The Welfare State Grand Slam

by | Apr 4, 2002

The welfare state enjoyed a stellar week. First, the Victims Compensation Fund, set up by Congress, announced compensation averaging $1.85 million for the families of the Sept. 11 terrorist attacks. While deducting life insurance and some pension benefits, the payout formula does not require any offset for charitable grants. In exchange, recipients agree not to […]

The welfare state enjoyed a stellar week.

First, the Victims Compensation Fund, set up by Congress, announced compensation averaging $1.85 million for the families of the Sept. 11 terrorist attacks. While deducting life insurance and some pension benefits, the payout formula does not require any offset for charitable grants. In exchange, recipients agree not to sue the government, the airlines, and other potential defendants.

“Government failed,” goes the justification. Yes, government did, indeed, fail, on Sept. 11. The government also failed to stop Pearl Harbor, a sneak attack that cost 2,400 lives and 1,200 injuries.

On the domestic crime front, the government often fails. In 1992, the government failed to stop the Los Angeles riots, which resulted in the devastation of hundreds of businesses, many of which remain unopened. The government failed to stop Charlie Manson from orchestrating a murder spree. The government failed to stop neighborhood thugs from stealing your stereo. Therefore, what? Do you get to pass the hat so your neighbors can chip in and buy you a new Sony?

The War Against Terrorism, despite the word “war,” remains undeclared, raising serious questions about the constitutional authority for Congress’s largesse. And, as a matter of practice, where does this end? How does the government sort out the deserving from the undeserving? Already the survivors of the bombing of the Oklahoma City federal office building feel slighted and now ask, “What about us?”

Second, Congress passed and the president signed a new “stimulus package.” Among other things, the bill extends unemployment benefits by 13 weeks for post-Sept. 11-related unemployed workers. Never mind that Federal Reserve Chairman Alan Greenspan recently pronounced the recession over, with many economic indicators turning up. And never mind a recent article co-authored by Kevin Hassett and John Lott of the American Enterprise Institute: “Dozens of economic research papers indicate that when you extend or increase unemployment benefits, you lengthen unemployment, because recipients wait until their benefits have been exhausted to take their next job. Larry Katz, the chief economist at the Labor Department during the Clinton administration, co-authored a study that found that workers are almost three times more successful in finding jobs when benefits are just about to run out.”

Third, the president reiterated his promise for $20 billion in aid to New York City, of which the city has received $10.7 billion so far. “When I say $20 billion, I mean $20 billion,” said the president. “I am the kind of fellow who does what I say I am going to do.” Actually, when the taxpayers say $20 billion, they mean $20 billion. “I am glad,” said Sen. Hillary Clinton, D-N.Y., “the president reaffirmed his commitment to rebuilding New York.” Actually, taxpayers reaffirmed their commitment to rebuilding New York. (Wasn’t it only last month when Office of Management and Budget Director Mitchell Daniels pronounced New York’s request for additional assistance a “little money-grubbing game”?)

And finally, steel tariffs. Engaging in corporate welfare to protect the domestic steel industry, the president imposed tariffs on certain imported steel products. To allow the steel industry to “get back on its feet,” U.S. trade representative Robert Zoellick announced tariffs of up to 30 percent to protect consumers against the “dumping” of “cheap, foreign steel.” (Isn’t this the same Mr. Zoellick who, only weeks ago, dismissed tariffs as “nothing more than taxes that hurt low- and moderate-income people”?)

Former Clinton economist Robert Crandall, now senior fellow in the economic studies program at the liberal Brookings Institution in Washington, D.C., called the tariffs “a damaging economic blow that could delay the U.S. economy’s recovery by increasing the cost of steel-made products like automobiles, cutting the demand for them and setting a dangerous precedent that could cause tens of thousands of layoffs in steel-using firms.”

How much will steel tariffs cost consumers? A study by the Consuming Industries Trade Action Coalition and the Heritage Foundation estimates that, for a family of four, these tariffs will increase prices by an annual average of $283. “It’s going to raise the price on consumer products, automobiles, refrigerators, machine tools,” said the study’s co-author. “Not only that, it’s going to harm more people than it’s going to help.” (Didn’t the president, as part of his tax-cut plan, only months ago send taxpayers a check for $300?)

Post-Sept. 11, Americans opened their hearts and wallets. Evidence suggests government intervention decreases people’s willingness to give, as taxpayers expect the government to take care of things. But James Madison, the Father of the Constitution, said, “I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents.”

Let’s make war on terrorism, not on the Constitution.

This editorial is made available through Creator's Syndicate. Best-selling author, radio and TV talk show host, Larry Elder has a take-no-prisoners style, using such old-fashioned things as evidence and logic. His books include: The 10 Things You Can’t Say in America, Showdown: Confronting Bias, Lies and the Special Interests That Divide America, and What’s Race Got to Do with It? Why it’s Time to Stop the Stupidest Argument in America,.

The views expressed above represent those of the author and do not necessarily represent the views of the editors and publishers of Capitalism Magazine. Capitalism Magazine sometimes publishes articles we disagree with because we think the article provides information, or a contrasting point of view, that may be of value to our readers.

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