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Monday, October 22, 2007
SCHIP is another ‘polite fiction’ of entitlement
The Atlanta Journal-Constitution
The first beneficiary of the Social Security “Trust Fund,” Ida May Fuller, filed on Nov. 4, 1939.
She had paid $44 in “insurance premiums” and for that “investment,” she collected $22,888.92 over the remainder of her life.
The first baby boomer, Kathleen Casey-Kirschling of New Jersey, applied this month. She was the first of the 10,000 people per day who will become eligible for benefits over the next two decades.
By 2017, it’ll pay out more in benefits than it takes in from payroll taxes. Reform was to be a top priority of President Bush’s second term. Congress has refused to take it up. So the march toward insolvency continues. By 2030 fewer than two workers will support one retiree. It’s a trick on illegals; about the time they get settled and made legal, the bill’s coming.
The story never changes. In 1996, the director of health and welfare studies for the libertarian Cato Institute testified before the Senate. Said he then: “Even if Social Security’s financial difficulties can be fixed, the system remains a bad deal for most Americans, a situation that’s growing worse for today’s young workers. Payroll taxes are already so high that even if today’s workers receive the promised benefits, such benefits will amount to a low, below-market return on those taxes.” True then. Truer now.
Various terms at the start of this column are in quotes. There’s a reason.
Whatever you think of Social Security as a foundational element of retirement planning, the fact is that it began on a fiction. “The Social Security Trust Fund is really little more than a polite fiction,” observed Tanner. The fiction that it was an insurance program and that participants paid premiums that were accumulated in their names in a trust fund.
The dishonesty, it can reasonably be argued, was for a higher purpose — to convince determinedly independent Americans to buy into the notion of government dependency. It worked. And as the beneficiaries grew and voted themselves more of another generation’s money, it became a sacred cow that politicians dare not reform.
There’s a lesson here for Democrats and Republicans searching for a compromise on what is euphemistically called the State Children’s Health Insurance program for “the working poor who can’t afford insurance.”
It’s not an entitlement. Not now, anyway. But under the vetoed legislation, it becomes an entitlement, hugely expanded. The cost now is about $5 billion a year. The vetoed bill would have increased the cost by $7 billion annually, creeping into the middle class and inviting parents to drop private insurance coverage in favor of the government entitlement.
To encourage states to provide coverage to the neediest children first, the administration recently imposed a rule requiring them to enroll 95 percent of those already eligible — those in families with incomes up to 200 percent of the federal poverty level, or $41,300 for a family of four — before taking on the middle class.
A reporter for Newhouse News Service, Elizabeth Auster, examined Ohio’s program and why it has signed up only 76 percent of the eligible poor.
“The state faces problems ranging from technical questions about how to count the number of eligible children to sensitive cultural questions about how to enroll children whose parents resist government help,” Auster writes.
Ohio has a large Amish population and the Amish and Mennonites typically avoid government programs because of religious beliefs. Illegals are “leery of enrolling,” because they fear deportation. And other parents “are sometimes too proud to seek help from government or dislike dealing with bureaucratic paperwork requirements, ” she writes.
Auster quotes the director, Cristal Thomas: “I personally know some people who philosophically, just as a matter of pride, wouldn’t enroll in public assistance even though they would technically qualify.”
The Children’s Health Insurance Program is not just about children. In some states, half or more are adults. But just as with the Social Security entitlement, false terms are applied and concerted campaigns are mounted to nudge families into greater and often unnecessary dependency.
People, even the poor, who want to stand on their own should be encouraged. But, then, this program expansion is not about “children of the working poor who can’t afford health insurance.” It’s about creating another Social Security entitlement, this time for health care.
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Limit tax giveaways to poor counties
The Atlanta Journal-Constitution
State and local governments should be forbidden by law to offer financial incentives for development north of I-20 and within 50 miles of the Atlantic Ocean. We know that North Georgia and the coast will grow. Development will come. Not a dime of incentives extracted from taxpayers should be used as a lure in either area.
For example, Great Wolf Resort has announced plans to build a 400-room resort and conference center on 20 acres at Lake Lanier’s Mary Alice Park, including a for-guests-only indoor water park. The city of Cumming pledged $10 million in incentives for the project, the state added $6 million for road work and Forsyth County pledged $5.1 million for road improvements, for a total incentive package of $21.1 million.
(The county doesn’t have the money, but will ask for the $5.1 million in a project list for a proposed special-purpose local-option sales-tax referendum in February.)
Those incentives are absolutely unnecessary. Between 2000 and 2005, Georgia ranked third in the nation in population growth. Nationally, the population grew 5.4 percent; Georgia grew by 11.6 percent, outpacing traditional Sun Belt boom states of Texas (10 percent) and Florida (11.2 percent). As the good fiscal conservative, State Sen. Jeff Chapman of Glynn County observes, too, incentives are often given on promises that companies or developers will deliver certain things, but “typically there’s never any follow-through to validate if all those things promised come to fruition.”
Georgia should always remain business-friendly, but we’re no longer a beggar state and should stop acting like one. The emphasis now should be on managing growth and using financial incentives to direct it to areas where growth is sorely needed.
The state already has a tier system of counties ranked on jobs, income and growth potential. Tier 1 counties are the 71 neediest, based on 36 months of unemployment data, per capita income and the percentage of residents living in poverty.
The second tier are those ranking between 72 and 106. Tier 3 comprises the next 35, while Tier 4 counties are the state’s 18 most prosperous counties. For the most part, Tier 4 counties are in Metro Atlanta and points north. Together, tiers 3 and 4 would include most of North Georgia and the coast. Fulton is, however, a Tier 3 county, though the northern parts are well off. Some tweaking of the formula may be necessary so that within Tier 3 and 4 counties, growth incentives could be limited by census tract.
Taxing existing businesses and residents in hopes of luring businesses from somewhere else is, frankly, a practice that governors across the South should agree to abandon. In rare instances where incentives are essential, the incentives should be reserved for Tier 1 and 2 counties where growth is not assured. Tax giveaways are not necessary in either North Georgia or along the state’s coast, and should be ended.
