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Friday, February 20, 2009

President Obama's Emerging Welfare State

After a month, it is of course a bit too early to offer any fair analysis of our new President. Still, from the policies he has championed so far, what emerges for me is that the President is a very boiler plate bleeding heart liberal. This translates into a philosophy that creates a welfare state. It appears that there is no sob story anywhere that doesn't attract the compassion of the President. So, armed with enormous power, the President also believes that any problem is his duty to solve. So far, it appears that "solving the problem" means a government program that becomes a give away to any number of so called aggrieved citizens.

The most obvious evidence of President Obama's welfare state is in the reversal Bill Clinton's welfare legislation in the stimulus bill.

A provision of the bill would establish a $3 billion “emergency fund” for states to use to pay for increases in their welfare rolls. Significantly the legislative language would reward states for increasing their caseloads, regardless of whether the increase was due to increased unemployment or other economic conditions or simply because the state loosened its work requirements or time limits. It also shifts the base for states caseload reduction bonuses in a way that will discourage states from holding down the growth in welfare. And, while the grant does not eliminate welfare reform’s central concept of replacing the individual entitlement to welfare with a state block grant, it certainly weakens the foundation.

As such, states are now encouraged rather than discouraged to put more people on their welfare rolls.

Of course, this niche of the stimulus bill is only the beginning of President Obama's penchant for welfare within the stimulus. President Obama increased the length of unemployment insurance and increased funding for food stamps. He increased the funding for COBRA, which pays for some one's health insurance when they lose their jobs. Furthermore, the tax credit within the stimulus mean that about half the population now pay no federal income taxes.

On top of this, President Obama signed an increase to the SCHIP bill which significantly increased the number of people eligible to receive free health insurance for their children.

President Obama signed an expansion of the State Children's Health Insurance Program Wednesday afternoon. "This is a down payment on my promise to cover every American," he said.

The President's mortgage bailout plan is another place where President Obama has employed the idea of welfare. In this plan, borrowers struggling to stay on time with their mortgages are given access to loan modifications in which their terms are made better and the government subsidizes this plan. More than that, the ones at the front of the line are the ones most upside down. This plan will subsidize those who's mortgages are more than the value of their homes more than anyone. In other words, the government will subsidize for them not only a better rate but a reduced principle.

Welfare for the citizen is not the only place where the President seems to want to act. He appears to also be a believer in corporate welfare. He has said unequivocally that he will not allow the big three automakers to fail. He is even mulling over a plan for TARP II to keep struggling banks in business. His stimulus plan also includes billions of Dollars for states struggling to keep a balanced budget. As such, the President has hit the trifecta. Whether it is individuals, businesses or even governments, if you can't make it on your own, the President sees it as his duty to use tax payer Dollars to help you make it. Welcome to the welfare state under our new President.


Anonymous said...

Please learn how to proof read, it makes it very hard to see your points if you don't. Thanks

StarWolf said...

Your comments here are implicitly suggesting that Obama's doing all of this in a vacuum, i.e. you are ignoring the fact that these policies are in response to the devastating collapse of our financial sector at the end of Bush's term. As for increasing unemployment benefits, well if you haven't noticed the private sector has been and still is hemorrhaging jobs. Massive layoffs means that millions of people are without jobs through no fault of their own (though you would likely dispute that--it *must* be the workers' fault, somehow-it always is their fault, never the upright, virtuous rich man's fault!) Now we can say "let them eat dirt," or we can try to help folks in such devastating circumstances through these stormy waters. In addition, you no doubt don't subscribe to Keynesian economic theory, but that's also a major factor in giving such aid, and to prevent deflation-- a deflationary spiral which would mean the next Depression.

mike volpe said...

Reagan faced significantly worse economic downturn and he cut taxes massively. In fact, he did all he could to make government smaller.

The economic downturn is a trojan horse that folks like you use to take us away from Obama's agenda.

There are plenty of options in these economic times, and President Obama picks only those that are favored by bleeding heart liberals.

StarWolf said...

All reputable economists agree that this recession is totally different than the 1981-1982 recession. As in a totally different *kind* of recession. We may not yet be experiencing the pain of 1981-1982 (although by some arguments we've already surpassed that level of pain), but fundamental national and global financial institutions are collapsing with staggering speed. And the *rate* of job loss looks as if it will scorch our entire economic landscape withing months, without desperate intervention. What got us out of the 81-82 recession was not anything Reagan did, but rather the Federal Reserve lowering interest rates (which they previously were hiking, which caused that recession in the first place). In the current case, the interest rates have been essentially lowered to zero, and the recession is proving recalcitrant, with devastating economic bombs continuing to go off-- as was the case with the Great Depression. The private sector will not be providing the jobs we need to keep our economy from cratering for at least the next couple of years. In the meantime the only option is for massive government stimulus and job-creation (2-3 times the bill that was just passed).