The Biggest Fraud in Welfare - WSJ - "Something is profoundly wrong with the U.S. welfare system—a problem that runs far deeper and is more dangerous than the shocking fraud in Minnesota that has been making headlines. Across the past half-century, America has seen what in any other country would be considered a golden age, in which lower-income households have made incredible progress... Yet even as our economy has experienced broad-based growth, real federal welfare spending has soared by 765%, more than twice as fast as total federal spending, and now costs $1.4 trillion annually. Were that money simply doled out evenly to the 19.8 million families the government defines as poor, each household would receive more than $70,000 a year. The source of this dramatic mismatch is a fraud built into how various programs determine welfare eligibility: The government doesn’t count any refundable tax credits or benefits that aren’t paid in cash as income to the recipients. Some claim this is appropriate because the beneficiaries aren’t free to spend noncash benefits on whatever they like. But that is a specious argument, because money is fungible. Receiving Medicaid, for example, frees up cash that would otherwise be spent on healthcare, allowing the recipients to spend the newly freed cash on other things. Noncash benefits aren’t in the end that different from income—except that salaries are taxed while government benefits aren’t. And individual welfare programs often don’t even count benefits paid in cash as income for the purpose of gauging eligibility. The government’s failure to count its largess as recipients’ income allows welfare households to blow past the income level above which a working family no longer qualifies for government help. Take a single parent with two school-age children who earns $11,000 annually from part-time work. The government considers this household in poverty because its income is below $25,273. But this family would qualify for benefits worth $53,128. It would receive Treasury checks of $3,400 in refundable child tax credits and $4,400 in refundable earned-income tax credits. The family would also receive Food Stamp debit cards worth $9,216 a year, $9,476 in housing subsidies, $877 of government payments for utility bills, $16,033 to fund Medicaid, $3,102 in free meals at school and $6,624 in Temporary Assistance for Needy Families. All this puts the family’s income at $64,128, or 254% of the poverty level. A hardworking family earning anything like $64,128 in salary wouldn’t be eligible for any of these welfare benefits in four-fifths of the states. Meanwhile, the welfare family would be eligible for another 90 small federal benefits and sundry state and local welfare programs. According to the Congressional Budget Office and other independent researchers, when all means-tested payments are counted as income, most welfare recipients have incomes that put them in the middle class, and the proportion of poor people in the U.S. falls from more than 10% to less than 1%. This unjust system also penalizes work. Unsurprisingly, the percentage of work-age persons in the bottom 20% of income who in fact work has in the last 50 years fallen from 68% to 36%. The budgetary effects of these inaccurate income calculations are enormous. Look at what government programs cost minus any dedicated revenue they collect and interest on the debt, which government is obligated to pay. Payroll taxes fund 87% of Social Security spending, requiring an additional $188 billion, or 4% of unobligated spending. Medicare is 45% funded by payroll taxes and uses $478 billion of unobligated spending, or 11%. Defense spending of $851 billion is 20% of unobligated spending. Means-tested welfare programs absorb $1.4 trillion, 34% of unobligated spending, and the rest of the federal government spends $1.3 trillion, or 30% of unobligated spending. If the government simply gave every poor family in America enough money to raise its income above the official poverty level, it would cost only $240 billion. That would reduce the annual deficit by two-thirds. In light of the mounting evidence of rampant benefits fraud, Congress should institute a comprehensive audit of all means-tested programs. But it should start with removing the largest fraud in welfare—the government’s gross overstatement of poverty"
Clearly, the reason there is still a problem is that they don't spend enough money, and they need to "tax the 'rich'" to fund even more social spending
Weird. Left wingers claim over 60% of US households are below the poverty line. But poverty is defined as not being able to go to baseball games
Meme - *Super rich companies tall and standing in water*
State tall and standing in water*: "We should raise taxes!"
