taxes, insurance, and SS I bring home less then that single mother does and I still have to support the children I have at home. They say prostitution is illegal, it’s alive and well and what I pay in taxes is supporting it.
    Frederick Bronson NC

  • MEG

    It’s about votes, power, and keeping their jobs in congress.

  • The fed govt is the new plantation owner keeping millions on the dole and demanding their votes.

  • AtillaPrime

    In IL this single mother also gets free daycare for her kids at IL tax payer expense.
    NO WONDER so many people just won’t work.

  • mmk

    I already knew this! There is no longer any point to study, go to college and work.  You can get it all for free from your dumb working neighbor next door! The working class in America has become the modern day slave! THE MODERN DAY SLAVE will be the title of my first and new book.  Americans need to know that if they spend their money on college and then get a “job”, they will be worse off than if they opened their legs, had sex, and children, and then applied for government aide.  This is so wrong and America will soon see that this will destroy us all financially.  

  • Check this out America.  I live in a city that borders Mexico.  Alot of the recipients of foodstamps and welfare checks live in Mexico.  The women had their kids in the U.S by crossing over to the U.S when they were ready to have the baby.  Well, you guessed it..those babies are considered American citizens.  These women claim that they don’t have spouses and they’ll use a phony local address.  Bam!  Instant help by our Government.  Because the babies are born in the U.S they also get Social Security card immediately upon birth.  Now the mother can get an income tax return @ $3000 per kid.  They also cross their kids over daily for free education and meals.  They only come over to the U.S to go grocery shopping.  Lots and lots of steaks for those familes.  Our system is a failure, eveyday Americans that are in “real” need, don’t qualify.  By the way, I’ve tried to report some,  our federal government agencies won’t lift a finger to rectify the situation.   It’s a real shame. 

  • williamlsasman

    Welfare today is big business to many people.  It has gone from one generation to the next. Back when we had no problem with jobs these people still would not work. There are many out there that can’t work because of some ills or hurts, but there are many more that fake there ills or hurts. Welfare and the food stamps need to be looked into more. I don’t believe that after these people get on these systems that anyone checks to see if the problem is still with them.  With illegals in the system it is overburden . Time washington and the states did something about this program and weed out the ones that are fakes.

  • Jstpcsofme

    I agree, except what are you going to replace those subsidies with? For some reason, we look to the government to create jobs now, which I find absurd. What is the solution? I hear a lot of criticism for the systems we have in place these days, but I don’t hear any good solutions.

  • Pblank07

    This welfare crap has gotton way out of hand. I am a cashier in a grocery store and you wouldn’t believe the fat hogs coming thru the lines with 200 to 400 dollars worth of groceries. The thing is they carry 3 to 400 dollar purses and fine clothes. Wigs and weaves in there hair. It box my blood. You know something else, we have to pay for their cigarettes and they can get cash back. Also, these illegals need to get back home. It infuriates me working people have to give our money to these freeloaders.

  • Pblank07

    This welfare program needs a lot of investigation.

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