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politics

Are you getting a handout?

[Today’s run: nothing yet]

Last night at bedtime we had on the radio to NPR.  I listened to about 10 minutes of Fresh Air, the show from WHYY hosted by Terry Gross.  She was talking to Ryan Lizza from the New Yorker magazine  about Rep Paul Ryan.

It’s not a surprise that Gross and Lizza didn’t seem very sympathetic to Ryan.

But one particular thing caught my ear.

When Ryan was a boy his father died and Ryan received Social Security survivors benefits.  Gross, having pointed out that Ryan now wants to cut back on government handouts says this,

“At the same time, he got Social Security when his father died.   Did he say anything about whether that help from the government helped him through that life changing experience?”  (around 14 minutes into the interview)

Did you catch that?  Social Security survivors benefits is “help from the government”.

When Social Security was put in place they had a hard time getting people to sign up for it.  People didn’t want to be seen taking a hand-out.  So they “sold” it to the American public as an insurance program.  It is not a handout when the insurance company pays to fix your roof.  That is a calculated risk.. you paid for it.

In a certain way it is right that someone on food-stamps or other assistance is not able to buy beer and cigarettes with the money.  By taking that assistance a person gives up certain liberty that they would have enjoyed with their own money.

So we have the convergence of two ideas:  1) taking money from the government erodes your liberty.  and 2) because of poor management, a program that was specifically designed to be not a handout becomes seen as a handout.

I don’t know any clearer way of showing the insidious nature of government programs.  You might think you are getting one deal, but the deal changes and there isn’t a thing you can do about it.

The same thing will be happening to a lot of state/local government employees when their pensions don’t come through.  They had a deal, the deal was mismanaged, and they will be painted as freeloaders.

 

4 replies on “Are you getting a handout?”

One need not go so far back as the implementation of Social Security.

Medicare part D was enacted in the first term of Bush and went into effect in the second term. This was at a time of large government deficits and 2 wars yet this expansion was not funded – the figures vary but are generally estimated to be in several trillions of dollars.

Politics is interesting and entertaning. I was not sure so had to research it: From what I am able to find, Ryan voted _for_ Medicare Part D. To me, his efforts to promulgate fiscal responsibility in government appear disingenuous.

I am fascinated that he is from Janesville, WI, which is a big GM (and union) town (they once built Suburbans there).

I guess my focus was not so much on the spending but on the psychological trap involved.

I see it unfolding for public employee pensions also (as I mentioned). People who worked, possibly at a lower wage, with the understanding that they would have an increased compensation via a hefty pension. But many state and local governments don’t have the fortitude to cut spending or raise taxes to actually pay for what they promised. The guys who did the promising have no skin in the game, probably long gone.

So the pensioners end up getting what looks like a public handout straight from tax income to their pocket.

All to say that what looks like a rock solid deal morphs into something else altogether.

Ryan isn’t really my point. Neither is Terry Gross. Although she displayed the attitude I am talking about, so do many others on both sides of the political aisle.
Part 1 is handing out the money. Part 2 is sending in the accountants to root out the corruption and inappropriate use of the money. Part 3 is pointing out how good you have it, you only get that money because your Uncle Sam loves you so much.

Am I off base in thinking the same pattern happened to the banks with TARP funds?

It happens with farm subsidies, welfare, Social Security, Medicare,… maybe not so much with direct supply contracts like defense contractors do.

And the bureaucracy measures success by the number of people they can “serve” with their program.

Oh well, I’m on a rant I guess.

Good to hear from you!

Pooper accounting rules would attend to that whereby the pension obligation is a liability that requires full funding. And this has been hte case for some municiplaities, but their models were fatally flawed in that they used a high rate of return on hte pension fund.

Regardless, voters must keep an eye on the books – not just take politicians at their word. This is boring and does not lend itself to yard signs and 30 second TV spots.

Bank TARP funds is a unique thing. Larger banks paid it back – _with_ interest. Without TARP we would may well have seen a run on banks and default of FDIC, which would have been a true catastrophe. In late 2008 we touched the precipice. I fully expected the wheels to fall off the economy in a self-perpetuating (and accelerating) downward spiral.

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