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December 1995
Volume 13, Number 12

Welfare Reform: True and False
Llewellyn H. Rockwell, Jr.

If it had the will, Congress could kill the redistributionist monster, the Welfare State, that's consumed at least $5 trillion in wealth since the Great Society. How? Cut anywhere and everywhere, abolish whole agencies, and return the $350 billion saved from next year's spending to the taxpayers in the form of a tax cut of the same size.

Anyone who thinks this plan is politically untenable hasn't talked to a taxpayer recently. Americans hate welfare. It violates cultural strictures against the free ride, taxes the productive to reward the unproductive, perpetuates poverty, and makes the government strong and the people weak. To get a jump on opposition from the media and special interests, the quicker it's abolished, the better.

So far, Congressional reforms have addressed none of these concerns. Speaker Gingrich told the New York Times: "we are around the edges trimming and manicuring and trying to rethink and modernize these programs, but there is not a single one of the big programs we're touching in a profound way."

That's not a defense, as he thinks; it's an admission of guilt, and proof, as if we needed it, that he will lead no revolution against welfarism. Programs are slated to grow and grow, at an alleged "slower rate" than some mythically worse growth rate that the Congress itself makes up. History will still record that welfare spending has gone up under the "revolutionary" reforms of this Congress.

The point is not the rate of growth of spending, but the destruction that taxes and spending are causing right now. If this destruction were ended immediately, masses of people would be reintroduced to the work ethic, taxpayers would have more money in their pockets, and voluntary spending on private charity would go up. Until then, poverty, sloth, and bureaucracy will continue to be subsidized by you and me.

People would love the opportunity to give more to actually help the less fortunate, especially in their own families and communities. But taxes, including Social Security, are draining people's discretionary income and creating a disincentive to give. A real welfare reform would address this problem first.

The primary plank in the Senate's bill has to do with block grants to the states. This is supposed to be "federalism," but no true federalist would be impressed. Federalism is the idea that government should be close to the people so it can be limited. Federalism does not mean that the national tax police should loot the industrious so politicians can dole it out to other governments on the condition that they give to people who pay no taxes.

The block-grant scheme was met by an invasion of state-government lobbyists. They didn't oppose the idea. They just wanted to make sure they get their share of the loot. See what's happening? The block-grant concept is creating yet another constituency demanding something from Washington: state legislators. Once the money begins to flow, and the politicians at the state level have new cash to play with, future welfare reform will be that much more difficult. Indeed, this could be part of the purpose.

The bickering has centered--as usual--on who gets what, a dispute that cannot be solved rationally. The money can't be divided on the basis of population, since there is no consistent relationship between poverty and population density. Neither can it be divided based on existing poverty, since that will create incentives to maximize poverty, as officially measured, in order to get the cash.

There are those who see welfare reform as a chance for new forms of social engineering. Some religious leaders say we should pay young, single mothers not to have abortions. Has it not occurred to them that the problem goes back one step further? When teens bear children out of wedlock, it's the consequence of a more fundamental problem that taxpayers have been forced to subsidize. If we stop the subsidies that reward promiscuity, we'll begin to see young people lead more ordered lives.

This argument goes to the core of another hysteria. Some Republicans have decided that poor women are responsible for virtually all our social ills. Instead of cutting welfare, they want to add political supervision and government orphanages. Writing in the New York Times, Lisa Schiffren, former Dan Quayle speechwriter, even urges these women to have abortions. But the point of welfare reform is to get government out of the business of running people's lives, either from the supply side or the demand side.

If we did this right--including a massive slashing of taxes for the rich and middle class--we'd see private dollars take care of the deserving poor after the bums have been forced to work or starve. Yet there are those who don't want private charities to stay private. A neoconservative group called the "Project for American Renewal," which has support in the Senate, wants Congress to spend $8.6 billion to subsidize private "antipoverty charities."

This way lies disaster. No doubt, private charity does a better job than government welfare. But it won't if it's put on the government dole. Charities know that government money is always there for the taking. Just do and say what the government orders. For example, policy groups can chow down on NASA's pork, so long as they say that NASA is the greatest thing since moon boots.

The danger of taking government money--in addition to being the recipient of stolen funds--is that it compromises efficiency and independence, and, of course, the Mises Institute has never taken a dime. Liberal groups are glad to take government loot, since their primary goal is to expand government power. But people with our views face a choice of sticking to principle or selling out.

Paying for or receiving welfare has become a way of life for everyone. Can we imagine life without it? Consider this analogy from the hometown of the Mises Institute. When Hurricane Opal hit us, people faced tremendous damage to homes and cars, rampant shortages, and nearly a week without electricity. Yet anyone who was able became part of a generous outpouring of concern for others. The reason was not the emergency situation as such, but the sense we had that if we don't help our neighbors no one will.

It is those feelings and actions that the welfare state has worked to dampen, and which abolishing welfare would revive. A sweeping and radical welfare reform would return hundreds of billions of dollars to their rightful owners, encourage charity for the truly needy, and underscore the need to scrape the barnacles off the boat.

The Congressional freshmen seem willing to adhere to a higher standard of public life than the leadership. No more fiddling around the edges with these diversionary tactics and thousand-page schemes. An honest welfare reform is as simple as wiping it off the budget tables.


Llewellyn H. Rockwell, Jr. is president and founder of the Ludwig von Mises Institute


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