To be more specific, poorly designed entitlement programs are leading to an ever-growing spending burden that ultimately will either lead to massive tax increases or a debt crisis.
To avoid either of those bad options, we need entitlement reform.
I’ve previously written about how to fix “social insurance” programs for older people, such as Social Security and Medicare.
Today, let’s look at the other category of entitlements, the “means tested” programs for low-income people, such as Medicaid and food stamps.
Let’s start by looking at two charts from the Economic Policy Innovation Center.
The first chart shows how fast spending on health programs is increasing, along with a line showing how fast spending increases if Republicans in Congress succeed with some reforms to the Medicaid program.
The second chart shows how food stamp spending dramatically spiked during the pandemic and has since stayed very high because Biden expanded the program.
Excessive government spending is America’s top fiscal problem.
To be more specific, poorly designed entitlement programs are leading to an ever-growing spending burden that ultimately will either lead to massive tax increases or a debt crisis.
To avoid either of those bad options, we need entitlement reform.
I’ve previously written about how to fix “social insurance” programs for older people, such as Social Security and Medicare.
Today, let’s look at the other category of entitlements, the “means tested” programs for low-income people, such as Medicaid and food stamps.
Let’s start by looking at two charts from the Economic Policy Innovation Center.
The first chart shows how fast spending on health programs is increasing, along with a line showing how fast spending increases if Republicans in Congress succeed with some reforms to the Medicaid program.
The second chart shows how food stamp spending dramatically spiked during the pandemic and has since stayed very high because Biden expanded the program.
Ideally, the way to deal with both programs is to copy Bill Clinton’s successful welfare reform by shifting the programs back to the states.
In the short run, this would mean giving states a “block grant” and giving them the flexibility to figure out the best ways of spending the money.
In the long run, the ideal policy would be to phase out the block grants so that states can decide both how to raise money and how to spend money.
Matt Weidinger of the American Enterprise Institute has a similar perspective. Here are some excerpts from a recent article...
Now if the MAGA Party (that some people still call the Republican Party) was serious about reducing the Federal debt and deficit, (and money grew out of a MAGA hat on the same day) they would be doing something like what Dan Mitchell is talking about here. But MAGA is not even conservative, let alone Republican, at least in ideology. They are their own political party in ideology.
My approach is a little different here.
So what leftists, Libertarians, and real Conservatives call the “welfare state”, I call it the safety net.
Why? Welfare states, especially in the developed world, are universal. They apply to everyone regardless of their income levels. America is obviously more liberal democratic, capitalist, liberal capitalist (if you will) as a country and we expect our people to be able to at least try to become economically independent on their own, before they are eligible for public assistance. Our safety net is there (and I’m sure this sounds corny) to catch people when they fall on hard times. It’s not there to try to micromanage their lives for them.
The American public safety net, in a Federal budget of $7 trillion (for FY 2025) is $1.7 trillion dollars, not including Social Security and Medicare. That might sound like a lot when you are talking about public assistance representing about 1/4 of the entire U.S. Federal budget. But compared with Canada and a lot of places in Europe, where they spend 40, 45, 50%, perhaps more in some places, America still has a pretty small safety net budget.
The U.S. Federal deficit as if right now, is around $1.8 trillion. That’s a huge number, which again begs the question why would a political party that’s supposed to be the center-right conservative party in America, be trying to add another $2 trillion to the deficit. But that’s a different question. But by applying some fiscal federalism to the U.S. public assistance budget, we could literally eliminate the Federal deficit in this country.
And we wouldn’t have to do “balance the budget off the backs of poor people” (as the far-left loves to say) by kicking anyone off these programs who actually needs them and are legally eligible for them:
Just turn them over to the states and local government’s
Give all these government’s an annual appropriation to run these programs themselves
Make all these programs financially self-sufficient
And require everyone on them to get an education and go to work as well.
So why do this, besides to deal with the Federal deficit?
Well, I just explained the fiscal reasons for doing this. And for leftists who are worried that this would give let’s say red states the permission to kick out minorities and poor people… you could have basic Federal standards that prohibits states and localities from kicking people off these programs, simply because they’re on them, or they’re trying to save money. They would be allowed to kick people off because they don’t want to work, or get an education, move into a good community, etc. But not simply just to kick them off.
And last reason for doing this is, as U.S. Justice Louis Brandeis famously and intelligently once said: states are laboratories for democracy. They are the boots on the ground when it comes to public assistance in America. And they don’t need Uncle Sam trying to run Medicaid, or Food Stamps, Public Assistance, job training, Welfare, Unemployment Insurance for them. And with just basic, enforceable, Federal standards, these programs would be a lot more cost-effective, (especially for taxpayers) and would be run a lot better, because the people running the programs, would be in the communities where these programs are run.
Source:The New Democrat
