Tuesday, March 2, 2021

Tax dollars to mismanaged cities and states is like giving crack to a crack addict.

by Rod Williams - There is a lot to not like in the Biden $1.9 trillion stimulus plan. The plan calls for sending another $1,400 per person to eligible recipients. This would be in addition to the $600 payments that was approved by Congress in December and would make for a total of $2,000. The new payments would go to adult dependents over the age of 17. So a dad, mom and a couple dependents over the age of 17 could mean one household gets $8,000. That is money the government borrows.

Also, now, illegal aliens could also get the money if the illegal alien is married to a citizen. In my view we should not be giving any of this funding to illegal aliens.

One of the worst things that luckily will not be in the bill is increasing the federal minimum wage to $15 an hour. The Senate parliamentarian ruled congress could not do that through reconciliation.  That makes what is still a terrible bill only a little less terrible. 

There are various things in the bill to increase government dependency, such as increasing by 15% the food stamp allowance, increasing the federal addition to a state's unemployment benefit from the current $300 a week to $400 a week, $25 billion in new rental assistance for low- and moderate-income households on top of the $25 billion approved in December. It also includes a lot of money to help people pay utility bills and extends the moratorium on eviction. These generous benefits may slow the recovery. If people are better off not working than working, they may not be in a hurry to return to work. 

There is something for almost everybody in the bill. There is money for schools, for small business, more subsidy for health insurance, Indian tribes, NASA, the military, money for transit systems, $75 million for the National Endowment for the Humanities and the list goes on and on.  Congress just kept hanging shiny ornaments on this Christmas tree.  A lot of the money will not help with economic recovery because much of it will not have to be spend until years in the future.  For a detailed list of what is in the bill, follow this link.

In my view, one of the worst things in the bill is $350 billion for states and cities to meet budgetary shortfalls. "To meet budgetary shortfalls," means a city or state has to need the money to get the money.  Essentially, this is a bailout for failing red states and big cities dominated for years and years by Democrats.  Republican ran cities and states are not having the same budgetary shortfalls as Democrat cities and states.  Many of the cities in dire financial straights are in that condition as a result of many years of spending more money than they were taking in. One of the worst failures is to adequately account for pension fund deficiencies and unfunded retiree health care obligations. Most of these cities and states were deep in debt before the coronavirus ever hit.  This bill will in essence make well managed city and states bail out mismanaged cities and states. 

In an article from Taxpayer Education Foundation titled Let Illinois State Government Fail, the authors examine this issue using Chicago and Illinois as the example. According the Truth In Accounting’s (TIA) analysis, Illinois ranks 49th in the country with a grade of “F” for health in finances, while Tennessee is the fifth highest ranked state with a grade of "A."  Illinois did not get their "F" overnight and neither did Tennessee earn its "A" overnight. 

In economics, there is the concept of "moral hazard." That is the likelihood of investors to take greater risks because of the knowledge that losses incurred as a result of those risks will be covered by another. Why act responsibly if I know the government will bail me out if I act irresponsibly?

In the article referenced above a Chicagoan is quoted as saying, "Like any kind of addict, the worst thing you can do is continue to feed the addiction. If the federal government bails out city and state governments, those governments will get away with their outright abuse of the taxpayers they purportedly represent.”

You don't help a crack addict by giving them more crack. 

Stumble Upon Toolbar
My Zimbio
Top Stories

No comments:

Post a Comment