Author Topic: House Stimulus Bill Will Cost Taxpayers $787 Billion in New Welfare Spending  (Read 1566 times)

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Offline Christian Zionist

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http://www.heritage.org/Research/Economy/wm2276.cfm

Welfare Spendathon: House Stimulus Bill Will Cost Taxpayers $787 Billion in New Welfare Spending
by Robert E. Rector
WebMemo #2276

The recently passed U.S. House of Representatives stimulus bill contains $816 billion in new spending and tax cuts. Of this sum, $264 billion (32 percent) is new means-tested welfare spending. This represents about $6,700 in new welfare spending for every poor person in the U.S.

But this welfare spending is only the tip of the iceberg. The bill sets in motion another $523 billion in new welfare spending that is hidden by budgetary gimmicks. If the bill is enacted, the total 10-year extra welfare cost is likely to be $787 billion.

The claim that Congress is temporarily increasing welfare spending for Keynesian purposes (to spark the economy by boosting consumer spending) is a red herring. The real goal is to get "the camel's nose under the tent" for a massive permanent expansion of the welfare state.

In the first year after enactment of the stimulus bill, federal welfare spending will explode upward by more than 20 percent, rising from $491 billion in FY 2008 to $601 billion in FY 2009. This one-year explosion in welfare spending is, by far, the largest in U.S. history. But spending will continue to rise even further in future years. The stimulus bill is a welfare spendathon, a massive down payment on Obama's promise to "spread the wealth."

Once the hidden welfare spending in the bill is counted, the total 10-year fiscal burden (added to the national debt) will not be $816 billion, as claimed, but $1.34 trillion. This amounts to $17,400 for each household paying income tax in the U.S.

Even without the extra spending in the stimulus bill, means-tested welfare spending is already at a historic high and growing rapidly. In 2008, federal, state, and local means-tested spending hit $679 billion per year. Without any legislative expansions, given historic rates of growth in welfare programs, federal, state, and local means-tested welfare spending over the next decade will total $8.97 trillion. The House stimulus bill adds another $787 billion to this total, yielding a 10-year total of $9.8 trillion. The total 10-year cost of means-tested welfare will then amount to $127,000 for each household paying federal income tax.

The Current Welfare System

Means-tested welfare spending programs give cash, food, housing, medical care, and targeted social services to poor and low income persons. In a means-tested program, benefits are limited to persons below a specified income level. The cutoff income level varies from program to program but is typically less than 150 percent of poverty, or around $33,000 per year for a family of four.

For example, food stamps and public housing are means-tested (or limited to lower-income persons) while Social Security and postal service are not. Means-tested welfare also includes "refundable" tax credits. With a refundable credit program, the government gives cash grants to persons who owe no income tax. Like conventional means-tested programs, refundable credits give aid to poor and lower income persons. Federal welfare spending also includes targeted grants to schools with large numbers of poor students. (This is a relatively small portion of overall federal welfare spending.)

The federal government runs over 50 means-tested welfare programs, including Temporary Assistance to Needy Families; Medicaid, food stamps; the Earned Income Tax Credit (EITC); the Women, Infants, and Children food program; public housing; Section 8 housing; the Community Development Block Grant; the Social Services Block Grant; and Head Start.

New Welfare in the Stimulus Bill

The House stimulus bill overtly increases federal welfare spending by $264 billion. Most of this spending will occur in the first two years after passage. For example, if enacted, the House stimulus bill will spend an additional $88 billion in means-tested welfare aid in FY 2009, an increase of more than 20 percent above prior spending levels. Federal welfare spending (including small increases built into existing law) will rise from $491 billion in FY 2008 to $601 billion in FY 2009. This one-year spending explosion (by far the largest in U.S. history) will not be a byproduct of unemployment generated by the recession but the result of a deliberate expansion of welfare eligibility and benefits by President Obama and Congress.

