Commentary: Adventures on Pleasure Island
Passage of the American Rescue Plan, the latest in a series of Covid relief bills passed by the United States Congress, received a 75 percent approval rating in a Morning Consult/ Politico poll. Not entirely surprising given that the bill provides (i) a $1,400 payment to most Americans, (ii) increased Obamacare subsidies to those making as much as $106,000 a year, (iii) an extension of federal unemployment supplemental benefits, (iv) tax free treatment for any debt forgiveness which may be subsequently implemented through either an act of Congress or Executive Order, (v) a temporary increase in the amount of the Child Tax Credit for children up to age 17, and (vi) a plethora of other giveaways to the American public, pension plans, schools, Amtrak, and state and local government; all courtesy of present and future generations of American taxpayers. It’s hard to give that much away without making a lot of friends.
I’ve got to wonder if the American public has actually stopped to consider at what cost all that federal largess might come. Are they really that anxious to provide $1,400 stimulus checks to a large number of persons who never missed a day of work during the Covid crisis (including persons in prison)?
Do they think that working Americans should be funding large health care subsidies for individuals who are, by all measures, members of the upper-middle class (and driving luxury automobiles)?
Does anyone consider it equitable for a blue state like New York to receive 35 percent more in state assistance than a red state like Florida with a 14 percent larger population?
Is it right for California, which has announced that it has a $19 billion budget surplus in the current year, to receive more than $42 billion in federal assistance?
Should a student amassing tens-of-thousands of dollars in debt securing a graduate degree receive a more favorable tax treatment than a cab driver who is provided debt forgiveness on the restructuring of a business loan?
But perhaps the most troubling feature of the American Rescue Plan, from a long-term perspective, is that it moves America’s social welfare safety net yet another step away from the Personal Responsibility and Work Opportunity Reconciliation Act of 1996. The 1996 Act, jointly crafted by Bill Clinton and a Republican majority in Congress, reformed federal welfare benefits, giving money to the states in the form of block grants and adding a work requirement to the recipients of the new program titled Temporary Assistance for Needy Families. In addition to adding work requirements for welfare recipients, the restructured plan placed caps on the period of time over which any recipient could receive benefits.
Requiring welfare recipients to work and capping the period of time over which benefits would be paid reduced the number of persons receiving benefits from 14 million in 1994 to 5 million in 2002, (Bill Reidl and Robert Rector, “Why Successful Welfare Reform Must Strengthen Work Requirements”, The Heritage Foundation, July 12, 2002). Furthermore, the U.S. poverty rate steadily declined according to Census Bureau statistics, from 13.7 percent in 1996 to 11.3 percent in 2000, never returning to the pre-reform poverty levels until 2009 at the depth of the Great Recession.
Rather than creating incentives for work, the American Rescue Plan erects additional disincentives. For those on the lower rungs of the economic ladder, unemployment assistance and other federal and state benefits can easily reap greater immediate rewards than working. Which all flies in the face of data showing that it is work, not public assistance, that lifts people out of poverty. While the liberal media has estimated that the American Rescue Plan will reduce overall poverty by a third and child poverty by half, the plan’s actual achievements are likely to be very different, (Dylan Matthews, “Joe Biden Just Launched the Second War on Poverty”, Vox, March 10, 2021).
The primary foe of poverty is work. Those who work, and work diligently, significantly reduce their odds of ending up in poverty. In a March 13, 2013 op-ed for Brookings Institute, Ron Haskins laid out a simple plan which, according to Brookings’ research on American adults, would lift 98 percent of those in poverty out of poverty, placing nearly 75 percent of them within the middle class. Therefore, the author argued that we should be evangelizing American youth with the following message:
“Let politicians, schoolteachers and administrators, community leaders, ministers and parents drill into children the message that in a free society, they enter adulthood with three major responsibilities: at least finish high school, get a full-time job and wait until age 21 to get married and have children.”
It is a message of individual responsibility, but one that actually works, as opposed to welfare programs which monetize the value of having children out of wedlock and provides lifelong assistance to some fraction of the society which really doesn’t care to work, often because they were raised in a home in which they never had the opportunity to observe role models who got up each morning, rain or shine, and trundled off to a job that they may not have enjoyed, but which met the needs of their family.
The compassion of the public assistance state is faux compassion. For many Americans we become the societal dealers of a “fix” that may cure a current pain but frequently produces long term, inter-generational misery. The success of the 1996 welfare reform act should have put that issue to bed forever. But it did not. If you can purchase a constituency with taxpayer dollars, Joe Biden and his minions are more than pleased to do so, particularly when they can do so with the approval of 75 percent of the American public. What are we thinking?
Donald Trump, for all of his faults, knew that what people really need is jobs. So that is where he placed his emphasis, reducing the poverty rate from 12.7 percent in 2016, the year before his inauguration, to 10.5 percent in 2019, the lowest rate in recorded Census history and the last year before the Covid shutdown of the economy. A remarkable achievement.
But now we have a new political class. One which apparently never read Pinocchio and doesn’t know that while Pleasure Island may provide a season of gratifying indulgence, such moments never end well. Eventually, those who indulge in such fantasies end up as beasts of burden, serving their masters.
— Victor E. Thayer,