President Trump’s Budget, “No Free Lunch”
When OMB director Mick Mulvaney unveiled President Trump’s budget, he used important language that we have not heard in many years.
To paraphrase Mr. Mulvaney, the measure of budget success for The Trump Administration is not how much federal assistance is given out, but how many people leave government dependency and join the private labor force as full-fledged workers.
The last time we heard a talk like this was over 20 years ago when then US President Bill Clinton (D) teamed up with Speaker Newt Gingrich(R-GA) to pass welfare reform arguing that tighter eligibility, time limits, work-search mandates, and better training programs would move people from welfare to workfare.
Critics said No, and that tougher welfare requirements will throw millions onto the streets with no federal assistance. Turns out they were wrong. Millions moved into the labor force to work productively, grow the economy, and provide themselves with new self-esteem and happiness.
This point on happiness is terrific, as a number of quantitative surveys that clearly show how people who work for a living are happier than those who depend on government assistance.
So, Mr. Mulvaney is now talking workfare, and not welfare. And the left-wing is already screaming help!
What we know for sure is that nearly 8 years after the recession government benefits for welfare, food stamps, 44-M people receive food-stamp benefits today, compared with 14-M in December 2007, Medicaid, and Social Security Disability Insurance are exploding.
So by tightening eligibility and putting back time limits and various work requirements, millions of Americans will return to the labor force, just as they did in the mid-1990’s.
The expansion of food stamps, welfare, health-insurance subsidies, unemployment assistance, and disability assistance have led to unintended consequences and perverse after-tax incentives, such that it pays more to stay on assistance then to go to work.
At the working-poor margin, taking a job may rob one of Barack Obamacare subsidies. So better one is better of not working, that’s bunk.
Helping people is valuable but not free. The more we help low-income people, the more low-income people you have. The more you help unemployed people, the more unemployed people we will have
The American Progressive Left is alarmed because President Trump is “slashing” the budget. That his budget is taking food out of the mouths of children, killing people for lack of health insurance, and pushing the elderly in wheelchairs over cliffs.
That is not the case/ In most cases, the new budget just slows the rate of spending growth.
The Trump Budget proposes to raise government spending from $4-T today to $5.7-T in Y 2027. That is not a cut, as the new budget proposes to increase federal Medicaid spending from $378-B today to $524-B in Y 2027. That is not a cut it is an increase.
Adding up each and every year between now and Y 2027, the federal government will spend about $55-T. The Trump Budget would curb that by about 7%, or $4-T’ish.
This is a growth budget, because it will re-institute reforms put in place by Bill Clinton that will restore incentives to work and remove incentives to not work.
When people re-enter the labor force, it promotes growth.
Workfare is better than Welfare.
President Trump also aims for a big-bang growth booster with a cut in business tax rates for large and small companies along with immediate expensing and repatriation.
Being President is a really hard job. And even if he drains The Swamp by just a bit, he shakes up the elite establishment.
Have a terrific week.