In confirming that he will let the Bush tax cuts expire, President Obama is discarding proven economic medicine. He is also bringing the discredited welfare state back to life, bigger than ever.
Heritage Foundation senior domestic policy analyst Robert Rector recently noted that the stimulus will overturn the fiscal foundation of welfare reform and for the first time since 1996, the federal government would begin paying states bonuses to increase their welfare caseloads.
- Under the stimulus bill, the federal government will pay 80 percent of cost for each new family that a state enrolls in welfare.
- The original goal of helping families move to employment and self-sufficiency and off long-term dependence on government assistance has instead been replaced with the perverse incentive of adding more families to the welfare rolls.
Uncle Sam would actually pay the states many billions of dollars to increase their welfare caseloads, with spending increases nearing $800 billion over a decade, with more than $1.3 trillion added to the national debt by the stimulus.
Yet amidst all this, the president promises to cut the budget deficit in half by the end of his first term -- a promise Harvard economist Jeffrey Miron, appearing on CNN, disparaged as "wildly optimistic," especially since the massive, ever-expanding Social Security and Medicare entitlement programs are left unaddressed.
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