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Welfare Reform

Nicholas Kristof has a must-read editorial in the NY Times. Kristof looks at the conservative mantra that government assistance reduces initiative, causes dependence, and increases the deficit — and agrees!

He helpfully suggests five public welfare programs are wasteful and have turned us into a nation of “takers”. They should be eliminated as quickly as possible:

  • Welfare subsidies for private planes. Astonishingly, the US government offers three different kinds of subsidies to tycoons with private jets. Even Dubya tried but failed to eliminate some of this boondoggle.
  • Likewise, subsidies for yachts. Here we have direct evidence that this has increased dependence, as the owner of a $2.6 million yacht complaining about efforts to end this subsidy, “It is so unfair to target people who want to use their boat as a second home.”
  • Government welfare for hedge funds and private equity. This has been called the single most outrageous tax loophole in America. Ronald Reagan eliminated this loophole, but it has snuck back. Freedom requires eternal vigilance.
  • The $83 billion a year subsidy to the too-big-to-fail banks. We’ve seen what that buys us!
  • And finally, tax subsidies paid by cities, counties, and states to big corporations to build factories and offices locally. This is one of my pet peeves. It is normally done in the name of creating jobs, but it does not create any jobs (it just moves them from somewhere else). In fact, by starving local governments of money, it hurts infrastructure, which destroys jobs.

Yes, America has become a welfare state. A welfare state for the top 1%, sapping their initiative and even worse, causing economic bubbles. No wonder we are worried about our economy. It is time to act.



  1. Hassan wrote:

    Is tax-break same as subsidy?

    Sunday, March 30, 2014 at 7:43 am | Permalink
  2. Iron Knee wrote:

    A tax subsidy is still a subsidy. After all, conservatives say that the government should not pick winners or losers. That’s the job of the free market.

    Sunday, March 30, 2014 at 12:36 pm | Permalink
  3. Hassan wrote:

    Iron, I am assuming from your answer that they are two different things.

    Sunday, March 30, 2014 at 1:29 pm | Permalink
  4. PATRIOTSGT wrote:

    A tax subsidy is not requiring an entity to pay a tax and is equivalent to a tax payment for book keeping purposes. So in effect a subsidy is a tax break although the different language is used and I imagine for political reasons.

    I agree 100% on eliminating all the loopholes described above. Just for the record.

    Interestingly, Reagan’s tax reform increased the long term capital gains tax to 28% (from 20%) while lowering the top tier of income tax from 50% to 28%. Most economists I believe would say this strategy if employed in our current situation would solve our deficit problem, although the Mr. Buffet’s of the world probably wouldn’t like it so much.

    I’ll leave my perceived problems with our social welfare programs for a different discussion.

    Sunday, March 30, 2014 at 1:47 pm | Permalink
  5. Iron Knee wrote:

    Hassan, no. A tax break is a subsidy. Pure and simple. As PSgt points out the only difference is political.

    And in fact, I would claim that a tax break is worse than a direct payout. It is incredibly regressive. It also distorts the economy more than a direct payout.

    Also, consider what would happen if we changed the way we financed roads and highways. Instead of paying for them with taxes and letting everyone use them for free (a direct handout), we changed all roads into toll roads and then gave a federal tax break to people who paid tolls. That would shift the burden to the poor, who would become less mobile, which would make it harder for them to get jobs. Meanwhile, we would subsidize the cost of driving for the rich.

    Sunday, March 30, 2014 at 2:29 pm | Permalink
  6. TJ wrote:

    PatriotSgt, what makes you think Warren Buffet wouldn’t like that tax reform? He has been highly outspoken about his taxes being too low and that they should be raised. It’s the Koch bothers that would have a problem with it, not Warren Buffet.

    Sunday, March 30, 2014 at 10:44 pm | Permalink
  7. ebdoug wrote:

    TJ, second you. Warren Buffet wants increase in the taxes for the rich. “Snowball” makes clear that for Buffett, it was the earning of money, not the spending. Spending means little to him except his corporate jet to get to meetings faster.

    Monday, March 31, 2014 at 6:03 am | Permalink
  8. PatriotSGT wrote:

    TJ and EBDOUG – you could quite possibly be correct on Mr Buffet (no S), but I was referring to a class of 1%ers more then an individual.
    While I think Buffet’s words for raising taxes on the wealthy are noble, I don’t know how much money he’s actually put into trying to change that. I am quite certain that people like the Koch Bros, etal have spent money to keep taxes low. How much beyond words has Mr. Buffet applied to raise taxes, or does he simply say it to look good. I’m sorry, but I’m just a little suspicious of anyone in that category of wealth and who got at least some of that wealth from a favorable tax code. To me it seems disingenuous or possibly hypocritical. To be a good businessman and get the kind of returns Hathaway has enjoyed requires in part securing favorable tax outcomes along with other sound business principles.
    I look at it this way, Obama nobly stated he would bring openess and transparancy to DC, but in reality it’s almost just the opposite. People can talk a good game (as politicians often do), but in my book actions speak alot louder then words. What are Mr. Buffets actions?

    Monday, March 31, 2014 at 7:24 am | Permalink
  9. Hassan wrote:

    Thanks for clarifications.

    Monday, March 31, 2014 at 8:28 am | Permalink
  10. TJ wrote:

    I’m not going to speak for Warren Buffet; I believe he’s already addressed all of those topics. But it’s pretty interesting that you are criticizing him for some perceived hypocrisy while at the same time seem to have no problem with the Koch Bros actions that are not hypocritical, but definitely go 100% against the proposal you brought up that I was replying to.

    I don’t believe you just accidentally picked the name Buffet in your first post because that was the first rich person’s name you could think of. There’s something else going on there – bringing up the name of the one rich person that agrees with your position (even if just in words but not in deed) instead of the many who so obviously do not.

    Monday, March 31, 2014 at 9:29 am | Permalink
  11. PatriotSGT wrote:

    Maybe I’m not making myself clear TJ and I apologize. I think big money people like the Koch brothers are absolutely wrong and the biggest part of the problem. I think Citizens United needs to overturned and we need to know where all political groups put their money and to who. I think this kind of money is the root of many of our problems. Like the politi fact on the side of the site says McConnel is the recipient of the most lobby money this year. I think lobby money is evil and destroying our goverment. Our politicians spend more time collecting donations then legislating. They don’t get that money for nothing.
    I don’t think WB is a bad man and I do think his heart is in the right place, I just don’t trust the uber wealthy.

    Monday, March 31, 2014 at 1:10 pm | Permalink