Any Day Now, Welfare Will Bring Prosperity

Philadelphia mayor Michael Nutter appeared on Fox & Friends this morning to talk about the Congressional debate over extending the Bush tax rates.  I caught the very end of his appearance and couldn’t find a transcript online yet, but he concluded by saying something like, “I’m more concerned about extending unemployment benefits and tax credits for the poor, so they can stimulate the economy and create jobs.”

Leaving aside the baffling idea that these things would “create jobs,” I have another question: Why haven’t they done so already?

Congress is said to be close to a deal with President Obama to exchange extension of all Bush tax rates for another extension of unemployment benefits, presumably without any uncomfortable mention of the Democrats’ “pay-go” deficit reduction promise to fund all new government spending with cuts in other programs.  Unemployment benefits currently run for 99 weeks.  The Labor Department estimates over 5 million people are currently receiving extended benefits, which equals three or four percent of the total work force.  Throw in 2.15 million people directly employed by the federal government, and you’ve got better than five percent of the working population receiving direct payments from Uncle Sam, instead of private sector paychecks. 

Meanwhile, the poor have been receiving “tax credits” – i.e. welfare payments disguised as “tax refunds” to people who don’t pay taxes – for generations.  Billions have been pumped through these programs since the recession began.  So, where is the stimulus?  Where are the jobs?

How much more of the adult population needs to be subsidized by Washington before the good times roll?  Are we supposed to believe the economy will kick into overdrive when, say, 10% of the country is either working for the government or receiving unemployment?  If unemployment checks are a fabulous source of economic stimulus, shouldn’t patriotic Americans begin quitting their jobs in droves, so we can really crank up that stimulus engine?

Wealth is generated when people freely exchange goods and services, which requires production and labor.  Economic activity isn’t just a matter of spending money.  If it were, then the best possible stimulus program would be for the government to print up another trillion dollars and give out piles of cash to everyone.  Then we could all spend our “Obama money,” and the American economy would shake the world with its deafening roar.

Welfare programs divert money from the wealth-producing sector of society into less efficient and productive segments.  This is an unlovely truth that socialists never want to confront, since it sounds insulting to their most valued constituents, but it doesn’t grow any prettier when we ignore it, and ignorance is expensive.  This is not a value judgment on the poor as human beings – plenty of them have ambition and drive that will help them move into the middle class, and beyond.  They need opportunities, not subsidies.  It’s also not an argument for completely eliminating all assistance to the destitute.  That’s not what we’re discussing, and it never has been.  We’re talking about redistribution on a massive scale, with much of the money dissipating into the inefficiency and corruption of our central government.

Unemployed people, by definition, spend most of their time doing one of two things: looking for a job, or sitting around.  Neither activity produces valuable goods or services.  No one should be surprised that taking a dollar from job creators, skimming off eighty cents for Uncle Sam, and throwing a couple of dimes at the unemployed fails to result in meaningful job creation.  The urge to flatter the unemployed by believing otherwise is a crippling delusion that only produces longer bread lines.