Thursday, July 28, 2011

Gov't Welfare Widens The Wealth Gap

Anyone that thinks these programs are to lift the recipients out of poverty are just fooling themselves. For some Democrats it may be a "feel good" exercise, but these programs are all about preserving voting blocks and gaining power and control over a huge segment of the populace. A poll today shows that 46% of Americans think that most members of Congress are corrupt. Thinking they vote for these programs for political reasons is not much of a stretch.

Starting in 1964, when President Johnson launched the War on Poverty, a well-intentioned crusade to end poverty, the U.S. has spent an estimated $16 trillion trying to help the less well-off.

LBJ and other well-meaning Democratic politicians at the time also hoped that the burgeoning welfare state would make people more self-sufficient, a noble goal. It didn't work.

Today, some 44 million Americans are on food stamps. In 2007, it was 26 million. Treasury Secretary Tim Geithner recently boasted that U.S. issues more than 80 million checks a month. But while the U.S. has more than 70 means-tested welfare programs, the poverty rate today is higher than it was in the late 1960s.

How can that be? "(M)ost anti-poverty/welfare spending erodes work and marriage," wrote Robert Rector, a Heritage Foundation economist, in a recent report. "As a result ... low-income Americans are less capable of self-support than when the War on Poverty began."

The most recent leg down in minority wealth is due almost entirely to America's massive housing market intervention — funded by Fannie Mae and Freddie Mac, overseen by HUD and pushed by influential Democrats. It has only made things worse.

Starting with President Clinton, the federal government coerced banks into making loans to uncreditworthy minority borrowers to boost homeownership.

The implicit subsidy in this arrangement was itself a form of welfare. When the housing market tanked, it was inevitable that those mostly minority households would have higher delinquency and default rates, and lose much of their wealth. That's what happened.

The road to hell, it's said, is paved with good intentions. But sometimes it's paved with taxpayers' money.

Read full article here.

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