Camel's Nose in the Tent

While $264 billion in new welfare spending may seem like a lot, it is only the tip of the iceberg. If the stimulus bill is enacted, the real long-term increase will be far higher. This is because the stimulus bill pretends that most of its welfare benefit increases will lapse after two years. In fact, both Congress and President Obama intend for most of these increases to become permanent.[1] The claim that Congress is temporarily increasing welfare spending for Keynesian purposes (to spark the economy by boosting consumer spending) is a red herring. The real goal is a permanent expansion of the welfare system.

The notion that Congress intends to temporarily increase Pell grants and EITC benefit levels for just two years and then allow benefits to fall back to their original status is out of touch with Washington reality. Any Congressman who, two years from now, suggests that the new welfare spending be allowed to lapse to pre-stimulus levels would be pilloried for slashing welfare.

"Spread the Wealth" Tax Credit

A major new welfare program in the stimulus bill is Obama's "Make Work Pay" refundable tax credit. This credit represents a fundamental shift in welfare policy. At a cost of around $23 billion per year, this credit will provide up to $500 in cash to low income adults who pay no income taxes. For the first time, the government will give significant cash to able-bodied adults without dependent children. Since most of these individuals have little apparent need for assistance, the new credit represents "spreading the wealth" for its own sake.

The lack of connection between this credit and "economic stimulus" is evident in the fact that the first payments under the program will not be made until April 2010.[2] This refundable credit is not included in the stimulus bill because of its "stimulus" effect. Instead, the inclusion of this new welfare program makes good on an Obama presidential campaign promise. While the stimulus bill claims this new credit will terminate after two years, President Obama and the congressional leadership clearly intend it to be a permanent part of a new, much larger welfare state.

Hidden Welfare Spending

There are another six welfare expansions in the stimulus bill that will almost certainly become permanent if the bill is enacted. These include expansions to food stamps, the EITC, the refundable child credit, Medicaid eligibility standards, Pell grants, and Title I education grants. Added to the "Make Work Pay" refundable credit, the aggregate annual cost of these welfare expansions will be nearly $60 billion per year.

The claim that these welfare expansions in the stimulus bill will lapse after two years is a political gimmick designed to hide their true cost from the taxpayer. If these welfare expansions are made permanent--as history indicates they will--the welfare cost of the stimulus will rise another $523 billion over 10 years.[3] The total 10-year cost of welfare increases in the bill will not be $264 billion but $787 billion. The overall 10-year fiscal burden of the bill (added to the national debt) will not be $814 billion but $1.34 trillion.

Welfare Spending Already at Historic High

Even without the stimulus bill, means-tested welfare spending in the U.S. is already at a historic high and growing rapidly. In 2008, federal, state, and local means-tested spending hit $679 billion per year. This vast outlay was the result of a fairly steady growth in welfare spending over the last two decades and is not a temporary surge due to the recession.[4] Without any legislative expansions, given historic rates of growth in welfare programs, federal, state, and local means-tested welfare spending over the next decade will total $8.97 trillion.[5] The House stimulus bill will add another $787 billion to this total, yielding a 10-year total of $9.8 trillion. The total 10-year cost of means-tested welfare will amount to $127,000 for each household paying federal income tax.

A Trojan Horse

The welfare provisions in the Senate stimulus bill are very similar to those in the House bill. Both bills use the idea of economic stimulus as a Trojan horse to conceal massive, permanent increases in the U.S. welfare system. The goal of the bills is "spreading the wealth," not reviving the economy.

http://www.askheritage.org/
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Offline briann

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By the way... In times like this... the best thing to do is to DECREASE the welfare state, not increase it. 

This package has destroyed Ginrich's extraordinary Welfare reform measure... which was part of the contract with America.

We are on our way to resembling France. 
 

Offline Lewinsky Stinks, Dr. Brennan Rocks

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This is what the people WANTED. This is why America voted for BHO.