*Average company. floundering and drowning in water*
*small company floundering and drowning in water*
*taxes as water*
Bondi shooting: Australia has traded its soul for the politics of envy - "The Australia I remember during my youth bears little resemblance to the nation that now exists. I am not sure you can even describe us as a nation – we are more like a heterogeneous agglomeration of vested and frequently colliding interests. I think there is a fair case to be made that we have traded away our soul. There is no cohesive national identity. There was, once upon a time, a demonstrably visible national character. We knew what it was to be Australian. We loved our country. Our flag. Our history. Our entrepreneurial and iconoclastic verve. Our disdain of centralised authority. Our willingness to give every person a fair go. Our characteristically intense competitive streak. And our eccentric and larrikin heroes. From Don Bradman to Kerry Packer. But today it is difficult to discern a unifying crusade or common community. There are, to be sure, redoubts here and there. But across this sunburnt land, we have emerged as a nation divided... The lucky country has become the lazy land, spoilt by endless resource riches and the seemingly bottomless pit of public money that this has bestowed. Our wealth has been relentlessly wasted on pet political projects that serve only to perpetuate the reign of those in power. Financially corrupt the voters to win the next election and then rinse and repeat. Until the money runs out. Australia has become obsessed with the public sector providing answers to its problems. Obsessed with centralised control. Remember the world’s worst lockdowns? Obsessed with censorship: eviscerate parental responsibilities and ban children from access to the internet. Obsessed with revisionism. We don’t even give our kids an opportunity to learn from our historical wins and losses. It is airbrushed in the name of trying to create an alternative political reality. Obsessed with cutting down tall poppies. That is, we don’t just want equality of opportunity, which is a crucial ideal – we increasingly seek equality of outcomes. A huge amount of the secular racial prejudice projected against Judaism by other creeds and cultures can be attributed to the fact that the Jews have been consistently one of the most successful communities in the countries they have lived in... the most intellectually bankrupt answer to any policy problem you will ever find is that inequality is to blame. It sounds profound to talk about inequality. Surely inequality is bad, right? But what is the counterfactual? Equality? So, you want communism? They will respond that this suggestion is absurd. But who then is in a position to judge precisely what the right amount of inequality is? What politician is endowed with the omnipotence to know precisely how successful the very best should be? How can they possibly divine the idealised dispersion in human outcomes? How much should we increase tax rates by as a proportion of total incomes to disproportionately punish the highest earners? To rob Peter to pay Paul? If you are asserting that inequality is bad, you must think that some form of communism is good. It is exactly the same banal logic that people apply when they claim that a persistently successful creed is to blame for all our problems. It’s convenient to point the finger at some transnational force when you cannot make sense of your personal plight... we want a world that celebrates success rather than one that persecutes the poppies. We want to live a life where we have every reason to be the best version of ourselves. The evil at the heart of persecution is pervasive envy of the exceptions"
Sneaky Birds Pretend To Be Hurt After They Noticed a Person Feed Another Injured Bird - "These birds saw a person feed an injured bird, so they all started pretending to be injured as well"
Freyy on X - "we literally live on a planet where water just flows freely and food grows on trees and we created Microsoft Office Suite and credit scores."
Left wingers really think the state of nature is paradise
Hans Mahncke on X - "Even for those who want welfare, there are basic prerequisites that must be in place for it to function. First, the system must rest on a high degree of trust that recipients genuinely need assistance, because policing abuse is inherently difficult and becomes more costly as programs expand. Once abuse grows, the cost of enforcement itself starts to crowd out the capacity to provide help, which is why trust has to be built into the design for the system to function at all. Second, there must be far more people paying into the system than drawing from it. If that balance flips, the math breaks down, work and tax compliance become less attractive, and incentives are reversed in exactly the wrong direction. Third, those receiving benefits must be seen as having contributed to the system in some meaningful way. If large numbers of recipients are perceived as having paid nothing into it, resentment among contributors is inevitable, as we are increasingly seeing now. Finally, benefits must be applied consistently. A system in which some people receive generous support, for example subsidized child care, while others in similar circumstances do not, will quickly be viewed as unfair and corrosive. In short, welfare systems depend on a delicate balance of trust, proportionality, and fairness. Without those conditions, they do not merely underperform, they cannot function at all. And that is before even addressing the fact that many people reject such systems in principle."
