Welfare Reform? Get Real!

by Steven R. Van Hook 
April 1, 1995
Santa Barbara News-Press

The collective cry to cut welfare subsidies for the poor is banging loudly on our eardrums. Taxpayers are concerned, and rightly so, about the money we have taken from us each April 15 and handed over to someone else.

There are big political points to be gained by righteously and raucously calling for cuts in government spending and slashing taxes. Of course, poor people are the most obvious recipients of the government dole -- we stand behind them in grocery store lines while they count out their food stamps.

But the poor are not the only ones with hands out for handouts; there are many other government subsidies that could and should be cut. The military, well-off seniors, agriculture, the medical profession, industry -- many benefit from government largesse.

Big business is a big beneficiary of government pay-outs. The government could save $265 billion over five years by eliminating or scaling back 120 spending programs and tax breaks that benefit particular industries, according to one moderate think tank.

Even the conservative Cato Institute says we would be hard pressed to find a single Fortune 500 company that doesn't receive some sort of federal aid. Will we see such political posturing calling for cuts to big business? Unlikely.

Problem with cutting subsidies is how loud an ox bellows when he's been gored. Interest groups and industries benefiting from government handouts organize powerful lobbies to protect their booty. The poor typically haven't a very loud voice for protest.

Granted we would all -- especially the poor -- benefit from better alternatives to welfare, but let's look a moment at economic realities.

The schism between the rich and the poor in America is growing wider and wider. In spite of an improving economy, the Census Bureau reports the number of Americans living under the poverty line in 1994 increased to 15 percent of the nation's population (some 39 million American men, women and children).

In an ideal society, everyone would be given the opportunity and the responsibility to work. But our post-industrial society simply cannot afford all the labor available. Indeed, a built-in unemployment rate is critical to a sound economy.

Without a "natural rate" of Americans unemployed, the economy will "overheat" with prices and wages rising, and a generalized inflation set into motion. Various experts estimate this natural rate somewhere between 6 and 7 percent, which, not surprisingly, is about where the current national unemployment rate resides.

Where will the welfare rejects go, if our economy is not designed to employ them? Will we tacitly allow them to fester in frustration? We simply cannot cut off assistance without providing opportunities, or we'll see explosive results.

As demonstrated in Los Angeles after the Rodney King verdict, these frustrations can violently unleash themselves, and we quickly realize the powerless are not so powerless after all.

We can sidestep the needs of those unable to find work; we can contemplate the anecdotal evidence of those unwilling to work. But we dare not fool ourselves into thinking there is not a price to be paid for ignoring their plight.

Prisons are expensive, police are expensive, unleashed frustration is expensive. One way or another, we as a society will pay for meeting the needs of our neighbors.

We need to find creative alternatives based on economic and social realities. We have to look beyond political expediency and demagoguery. We have to take count of the true costs and benefits of our reforms. We need to be wary of the temptation to find easy scapegoats. We have to have heart.

And we can't be blind to who may be powerless, and who, ultimately, is not.