Offline HiWarp

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This is what the people WANTED. This is why America voted for BHO.

That's right!  The people voted for socialism and now they're getting what they asked for.
"When the people fear their government, there is tyranny;
when the government fears the people, there is liberty.”
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Offline Zelhar

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Give him enough power and the US will resemble Zimbabwe.

Offline JewishAmericanPatriot

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5th Columnist Arlen Specter betrays Republican Party yet AGAIN:

http://www.newsmax.com/newsfront/republicans_stimulus/2009/02/08/179583.html?s=al&promo_code=79C5-1

As one blogger said, "Specter is DONE!" He is up for re-election next year here in PA, and I will vote AGAINST him and campaign against him, even though it means a Democrat wins that Senate seat.

WHYOHWHY do the embarassment liberal Republicans often turn out to be Jews???  :'(

Time to get rid of the RINO's and Fifth columnists in the Republican Party! As a lifelong Republican, I will make kicking Specter out a top priority next year 9and one good thing is, I have two kids who will turn 18 just in time for that election, too!)

JOIN THE ANTI-OBAMA RESISTANCE!

America's Last Stand: http://americaslaststand.angelfire.com

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Offline briann

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5th Columnist Arlen Specter betrays Republican Party yet AGAIN:

http://www.newsmax.com/newsfront/republicans_stimulus/2009/02/08/179583.html?s=al&promo_code=79C5-1

As one blogger said, "Specter is DONE!" He is up for re-election next year here in PA, and I will vote AGAINST him and campaign against him, even though it means a Democrat wins that Senate seat.

WHYOHWHY do the embarassment liberal Republicans often turn out to be Jews???  :'(

Time to get rid of the RINO's and Fifth columnists in the Republican Party! As a lifelong Republican, I will make kicking Specter out a top priority next year 9and one good thing is, I have two kids who will turn 18 just in time for that election, too!)




Spector is a POS (pardon my language)

He NEVER was anything other than a democrat RINO. 


Offline Zelhar

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Do you know what is the 'normal' size of the American budget ? I assume it is about 1 trillion ?

I see a big different between the new stimulus plan to the one that the Bush administration had. I think under the old bailout plans the government can expect a return that would cover a great portion of its cash infusion. For example AIG is worth alot of money (unfortunately it seems to me that the bureaucrats are trying to sell it for scrap), also the bad assets are after all backed by real houses that worse something.

Offline briann

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Do you know what is the 'normal' size of the American budget ? I assume it is about 1 trillion ?

I see a big different between the new stimulus plan to the one that the Bush administration had. I think under the old bailout plans the government can expect a return that would cover a great portion of its cash infusion. For example AIG is worth alot of money (unfortunately it seems to me that the bureaucrats are trying to sell it for scrap), also the bad assets are after all backed by real houses that worse something.

They are completely different.  The bank bailout was purportedly, to stop the banks from failing, and the stimulus plan is to fund Left-leaning pork, earmarks, and anything and everything that is on a democrats wish-list.

As far as the bad assets purchased from the bailout..... they ARE backed by real houses, but those houses have dropped DRAMATICALLY since their purchase.  A recent audit shows that of the 300 billion that was purchased are in actuality worth about 200 billion today.  The Banks got a complete fool in the government as an investor.

Although BOTH the bailout and the stimulus plan are horribly mismanaged... the bailout DOES have the potential to help... but the stimulus plan will ONLY hurt.  Right now... America has limited resources and investments for the private sector... and the last this you want to do is.... put these investments in the hands of the government... since the gov is clumsy, stupid, and clueless.
This welfare will KEEP people from getting jobs... and those in the middle class who do find jobs... will only find useless government pork jobs that accomplish nothing... such as 'community organizing'

This is WORSE than the new deal... since at least the new deal was primarily used for infrastructure... the stimulus plan is just PURE partisan garbage that promotes bad behavior, builds socialism, and crowds out what is left of the private sector.