Tags: Block | Grants | Spending | Ryan

Unfortunately 'Block Grants' Don't Block Spending

Thursday, 07 August 2014 12:47 PM Current | Bio | Archive

Last week I wrote about Rep. Paul Ryan’s budget that eliminates crony culturalism, where the middle class subsidizes the one-percent’s entertainment choices. Ryan also developed Expanding Opportunity in America, a program to “reform” welfare spending by devolving control to states with the federal government providing funding and limited oversight.

Ryan’s magic word is “block grants.” The bureaucracy divides the ocean of federal welfare spending by using a complicated formula — number of residents; times percentage of vote for Obama; minus the number of Republican officeholders squared — to arrive at a total for each state. To qualify states submit a plan that conforms to federal guidelines.

For example, instead of Uncle Sam spending hundreds of millions of dollars to build a nationwide website that doesn’t work, the individual states design websites that don’t work and the feds provide the funding.

Leftists hate block grants because they see the technique as an erosion of their power to micromanage state bureaucrats. Without federal control poor people would be at the mercy of heart-hearted Scrooges in hellholes like California, New York, or Maryland.

Republicans, bless their hearts, see block grants through the misty lens of long-lost federalism when states weren’t welfare mothers and had independent power. It’s a nostalgic dream that doesn’t match up with reality.

My problem with block grants is inefficiency and waste. Think of it this way: A new service called Uncle Sam’s Magic Vacuum opens. It offers to pay all your monthly bills in return for you sending a single check. You sign up, attracted by the convenience and glad to be rid of the headaches. Except after the first month you discover Uncle Sam’s service costs 30 percent more than you were paying on your own.

You demand to know what’s going on and Sam explains the extra 30 percent goes to overhead since those bills don’t pay themselves.

The same with block grants. The IRS takes tax dollars from your state and sends it to Washington. There it goes through Uncle Sam’s laundry where the money always shrinks. After charges for overhead, waste, fraud, and abuse the much smaller amount is sent back to the state where it originated.

Ryan promises his plan will be “revenue neutral,” evidently to avoid claims that Republicans want to balance the budget on the backs of the poor. But “revenue neutral” means taxpayer hostile.

The federal government has 92 programs to fight poverty, which is more than the number of divisions in the U.S. Army during WWII. And it’s more expensive, in that yearly spending on welfare programs now approaches $1 trillion.

If Uncle Sam just sent a check to individuals each recipient would get $22,000. Robert Woodson — a Ryan supporter — points out, “70 cents of every dollar spent on poor people goes not to the poor, but to those who serve poor people. These professional providers ask not which problems are solvable, but which ones are fundable.”

The War on Poverty is therefore not a conflict the fighters want to win if they intend to keep their job.

Ryan says, “I would start a pilot program called an Opportunity Grant. It would consolidate up to 11 federal programs into one stream of funding to participating states. The idea would be let states try different ways of providing aid and then test the results. In short: More flexibility in exchange for more accountability.”

This should mean the federal role would be much smaller, so unless welfare bureaucrats join Obama on the golf course or start burning up bandwidth with SEC porn surfers, there isn’t going to be anything for them to do, except continue to cash their paychecks, so as to avoid poverty.

The solution to welfare spending and the federal budget is to gradually reduce the federal role and increase that of the states. For block grants to begin to make a difference in spending, federal money should be limited in time and amount.

A better program would be a matching block grant that forces buy-in on the part of the state. For each dollar the state puts in the feds will add two or even three more. Each year the federal portion is reduced until the state is funding its own welfare program.

This eliminates Uncle Sam’s laundry and lets state tax dollars stay inside the state.

Returning the job of caring for residents to state government would free up federal dollars for debt reduction or tax reduction. State taxes would increase as states shoulder the load they should have had all along and federal taxes should decrease.

Otherwise, considering block grants as a budget and spending lifeline is simply playing musical chairs on the Titanic. Michelle is happy everyone is getting exercise, there is plenty of shouting and commotion from the politicians, but the final destination remains unchanged.

Michael R. Shannon is a commentator, researcher (for the League of American Voters), and an award-winning political and advertising consultant with nationwide and international experience. He is author of "Conservative Christian’s Guidebook for Living in Secular Times (Now with added humor!)." Read more of Michael Shannon's reports — Go Here Now.

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Last week I wrote about Rep. Paul Ryan’s budget that eliminates crony culturalism, where the middle class subsidizes the one-percent’s entertainment choices.
Block, Grants, Spending, Ryan
Thursday, 07 August 2014 12:47 PM
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