The Free Press on X - "You’ve been lied to about Africa. @MagatteW: “Africa is not poor because of colonialism. Africa is poor because we have made it impossible for our people to create wealth.”"
Magatte Wade on X - "I’ve done business in the US and a handful of African nations, so let me push back on this comparison Yes, the US has regulations. But comparing American regulatory burden today to African regulatory burden today misses the point entirely. The US is a rich country that can afford inefficiency. For instance, California’s overregulation slows it down, sure, but it’s slowing down from an already wealthy baseline. Africa doesn’t have that luxury. Every unnecessary barrier costs us more because we are starting from less. The problems you listed are not separate from overregulation. They are consequences of it.
“Lack of access to capital”: Why won’t banks lend? Why won’t investors invest? Because civil law is unpredictable, property rights are weak, land can be seized, and contracts aren’t reliably enforced. Capital avoids Africa because the regulatory environment makes investment risky and returns uncertain.
“Poor social infrastructure”: What do you mean here, precisely?
“Poor human capital”: Where do Africa’s best doctors, engineers, and entrepreneurs go? To less regulated economies (like the US) where they can actually earn money. Nigeria loses thousands of doctors yearly to the UK and US. Senegal’s brightest go to France or Canada. Brain drain follows opportunity, and opportunity follows regulatory environments that reward effort instead of punishing it.
“Poor enforcement of public policy and rule of law”: This is part of the regulatory problem I’m describing. The issue is not “too few rules on paper.” It’s too many rules applied arbitrarily, selectively, and unpredictably. In much of Africa, enforcement means whoever has connections gets exceptions and everyone else gets squeezed, and that’s regulation weaponized (note that rule of law is part of economic freedom).
“Inconsistent and opaque regulatory requirements”: This is literally my point, as I stated earlier. When the rules aren’t clear, the bureaucrat becomes the rule. And his incentive is to add senseless steps, not remove them. That’s how you get overregulation and bribes to “speed things up.”
The US got wealthy during periods of much lighter regulation. Now it’s rich enough to afford its own bureaucratic bloat. We are not. Comparing where America is today to where Africa is today, as if we’re playing the same game with the same margins for error, ignores everything about how wealth actually gets created. This is not a “big lie.” It is what every successful prosperity-building story, from Mauritius to South Korea to Singapore, has in common: economic freedom."
Vincent Geloso on X - "Piketty is wrong about the past and the future. My forthcoming book, while not directly about Piketty, shows exactly that. It shows that the era from 1870 to 1910 in America -- when markets were quite open, contestable while people and capital could move around -- was the first era of egalitarian growth. The living standards of the bottom 90% rose as fast as the top 1%. And that fast was really fast (more than 2.5% per annum year in year out). The point we must start realizing NOW is that markets are naturally egalitarian forces. State-solutions might here and there promote growth for people at the bottom but state-solutions often open the door to rent-seeking, political specialization and patronage that may create inegalitarian growth and slower overall growth. With contestable markets, elite wealth is not sacrosanct. With secure property rights, innovation can have spillovers for the many but still be sufficiently rewarding for the innovator to undertake and adopt. With open markets, you can escape bad situations and move to areas or industries of opportunities. With strong protection of property comes (as a tool for it) barriers to political specialization and rent-seeking which atrophies crony capitalism (which slows growht and is inegalitarian). Yes, some functions of the state can be egalitarian but they are modest complements to what I just described. Open and contestable markets are the ultimate egalitarian force we have ever deployed to generate a growing society."
Mark S Elliott on X - "Raising taxes to reduce inequality has been the game plan for almost 7 decades. What are the results? Hyperfinancialization, waste, and devaluation. Now, Piketty wants to accelerate this model."
