Friday, August 15, 2014

Fifty Years Later: Losing the War on Poverty

This year marks the 50th anniversary of the War on Poverty, ushered in by President Lyndon Baines Johnson at his first State of the Union speech in which he said "We shall not rest until that war is won. The richest nation on Earth can afford to win it. We cannot afford to lose it."

The weapons he brought to that war include the Social Security Act of 1965, which introduced Medicare and Medicaid. Five decades later they remain an indelible part of American life and American expectations, used extensively by the poor and (especially in the case of Medicare) the not-so-poor.

Despite their abundant patronage, these massive, unconstitutional programs have not eliminated poverty. Nor are they even remotely efficient or affordable.

Medicare, which provides health “insurance” to almost 50 million Americans aged 65 and over, is funded through a payroll tax of 2.9 percent split between the employee and the employer.

Despite stripping the working economy of more than 3 percent of its value annually, the program is still unable to adequately fund itself. Since 2008 the Medicare trust fund has been paying out more than it brings in. The program’s trustees say that Medicare will be bankrupt by 2026, but a 2013 report by Forbes showed that the actual date of insolvency is 2016 when you eliminate some accounting gimmicks of Obamacare.
Upon its collapse, what will the federal government do? It has done nothing yet to prepare for Doomsday, even though it’s not too far away. So, a financial crisis and tax tsunami are looming for American taxpayers and Medicare beneficiaries, as well as the companies and workers who must be paid to provide for oldster’s care.

The crisis continues with Medicaid, which provides medical and health-related services and funding to the poor. In 2013, approximately 73 million Americans received Medicaid. The total cost was $415 billion. That expense is expected to exceed $600 billion by 2017.

There is no end in sight to its blood-letting. It should be noted that the program is notoriously abused and overused, with some states — like New York — providing recipients with products and services that those on private health insurance would never receive without considerable deductibles and co-pays. In the Empire State, the accumulated cost to taxpayers is a whopping $16,000 per Medicaid recipient.

The abject failure of this War on Poverty can be seen in the poverty rate. The number of Americans considered impoverished stood at 15% of the population last year, up from 12.5% a decade ago. When the War began in 1964, the poverty rate was 19%. After 50 years and trillions of dollars is 4 percentage points the best we can do?

What accounts for this lost war?

It’s obvious that Medicare and Medicaid create and/or maintain poverty rather than alleviate it.

In its effort to combat the very poverty it had previously created through taxation and regulation of a productive private sector, the federal government managed to feed the poverty monster by adding to the cost of doing business (which inhibits job growth, stunts wages and sends jobs overseas) and living (which prevents people from spending as much as they could in the free market, which would then encourage economic development and squash poverty).

Whenever money is forcibly removed from the private sector like the hundreds of billions for the War on Poverty every year, the private sector is unable to do what it should – that is, create wealth.

Thus, the average worker, because of diminished employment opportunities, becomes impoverished by the invisible hand of the government. That individual then relies on government subsidies, further stressing the system of dependence unleashed by our government, which will then, again, take away more jobs and opportunity further down the road.

It’s a vicious cycle --- and a war we are losing because of the very weapons we are using to fight it.

From the 18 August 2014 Lockport Union Sun and Journal

No comments: