Tag Archives: Subsidies

Commentary

How the federal government and stimulus spending discourage work

2 Comments

A post by Hans Bader at the Competitive Enterprise Institute.

Excerpt:

Thanks to food stamps, Medicaid, and housing subsidies, and other welfare benefits, many “poor” people have far more disposable income than self-supporting households earning $40,000 to $60,000 a year.  Veronique de Rugy points to a finding that “a one-parent family of three making $14,500 a year (minimum wage) has more disposable income than a family making $60,000 a year” — even excluding benefits from Supplemental Security Income.  “America is now a country which punishes those middle-class people who not only try to work hard, but avoid scamming the system.”

[…]The analysis de Rugy cites actually understates the disincentives to work, because it ignored the fact that many households that are “poor” in terms of taxable income are not poor at all once you factor in tax-free income from non-governmental sources.  For example, child support is tax-free to the recipient family, no matter how huge the payments they receive (for example, a billionaire may pay several million dollars a year in child support to each of his ex-girlfriends with kids, leaving them in tax-free luxury, and under New York’s child support guidelines, everyone is supposed to pay at least 17 percent of their gross income in child support for just one child, regardless of how high that income is.  In Massachusetts, middle-income households pay 25 percent of gross income for just one kid — which is around a third of their after-tax income — under that state’s child support guidelines).

He also talks about how the federal government encourages child support agencies to yank more children away from their parents – they get more funding that way!

Commentary

Is a college degree worth the money you pay for it?

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Do college degrees really get you a better job?

It depends on what you study. If you study really hard stuff that is in demand, then it will help. But if you study easy stuff and don’t come out in the top 1% of those easy programs, then going to college is a huge waste of money. It’s also a huge “opportunity cost”, because you could have been working instead of going to college – which would get you not only a salary but a lot of experience, too. Instead of having $50,000 in debt, you could have $50,000 in savings, over four years.

Take a look at this article from the Chronicle of Higher Education. (H/T Hans Bader at the Competitive Enterprise Institute)

Excerpt:

“60 percent of the increase in the number of college graduates from 1992 to 2008 worked in jobs that the (Bureau of Labor Statistics) considers relatively low skilled — occupations where many participants have only high school diplomas and often even less.” This means that the great push to increase the number of college grads has apparently come to very little — only a minority of the additional grads are in occupations regarded as requiring a bachelor’s degree.  Of the nearly 50 million U.S. colleges graduates, 17.4 million are holding jobs for which college training is regarded as unnecessary. The number of waiters and waitresses with college degrees more than doubled from in the years 1992-2008, from 119,000 to 338,000, and cashiers with college degrees rose from 132,000 to 365,000.

We should not be taking money from working individuals and businesses to provide grants for immature students to study basket weaving. Providing money for so many people to study things that are not practical and that they are not even that good at is a waste of money. We are not getting a good return for this money if graduates just go on to do jobs that they would have done anyway. The real questions that should be asked by students is “is this worth the money? Will this help me to find a job?” And the real question that taxpayers should be asking is “do we need to stop wasting money on grants for useless degrees and leave the money in the private sector to create more good jobs instead?”.

It’s not good to be sending young people to universities that are run by leftists in any case, because it insulates them from real life and puts them at the mercy of perpetual adolescents (professors). For many students, college is wasted on partying and “studying” impractical and counter-factual areas like feminist studies, peace studies, black studies, Marxist studies, queer studies, etc. We do not need to be sending so much money into the pockets of unqualified leftists like Bill Ayers and Bernadine Dohrn, who bash capitalism while living off of the wealth produced by it.

Hans writes:

In “The Great College Degree Scam,” expert Richard Vedder points out that “[s]ome in higher education KNOW about all of this and are keeping quiet about it because of their own self-interest. We are deceiving our young population to mindlessly pursue college degrees” they don’t need.

Hans also talked about the problem of rising college debt here.

News

New study finds that Obamacare subsidies cost 578% more than CBO estimates

1 Comment

Verum Serum writes about a new Lewin Group study on the cost of Obamacare health care subsidies. (H/T Health Care BS via ECM)

Excerpt:

A new study by the Lewin Group estimates that 28.6 million Americans will be eligible for a federal subsidy to purchase health insurance beginning in 2014 at a projected cost to tax payers in excess of $110 billion. This estimate is dramatically higher (578%) than the cost of these subsidies forecast by the Congressional Budget Office (CBO) prior to the bill’s enactment into law. If the new estimate is correct, it would mean that instead of lowering the deficit by $143 billion over ten years—a claim widely touted by proponents of the law— the legislation would begin adding to the deficit as early as 2015, only one year after major provisions of the law go into effect.

A central component of the Patient Protection and Affordability Act is the establishment of health insurance exchanges starting in 2014, enabling individuals and families with incomes up to 400% of the federal poverty level who do not have insurance to purchase federally subsidized coverage. The CBO’s final analysis of the bill enacted into law projected that only 7 million Americans would begin receiving these subsidies in 2014 at a total budgetary cost of $19 billion. This figure is $91 billion lower than the amount estimated by the Lewin Group.

The Lewin Group study was commissioned by Families USA, a healthcare reform advocacy group based out of Washington D.C. which is closely allied with the White House and leading Democrats in Congress. Then Senator Obama was a keynote speaker at their annual Health Action conference in 2005 and 2007, and House Speaker Nancy Pelosi opened the 2008 event. Other leading Democrats who have participated at Families USA events in recent years include Hillary Clinton, John Kerry, and Ted Kennedy.

[…]The CBO’s projection that the healthcare reform bill would reduce the deficit by an estimated $143 billion over 10 years was a critical factor in the enactment of the bill. Democrats lost their super-majority in the Senate in January 2010 when Scott Brown was elected in Massachusetts, and ultimately passed the bill in March only through the use of procedural tactics, and without a single Republican vote in the House or Senate.

The claim that the bill will reduce the deficit continues to be a leading selling point for proponents of reform. Just last month Families USA repeated this claim in a press release criticizing opponents of the legislation. But if the latest Lewin Group estimate is correct the initial 10-year cost of the bill will be significantly higher than what was forecast by the CBO, and would begin adding to the federal deficit as early as 2015.

So, this is a study commissioned by a left-wing group that did not find what they set out to find. I’m sure you will be hearing more about this study this week, but this finding will probably not be featured.