September 17, 2015

Poverty and Government

The Census report on American poverty misses some key points.

The Census Bureau this week released its annual poverty report — the banner statists wave to demand more wealth redistribution in the name of justice. According to the report, 46.7 million Americans lived in poverty in 2014. But before you say “Thanks Obama,” there’s a bit more to the numbers.

This would be tragic, except by the Census Bureau’s own definition, the average poor American has a car, enjoys air conditioning and has cable or satellite TV. Indeed, as Heritage Foundation Senior Research Fellow Robert Rector notes, “Half of the poor have computers, 43 percent have Internet, and 40 percent have a wide-screen plasma or LCD TV.” And more than 40% of poor households own their own home.

With poverty like this, who needs wealth?

The problem is that the Census Bureau’s report is fundamentally flawed. While it measures poverty by household income — $24,008 being the threshold for a family of four in 2014 — it almost fully discounts welfare benefits given to the poor.

Indeed, according to a Heritage Foundation report that divided all households into five groups based on income, the lowest three quintiles, representing 60% of households, received more in government benefits (i.e. wealth redistribution) than they paid in taxes. Meanwhile, not surprisingly, the top two quintiles paid more than they received.

We’re not talking a minor imbalance here. On average, households in the bottom fifth received an astounding $24,700 more per year from the government than they paid in taxes, while households in the top fifth paid an average of $48,000 more per year in taxes than they received in government benefits and services.

How do we know not all those who receive are legitimately needy?

Well, aside from the high-definition TVs, it turns out that the majority of those receiving food stamps are not children and the elderly but rather working-age, able-bodied adults. Why? One huge reason is the government no longer requires able-boded adults to work in order to get on the food stamp dole. And, shocker of all shockers, when work is dis-incentivized, many people stop working.

Indeed, as Benjamin Franklin once presciently said, “I am for doing good to the poor, but I differ in opinion of the means. I think the best way of doing good to the poor, is not making them easy in poverty, but leading or driving them out of it. In my youth I travelled much, and I observed in different countries, that the more public provisions were made for the poor, the less they provided for themselves, and of course became poorer. And, on the contrary, the less was done for them, the more they did for themselves, and became richer.”

But clearly the idea of working for wages is flatly un-American, right? After all, as Bernie Sanders reminds us, America was founded on “racist principles,” and our “rigged economy” was “designed by the wealthiest people in this country to benefit the wealthiest people in this country at the expense of everybody else.” So the solution can hardly be equal opportunity that has allowed both black and white Americans to achieve unparalleled levels of economic freedom.

To a hammer, everything’s a nail, and to a socialist, everything is a call for income redistribution.

Of course, as the great Margaret Thatcher so eloquently noted, “The problem with socialism is that eventually you run out of other people’s money.”

The other problem with socialism, incidentally, is that it’s unconstitutional — an apropos reminder as today marks the 228th anniversary of the signing of the Constitution in Philadelphia.

Indeed, James Madison, who is considered the father of our Constitution and who served as our fourth president, once said, “[T]he government of the United States is a definite government, confined to specified objects. It is not like the state governments, whose powers are more general. Charity is no part of the legislative duty of the government.”

Mr. Madison, how far we have fallen.

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