Monday, June 22, 2009

WSJ: Numbers on Welfare See Sharp Increase

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These guys in power need to create a new bubble quickly ... bubbles have been the main job drivers of the past 10 years as we get rid of "1960s type of work" and move to this new fangled "shopping economy". So to pick up the slack for all those who actually made a living on 1960s type of work (now being done in countries whose economies are among the most stable in the world) we have to throw easy money into the country to create bubble jobs. Unfortunately, in between the bubbles come the busts - and just in the past 18 months we've gone from 1 in 11 on food stamps, to 1 in 9 [Jun 8, 2009: 1 in 9 Americans on Food Stamps]... and now the welfare rolls are ramping. I can almost hear the political furor starting - dogma does not allow people to see how this is all interconnected, as we head down the path of Pooring of America. Lack of productive jobs that keep a middle class lifestyle might explain the dogma we are sure to hear about how an exponential amount of Americans are suddenly "lazy" and "feeding off the state".

And where will the states come up with the money to pay for the increasing amount of "suddenly lazy" folk? You guessed it... from our money trees.

pssst - as you see long term unemployment claims fall in the months ahead, after you digest all the green shoots from CNBC just remember this story and how many (not all) of those people simply have extinguished their benefits. A few million are now reaching that stage where they will run out of unemployment even after federal extensions. So not only to they become "not unemployed" to the public, they stay on the public dole but in a different compartment. See the unemployed person? Not under shell 1... look under shell 2... where conveniently he is no longer counted as unemployed. Prosperity!

Via WSJ
  • Welfare rolls, which were slow to rise and actually fell in many states early in the recession, now are climbing across the country for the first time since President Bill Clinton signed legislation pledging "to end welfare as we know it" more than a decade ago.
  • Twenty-three of the 30 largest states, which account for more than 88% of the nation's total population, see welfare caseloads above year-ago levels, according to a survey conducted by The Wall Street Journal and the National Conference of State Legislatures. As more people run out of unemployment compensation, many are turning to welfare as a stopgap.
  • The biggest increases are in states with some of the worst jobless rates. Oregon's count was up 27% in May from a year earlier; South Carolina's climbed 23% and California's 10% between March 2009 and March 2008. A few big states that had seen declining welfare caseloads just a few months ago now are seeing increases: New York is up 1.2%, Illinois 3% and Wisconsin 3.9%. Welfare rolls in a few big states, Michigan and New Jersey among them, still are declining.
  • Welfare cases peaked at above five million in 1995 and declined sharply after the 1996 law put time limits on benefits and emphasized moving recipients from welfare to work. The time limits vary by state, but the federally mandated maximum is five years with some exceptions; after that, benefits end.
  • The cash-assistance program, called Temporary Assistance for Needy Families (TANF), was created by the 1996 law and replaced previous welfare and jobs-training programs. Funded partly by the federal government and partly by the states, it primarily assists women who have children and no job, or a very low-paying one. The number of families on welfare had been falling steadily and, nine months into the recession, stood at 1.6 million in September 2008, the most recent date for which national tallies are available. (that is actually a quite tiny number in the big picture, with well over 320M Americans - let's see how it looks a year from now - when we should be well into the green shoot "recovery")
  • "This is the first real test," said Liz Schott, a welfare analyst at the Center on Budget and Policy Priorities, a liberal Washington think tank. "We always said, how is it going to perform? How is TANF going to perform in an economic downturn?"
  • One clue, she says, can be found in a different measure. Although the TANF program seems to be accommodating increased need, it is doing so at a slower rate than another government initiative: the food-stamp program. The number of food-stamp recipients has risen in every state and was 19% higher in March than a year ago, a much bigger increase than the number of welfare cases.
  • Food-stamp eligibility is significantly easier than the criteria for receiving welfare, so food-stamp assistance tends to rise first. n general, a family of four must have a monthly income of less than $2,297 to qualify for food stamps. Welfare, on the other hand, is designed as a last resort. (I wonder if that is gross or net, if gross that is about $26K for a family of 4; i.e. you rich folk at $30K household income for a family of 4... no soup for you)
  • The average monthly welfare benefit in 2006, which reflects the most current data collected by the government, was $372. (I normally would ask why government data is so outdated with all the trillions we waste, that we cannot even get 2008, not to mention 2007 data - here in the middle of 2009)
  • The recession is straining many state welfare programs. State budget woes often mean more cases without more employees. And the demand for cash assistance is squeezing funds for job-training programs targeted both at the unemployed with little work experience and unemployed professionals with extensive work experience.
  • The federal government's fiscal stimulus includes $5 billion for states where more families receive welfare or spending increases on employment subsidies or short-term emergency assistance. (so you are telling me states did not budget for a rainy day? Aha! Call the money trees - chop, chop, chop)
So aside from easier standards why the surge in food stamps but only now the rise in welfare? As mentioned above...
  • The lag in the increase in welfare cases during the worst recession in a generation is curious to some some scholars. "In many respects, the mystery that had been operating until now had been how can there be such a rapid increase in unemployment and long-term unemployment and not show up in the welfare [system]?" says Mark H. Greenberg, director of Georgetown University's Center on Poverty, Inequality and Public Policy.
  • The extension of unemployment benefits by Congress -- for as long as 59 weeks in some states -- may be one reason.
  • Another cause of the delay may be that welfare is targeted at women and children, and this recession has been hardest on men. The lag in the increase in welfare cases may simply show that it took longer for the recession to hurt women than men, says Mr. Haskins of the Brookings Institution.
Again, I continue to believe this market - just as it misjudged how this disaster would hit the US consumer 2 years ago - is once again misjudging. If not for free money handed out left and right, (that we don't have mind you) things would appear far worse than they are now. And they don't appear very well to many on Main Street but I suppose those are not CNBC's audience. But the battle plan is set - keep chopping down money trees and substituting hand outs for real jobs, ex government transfer payments (which are "saving or creating 3.5 million jobs"). Then keep throwing money into the pot via Federal Reserve low interest rates until that money can create a new bubble to employ countless Americans who used to be able to provide for themselves pre "transformation to a shopping economy". (that worked great the last time around! Why not try it again but 50x as big?) Meanwhile borrow money from countries where many of those jobs were sent. Then wait for global prosperity via Asia in about 2 generations... and then we can create jobs as we outsource to them what they need. Unfortunately, we still have to deal with this generation ... ah yes, bubbles.

The circle of life.

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