Vincent Geloso on X - "One of the things I point out is that the golden age of equality — which he argues coincides with tax hiles — was not as golden. There was far less levelling from 1929 to 1975 than is commonly shown. There was some, but it was probably driven by other things such as internal migration, unions and education spending"
Sylvain Catherine on X - "Very happy that our paper received the DFA Prize for Best Paper in the Journal of Finance. The literature on wealth inequality has been highly influential in public debates, yet it largely ignores a key way households save over the life cycle: Social Security. We show that including the fair value of accrued benefits in wealth substantially mutes the rise in wealth inequality since 1989. Its importance has grown dramatically over the past three decades. In 1989, Social Security represented only 26.0% of the wealth of the bottom 90%. In 2019, this percentage rose to 49.8%. We cannot understand household balance sheets without paying attention to Social Security."
Zephyr Teachout on X - "New York City has an amazing concentration of independent grocery stores, but the way that Amazon (Whole Foods) and Walmart use their power to block them out by getting unfair deals from big suppliers is making it almost impossible to survive. Tell your reps to support @MicahLasher and @CordellCleare important Consumer Grocery Pricing Act."
daniela on
X - "So a chain like Whole Foods/Amazon that uses its ability to bulk purchase to price out independent grocery stores is bad, but a govt grocery store that can price out independent grocery stores because it doesn’t have to pay taxes is good?"
There being no Walmarts in NYC aside, it's amusing how left wingers want to and do keep raising costs, then complain that prices are high
Carrie Severino on X - "Years after the Supreme Court made clear in Janus v. Afscme that workers have the right to opt out of public employee unions, the state of Oregon is still trying to find a workaround — now by blocking workers from being told of their constitutional rights. Outrageous. “The reason is simple: Unions are bleeding members. Workers are exercising their rights by resigning, keeping their dues money in their own pockets instead of funding political causes with which they don’t agree. Instead of making themselves more appealing to workers, unions lobbied the state government to criminalize speech and the rank-and-file’s desire to exercise their freedom of association.”"
Crime In NYC on X - "Taking advantage of a generous New York state program to aid his ailing mother, Ballal Hossain signed up a dozen family members to work as her caregivers. Over six years, they were paid $348,000 to look after the elderly woman at a Manhattan apartment. Except the mom was in Bangladesh the entire time. Incredibly, Hossain got away with the fraud by having his brother pose as their sick mother for whenever inspectors showed up, before finally being caught. He was later sentenced for grand larceny, according to prosecutors. It’s just one egregious example of a welfare program — called the Consumer Directed Personal Assistance Program, or CDPAP — that has cost New York taxpayers hundreds of millions of dollars to waste and fraud. First set up in 1994, CDPAP was intended to alleviate the number of elderly people going to nursing homes. The @nypost was able to identify at least $179 million stolen by CDPAP recipients over the last 10 years, while the program wasted at least $1 billion of taxpayer cash on middlemen [private companies contracted by the state to handle administrative tasks]. Lawyer Richard Harrow prosecuted Medicaid fraud in New York for 27 years, and now works in Albany specializing in Medicaid fraud cases. “If you think Minnesota is a big deal, multiply that by 10,” he warned The Post, referring to the $1 billion daycare fraud scandal there. “CDPAP is the biggest fraud there is because it all takes place in people’s homes.” Costs for the program itself have more than quadrupled."
Mark Elevate on X - "The problem isn't that the mother was never there. The problem is that even if the mother was there, the taxpayers were paying this family 55k a year to look after their own mother. The whole system is the problem."
𝖓𝖎𝖓𝖊 🕯 on X - "You've probably seen charts showing that "Healthcare" is the fastest growing industry in New York, displacing old mainstays like finance and insurance. To a significant extent, it's because of programs like CDPAP, i.e., just thinly-disguised, widely-defrauded welfare scams."
How much of blue states' vaunted higher GDP is due to government transfers?
