Requiem for the Welfare State

Today’s welfare state is an unaffordable luxury that belongs in a junkyard with other failed experiments.  It will not vanish completely, but responsible politicians—if the term is not oxymoronic—must take the heat and shrink it to a manageable size.  Multiple public pensions providing two or three times the nation’s median income must end.  The private sector cannot support the public sector.  Social Security and Medicare must be means tested.  Victor Davis Hanson writes that we must confront the reality of a welfare state that is predicated on flawed assumptions about everything from demography to human nature [because] a rendezvous with brutal reality is now upon us.

One way or another, the days of robbing our grandchildren will soon be over.  The author questions the practice of automatically increasing welfare payments for people who continue bringing children into the world that they cannot support.  Should Medicaid pay for sex change operations?  Why have  mortgage-interest deductions for people who are wealthy enough to own multiple homes?  Maybe we no longer need troops stationed in Germany and Japan.

Steve Doughty writes in the Mail Online that the welfare states of Europe…are now facing destruction because of the sovereign debt crisis…The troubles that began with the collapse of Greece and which now threaten the euro spell the end for excessive…welfare systems.  If left unchecked, the expanding American welfare state would soon mirror the one that is bankrupting Europe.

Although the average Greek retires at 53, their life expectancy is 80.2 years.  French state workers can retire at age 60 on one-half of their salaries; life expectancy there is 81.1 years.  Fired German workers can collect 60% of their last pretax paycheck amount from the government for a full year.  They cannot afford such largesse, and neither can the US.

The current Theftocrat created recession has put 44 million Americans on food stamps.  The American Thinker reports that there were roughly 20 million in that program in 2006 when President Bush was in office. Federal welfare spending is one of the primary reasons for our $1.5 trillion annual budget deficit.

• 1.4 trillion for Medicare, Medicaid
• The Department of Health and Human services gets 83.5 billion
• Welfare housing costs 41 billion
• The oxymoronic Earned Income Credit program takes 59 billion

Today O-bumites are trying to borrow trillions more dollars to enhance their vote buying theft-welfare state.  Opposing sides of the Congressional aisle are in a Mexican standoff over continuing this inter-generational theft.  In this article by Daniel Palazzolo, the author describes the national dilemma.

We are in this mess because we don’t want to pay for the programs we profess to need and both parties know it.  We say we want less government, but we don’t want to spare the programs that make government too big.  We say we want our leaders to compromise, or we want a “balanced approach,” but we don’t really want to pay more taxes from our pockets, or accept lower benefits from the programs we depend on.  Let someone else sacrifice.

While we fight about decreasing spending and increasing our debt, we are far along our descent into national bankruptcy.  We cannot pay our bills yet want to borrow more money.  We will soon be insufficiently creditworthy to justify borrowing at low rates.  Congress will be forced to match expenses to revenues because the only people who will loan to us will demand usurious interest rates.  There is a silver lining in our economic cloud after all.

May your gods be with you.

Progressives' Diversity Depression

Depressions differ from recessions in duration and intensity.  At some point, the length of a recession coupled with the severity of its economic downturn justifies calling it a depression.  Whether we are in the throes of a recession or depression, the current depressed level of economic activity is the direct result of government actions aimed at creating diversity.  Progressives’ operational definition of the term diversity is government-enforced redistribution of resources.

Taki’s Magazine describes our current state as a Diversity Depression.

Artificial demand for housing—demand contrived by government fiat rather than by the desires of creditworthy buyers—inflated property values well beyond any costs recoverable through resale.  Essentially, three factors caused this unsustainable bidding war.  As part of creating his Great Welfare Society, Lyndon Johnson and his cronies changed Fannie Mae from a government agency into a Government Sponsored Entity to hide their intentions and to give themselves plausible deniability concerning their control of Fannie’s actions.

Jimmy Carter and company invented the Community Reinvestment Act that made lenders forgo opening branch banks unless they issued mortgages to people who were incapable of repaying their loans.  The CRA forced them to choose between needlessly increasing losses on bad loans or being fired by stockholders for making less money than competing institutions.

Bill Clinton and his cohorts greatly increased the required ratio of noncollectable loans to profitable mortgages, and lenders bundled these high-risk loans together as securities in an attempt to offset some of the anticipated losses, creating the sub-prime mortgage industry.  As long as borrowers repaid these high interest rate mortgages, everything was peachy; only, this financial house rested on an unstable foundation.

In 2003, then President George W. Bush, members of Congress, and other officials began to warn that this Ponzi scheme was going to unravel.  Barney Frank, Chris Dodd, and other Theftocrats argued that it was financially sound and socially justified—this is the diversity aspect of this debacle—offering their usual crutches-for-little-Timmy-Cratchet arguments.  Before long, Corruptocrats’ constituents began to live down to their credit histories and to default on their mortgages in droves.

The securities made up of these financially unjustified mortgages lost billions of dollars in value, housing supplies greatly exceeded demand, real estate values plummeted, lending institutions collapsed, businesses closed, unemployment skyrocketed, and investors stopped investing.  So thanks to the Theftocrats’ vast expansion of the theft-welfare state, we are in the midst of a Diversity Depression.  It is the direct result of progressives’ redistributive policies and laws.

Having created this dreadful mess, Team O-buma’s response has been:

• To borrow another $2 trillion from the Chinese and squander it on ineffectual programs

• To nationalize industries that are vital to economic recovery and give them to bureaucrats who are so ignorant of business matters that they cannot successfully operate a for-profit entity

• To apply excessive regulations to strangle the life out of the energy sector, knowing that the US economy runs on oil

O-buma and the other progressives caused the current crisis, and they are exacerbating it by intentionally pursuing the same failed experiment.  They are bankrupting the nation and breaking the back of the greatest economic engine in the history of the world.  Anyone who still fails to recognize that they hate America has not been paying attention.

May your gods be with you.