Libertarians and The Welfare State

Many people reading this are currently under the assumption that public welfare is a necessity which must be provided by the government to people who are, for one reason or another, lacking something.  This “lacking” could be due to any number of external factors, but it’s usually chalked up to people being victimized by economic decline, evil business practices, or more generally their socio-economic status.  Regardless of the indicated root cause, poverty, old age, and disability are certainly prime examples of what many of us think requires government welfare, and this assumption probably continues to reason that not only is government welfare a necessary thing, but a good thing.  How else does money, housing, medical care, prescription drugs, retirement stipends, food stamps, job retraining programs, assorted kinds of compensation, education, and all the rest reach those who lack, if not via government’s guiding hand?

But let’s be crazy and controversial, shall we?  Let’s assume that there might be more to the story than “and they all lived happily ever after, because they advocated for more funding in the subsequent fiscal year.”  Let’s stop for a moment, and ask a few questions about welfare, like:

So how much do these government welfare programs actually cost, anyway?

That’s a good place to start, right?  Savvy consumers that we are, we probably want to know what the price tag is before we buy something, no matter how good it sounds.  I mean, a Rolls-Royce looks great until you find out it’s like half a million bucks plus tax, so, y’know, let’s keep our credit cards in the wallet for a minute before we get too excited about all the features.

A convenient starting point for adding up the so-far price of welfare is back in 1965 with President Johnson’s Great Society programs.  This “Great Society” was to be the series of government welfare programs that were going to end poverty once and for all.  They even called it the War on Poverty, which was a really severe thing to do before it became an increasingly offhand political expression, such as Nixon’s War on Drugs, George W. Bush’s War on Terror, and Michelle Obama’s War on Childhood Obesity (send in the tanks; they’ve got Twinkies!).  In other words, they weren’t screwing around – I repeat, they were going for THE END OF POVERTY.

So, with the Great Society came state and federal funding for medicare, medicaid, food stamps, a wide variety of education initiatives, job training, urban transportation, and so on.  Various civil rights initiatives – the Civil Rights Act of 1964 and 1968, the Voting Rights Act of 1965, and so on – were considered a part of the overall program as well, though we’ll just be focusing on the War on Poverty and its creation of many modern welfare programs that are still in place today.

And now, the price of the War on Poverty:

$15,900,000,000,000 between 1965 and 2008.  That just under sixteen trillion dollars, give or take; sixteen trillion dollars to “end poverty.”

Well, that sounds like a lot, but think of all the good it’s done.

It’s actually very important to focus on just what that number means before we progress.  If you added up the cost of every war the United States has been in since there was a United States, you’d need to multiply the total two-and-a-half times over to reach the price of the War on Poverty.  That is a colossal pile of money, and it’s only increasing.  In fact, another $10.3 trillion is going to be spent on welfare over the next ten years, not including our new nationalized health care system.

So what?  We’re the richest country in the world.

I’d love to meet whoever started that rumor.  Actually, as a country, we don’t have enough money to buy the rope we’re hanging ourselves with.  We’re flat broke, but that hasn’t stopped both Republican and Democrat administrations from spending as if times were never better.  The fact is  we’re rapidly approaching $14 trillion in debt, which is a problem not only because it’s past a dangerous economic tipping point, but also since we’re planning on increasing that precarious number by another 70% just to fund massive welfare programs that we literally have no way of paying for.

Wait… what?

This situation really encapsulates everything libertarians are calling for; we demand less government because, among other reasons, we’re at the point of impending economic collapse in the near future.  If you fell asleep in history, let me be succinct: continuing this insane spending addiction means The Great Depression Part II, and it doesn’t matter what we spend the money on, either.

Now hang on just a minute.  Why can’t we just buckle down and pay it off?  What’s the big problem here?

I’d like to direct your attention to a previous link I posted, which was to the U.S. Debt Clock.  Its numbers come from from the likes of the U.S. Treasury Department, the Federal Reserve, the U.S. Census, the Congressional Budget Office, and so forth.  Mouse over any number you like to see the sourcing.  The debt clock, I should mention, is a concept that began during the Reagan years as an actual billboard in Times Square, but unfortunately our national debt is so high that the original board can no longer display it.  This website is a new version of the same thing.

So, while you might say something like “let’s pay it off,” you need to realize that, as a taxpayer, your share of the current ever-rising federal debt burden is actually over $124,000.  Yes, if we split all the national debt up, that’s your piece of the pie.  If you spread the debt out further to be paid equally by every citizen – which would also include every man, woman, and child not paying taxes  – the new cost is $44,000 per individual, and climbing.  This debt share does not include local and state government debt, but I’ll get to that momentarily.

Furthermore, each citizen could have an additional $52,000 share of the cumulative privately held debt in our country – the significance of that number will be explained in a minute.  Unfortunately, the average family only has about $9,600 in the bank.

What does that mean?

Bear with me here.

It means that every citizen – not just taxpayers – would have to pay a total of roughly $176,000 to settle up their even share of all U.S. debt held today, and that includes all personal, business, financial institution, state government, local government, and federal government debt.

Here’s an important point to differentiate these numbers I’ve been mentioning:  public debt – which is to say government debt – is quite literally everyone’s problem; however, the possibility of additional debt at your own state and local government might make your debt share even worse for you, or possibly worse for everyone if that additional debt is spread around to all Americans as well.  The bottom line is that we are all responsible for federal government spending, and some of us if not all of us are going to be responsible for state and local government spending.  On the other hand, private debt – like credit cards, mortgages, business debt, and so on – is an individual problem until government assumes that debt with bailouts, as is the practice today.  In other words, the “best” case scenario is that literally everyone owes $44,000 (alternatively, all taxpayers owe $124,000) to get just the federal government out of debt, and then everyone would be expected to take care of their own personal private debt on the side; the worst case is $176,000 from every citizen if the government continues the bailout insanity, which includes a federal bailout of state and local debt.

Whoa, wait.  What if we, like, get the government to cancel the credit card debt?  Wouldn’t legislatively erasing some of that private debt be a good start to helping us pay off the national debt?

That would be a bailout.  I’ll show you why that doesn’t work.  Let’s say the government signs a bill to bail you out and pay for some or all of your credit card debt.  Yay.  Of course that bill wouldn’t be targeted literally just at you; lots of people would be bailed out.  Now all you have to do is pay for that bailout through increased taxes (because government money, even bailout money, is literally your money), plus now you get to pay for the new additional costs of creating and administering the program that they’d use for this theoretical bailout.

So I’d basically get lots of free money with this bailout?

No.  Initial debt + personal government bailout – new government bailout program tax share – bureaucratic fees – administration costs – corruption = quite possibly even more debt than you started with.  A bailout wouldn’t be dodging a bullet so much as jumping in front of one and insulting its mother; the government’s debt is your problem, your personal debt is your problem, and when government assumes your debt and/or anyone else’s debt, it’s your problem.  

So you’re saying we can’t afford welfare?

I’m saying that this means that we can’t afford government programs beyond our income, and that certainly means we cannot afford a continuation of the Great Society.  Perhaps the greatest irony of the welfare system created by the Great Society is that it not only failed to eradicate poverty, but that its skyrocketing cost has an excellent chance of impoverishing this entire country.

I want to emphasize that the debt problem as a whole isn’t caused exclusively by welfare spending, even though that’s specifically what I’m hi-lighting today.  It’s easy to point at the largest government expenditures, like welfare, and show how and why they in particular are disproportionately part of a larger problem.  There is, of course, more to the failure of welfare than dollars and cents, but I firmly believe that the failure starts there.