Millennials are richer than their boomer parents. Here's why they love to complain anyway. - "When Gen Xers and millennials hit their late 30s they had a median household real (aka inflation-adjusted) income 16% and 18% higher, respectively, compared to the generation before them at the same age, whereas the Silent Generation and baby boomers had increases of 34% and 27%, respectively... thinking your parents had it easier isn't particularly unique to the avocado toast cohort. "Almost every generation is like this," says Matt Darling, a senior research associate at MEF Associates, a social policy research firm. People tend to downplay the tribulations that plagued previous generations — after all, they weren't around for them. Millennials frustrated by post-pandemic inflation could probably stand to talk to boomers about how they dealt with it in the 1970s and '80s. "Every generation has its own unique challenges, and every generation forgets about what happened previously," Darling says. As big-ticket items have become increasingly expensive — housing, healthcare, childcare, education — it's become easy to overlook the smaller-ticket items that have gotten cheaper. Yes, sending your kid to preschool is going to hit you where it hurts, but at least the toys you buy them and the clothes you put them in nowadays are super inexpensive. The same goes for that iPad you let them play with more than you should. "They feel so vulnerable because they're looking at what the ultra-elite rich are doing and can afford to do, and, in comparison, they feel poor."... As workers at the bottom earn more, it can also push up prices for the better-off. Part of the reason people are annoyed by the high cost of their DoorDash orders is that delivery drivers may have a minimum amount they need to earn. That tip you're angry at at the coffee counter is supplementing the barista's pay, whose wages have gone up anyway in recent years and are making your fancy coffee pricier. Most people would agree it's good for home health aides to be paid more — until they try to hire one to take care of their parents."
Time to increase the minimum wage, because greedy companies will be forced to reduce their profits to pay workers more without raising prices
Capitalism does not reward risk – Matt Bruenig Dot Com - "Capitalism does not reward risk-taking. This is easily shown. Suppose Noah and I each invest in ways that are identical in all regards with respect to risk. If capitalism rewarded risk-taking, then each of us would get an identical return. But we don’t necessarily. Suppose Noah’s investment leads to him receiving a large return, while mine leads to me receiving nothing and even losing what I put in. In that possible scenario, even though we behaved in a relevantly identical fashion, capitalism distributed us different amounts. Noah was rewarded for risk-taking. I was punished."
Paul Hundred, GED on X - "“We took on the same amount of risk but he hit the jackpot and I lost everything”
“That’s why it’s called risk”"
Left wingers don't understand capitalism, then proclaim it has failed
CMV: hardly any millionaires are going to leave New York City because of 2% more in taxes : r/changemyview - "These kinds of taxes have been tried before, without success. I collected a few links here
“We argue that a well-designed wealth tax would reduce the tax base by 7–17 per cent if levied at a tax rate of 1 per cent.” https://onlinelibrary.wiley.com/doi/full/10.1111/1475-5890.12283
“Migration effects of the reform dominate: internal mobility of wealthy taxpayers appears as the major behavioral response to the change in the net tax rate, accounting for a large portion of the post-treatment total net wealth in the treated municipality.” https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4991833
“We find significant migration responses among the wealthy: a 1pp increase in the top wealth tax rate decreases the stock of wealthy taxpayers by about 2%. A large fraction of the wealthy are business owners, and their businesses are negatively affected by owner out-migration.” https://www.nber.org/papers/w32153
Edit: responding to complaints that links above were about European wealth tax (borrowed from another thread where I argued that the UK eliminating non-tax status is economic suicide), I’m adding links about USA state income tax migration effects:
https://taxfoundation.org/data/all/state/taxes-affect-state-migration-trends-2023/
https://news.ucr.edu/articles/2024/04/03/research-shows-direct-link-between-state-income-taxes-and-migration “Research shows direct link between state income taxes and migration. A new study looks at 110 years of income tax history across the U.S. and notes out-migration by wealthy Americans”
https://www.bakerinstitute.org/research/domestic-migration-and-state-tax-policy-0 “the estimates suggest that a 1 percentage point increase in the top marginal income tax rate is associated with a reduction in net migration by 6.1 federal taxpayers per 10,000.4 To put this into perspective, levying California’s top marginal tax rate of 13.3% (relative to no income tax) would be associated with a loss of 8.2 taxpayers per one thousand. If economic growth is roughly proportional to the population of taxpayers, it would imply a loss of nearly 1 percentage point of growth annually. Studying AGI flows, however, suggests that the economic losses could be more severe. The estimates indicate that a 1 percentage point increase in the top marginal tax rate is associated with a reduction in net AGI flows of around $11.54 for every $10,000 of AGI in the state. For California, this suggests an annual loss of 1.5% of AGI, relative to a tax structure with no income tax. “
Edit2: people keep smugly bringing up Massachusetts. It’s not the win you think it is:
“Massachusetts’ tax burdens were above average but nowhere near as high as now, the 36 percent increase in federal tax returns with an AGI of $1 million or more is far less impressive when compared to a national average of 49 percent, let alone against the 61 percent, 75 percent, and 77 percent increases in Texas, Arizona, and Florida, respectively—three notably low-tax states. And the performance of a state like Massachusetts is particularly anemic against the boom in the low-tax mountain west, where Utah’s 81 percent increase, Idaho’s 106 percent increase, and Montana’s 132 percent increase are particularly astonishing. All three states have cut taxes in recent years.”
