Sunday, June 14, 2009

Entitlement Mania

By: Laura Adelmann

Is there something about our culture that makes an ever growing number of Americans feel that they should be getting everything they want, with no real effort on their part? What happened to the values of working hard and saving, starter homes and delayed gratification? It seems they’ve disappeared from the landscape and it’s a trend that should concern us all.

Once upon a time, actions had consequences. If you didn’t have the money to buy a house, you didn’t buy a house. Then along came your friendly neighborhood government and made lenders give you money because everyone should be able to buy a house, no matter their financial situation. Fannie and Freddie loaned with abandon. People put no money down, took out variable rate mortgages and the loan defaults began. Everyone now has to pay for that pandering error in judgment with lower housing values and harder to get credit.

Social Security is another program that leads to government dependence. It was created at a time when the life expectancy was much shorter and it was a safety net, not a retirement plan. It has now become for many their only retirement plan. Why save for your golden years when you can spend now and the government will provide you a paycheck when the time comes.

And, don’t forget welfare or Temporary Assistance to Needy Families as it's more politely called. People used to take care of each other in hard times. We relied on family and church if things were dire. Then along came welfare and people learned that the more children you had the more money you received. Clinton tried to end that downward spiral by reforming the system, but the truth of the matter is that many life-long welfare recipients moved to Social Security in the form of means tested Social Security Insurance benefits (SSI.) They are deemed disabled, and there is little monitoring of their continued eligibility. Others spend their time and energy trying to find new ways to stay on benefits rather than using the assistance as a step up to independence. Welfare creates very few success stories. The cost of this program continues to expand, with no end in sight and no new reforms in the wings.

Finally, since it seems we haven’t learned that entitlements drain the life out of both their recipients and the economy, we have our President eager to dabble in healthcare reform. Rather than consider the example of Medicare, a program that grows more and more expensive each year, the President appears to subscribe to the idea that a government run option will reduce healthcare spending. He has already expanded SCHIP, the health insurance program for children whose parents earn too much to qualify for Medicaid. He will likely offer a government insurance option. Soon, to cut costs, rationing would start and again those entitled to this “free” insurance would suffer. Soon, so would the rest of us in the form of higher taxes and fewer and fewer private options until we are all in the same boat, our lives subject to what the government tells our doctor is appropriate treatment.

Social Security, welfare, misguided housing reforms have all trained people to look to the government for what they should provide for themselves. As our country’s entitlement programs grow ever larger and Obama seeks to add yet another large bureaucratic monstrosity in the form of healthcare reform, we must remember that entitlements depend on taxpayers to fund them. But what Congress and the President fail to realize is that the more they hand out to people, the fewer people will be out there working and paying the taxes that fund their "voter outreach." Entitlements will become unsustainable. It’s better to pull the plug now, while the patient still has a chance on his own.

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Casey said...

In 2005, George W. Bush adviced Fannie Mae and Freddie Mac to pull out of multifamily housing units and rental property, and to put their money into houses because homeowners make better American citizens.

Unintended consequence: Rental prices shot up, and there was a 2 year waiting list for affordable housing. In many area's they had to crack down on laws of how many people could live in a location because families were renting one bedroom appartments for 4 people, or multiple families living together which under 99% of lease agreements is illegal.

So with the influx of new homes, and people desperate to sell them, and yes government stepping in,, the balloon payment became a fad. A fad that made it so people could afford the monthly payment on a house, but not on an apartment.

If you made $900 a month, and the cheapest rent you can find is $700 a month... and the housing payment is $500 a month for 2 years but then will balloon... do you know how many people saw themselves in that situation and said "Cheap rent for 2 years, Thank God."

This became especially true when the wait list for low income housing was at least two years long in most of the hard hit areas. So these people had no choice but to either buy a house and take the foreclosure in two years or swim in debt and face eviction every month.

Not to mention of course that a large portion of the foreclosures came due to injury or illness and the health insurance costing people their houses.

Now, you may say government dependence mania is there, but as a person who has worked high up in the service sector, the dependence isn't as you think it is. My job many times was to help our employees fill out forms to get food stamps and such because then YOU would pay to keep our goods cheap. We didn't want to give our employees health insurance, so we signed them up for medicaid so YOU could pay for their insurance.

It's not the employees that love the government subsidies, it's the employeers.

If you really want people off government subsidies, then you have to make sure employers pay them enough to survive. Support employers that hire full time instead of all part time. Support employers that give their employees benefits (and actually gives them, not advertises it, but then has loopholes... or gives a health insurance coupon like with the 80/20 deal.)

You really want to get people off government subsidies, band against unpaid internships, the illegal bastion of labor has been replacing low skill but decent paying jobs for the last 10 years. When was the last time you heard of someone being a "Paralegal" they are being replaced by "Law Interns."

Remember, if the employers don't pay people enough to survive, they will find a way, and it will either be with government subsidies or robbing you. Which paying for them in jail is far more expensive then supporting jobs that pay them enough to survive.

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