Edit3: here’s more on Massachusetts since people keep insisting the tax policy was a winner. My debate isn’t about the morality of capitalism or does Massachusetts have good social services - I lived there for several years, it’s a perfectly nice place to live. But the question at hand is tax policy and migration :
“159,200 people left the state between Filing Year (FY) 2021 and FY2022, while just 113,586 people moved into Massachusetts from out of state during the same timeframe. That amounts to a net loss of 45,614 people in population size. According to an analysis by Pioneer Institute, there are only four states that have worse net migration losses: California, New York, New Jersey, and Illinois. Massachusetts didn’t just lose a net 45,614 people. In reality, 159,200 Massachusetts citizens moved out of state, taking about $13.21 billion in adjusted gross income (AGI) with them. Only $9.37 billion in AGI migrated into the state, leaving Massachusetts with a net loss of about $3.9 billion in taxable income, according to IRS data.”"
The failure of Norway's wealth tax hike as a warning signal - Brussels Report - "around 80 affluent business owners left Norway and moved to Switzerland. The former Swedish Finance Minister Anders Borg who oversaw the abolition of the wealth tax in his country in 2007 stated in this regard: “As a Swede, you get the feeling that you are experiencing the same thing we did in the 70s and 80s, when business owner after business owner left the country – at great cost to Sweden.” Norway has lost several billion NOK in tax revenue due to this emigration. Infrastructure is also being damaged. Numerous small and medium-sized enterprises have been affected negatively. This is primarily a consequence of the fact that the wealth tax is calculated on values tied up in the company (so-called working capital), without taking into account the company’s earnings or losses. In addition, the wealth tax only affects Norwegian private business owners/investors, but not foreign investors. Many Norwegian-owned companies are drained of capital year after year to pay the tax, which foreign-owned companies avoid. The resulting distortion of competition forces companies that cannot or do not want to move out of Norway to decrease their investments and sometimes to sell at an inopportune time or close down. This may be tackled under the Norwegian Constitution... the rigid stance of the current government is essentially due to two reasons: Firstly, the executive in Norway is powerful. However, although the trust of the governed in those who govern is still relatively high, it is declining. Prominent university professors criticise the arrogant behaviour of the state. The private sector is increasingly dissatisfied. The second reason why the Government is unperturbed by the crisis it has caused, with numerous business owners moving away and so many small and medium-sized businesses suffering, is the fact that the government finds itself in a permanent moral hazard. The country’s enormous oil and gas wealth acts like a comprehensive insurance policy. The government is not forced to be economically prudent. Whatever mistakes it makes, it does not have to bear the consequences, at least not in the short term. In addition, the government can appeal to a motive that is typically European: envy. There are even those who suspect that the current Norwegian Government is trying to benefit from the exodus on a political level. By agitating against the supposedly selfish “traitors to the country” who move to Switzerland, it may profit from the situation with the voters... Among the countries that had a wealth tax in the past but have abolished it, Germany, France and Sweden are particularly instructive. Everywhere, this tax was abolished because it caused more harm than good. The rich, who were to be fleeced, voted with their feet. Even without including emigration, wealth tax on working capital damaged the government’s income base. The wealth tax discourages investment and growth also in many companies with owners who do not move, and thus reduces other more important tax revenues such as corporation tax."
