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Are you on welfare?

27 Mar

By David Young

In early May 2010, Greece has been almost paralyzed by riots. More than 100,000 people, just a few weeks ago, rioted in the streets to demand better pay, higher employment, and more welfare programs to stave off the current economic depression. Within days, the international bond markets responded to the crisis by increasing the cost of this Greek debt by more than triple overnight. Guaranteeing collapse of the Greek state, should the European Union leaders remain silent.

But is Greece alone in this very real crisis?

Consider Ireland, crushed by a current reported unemployment rate of 20%. Not far behind are the rest of the PIIGS countries, as they are called. In sum, Portugal, Ireland, Italy, Greece, and Spain all threatened to break up the Eurozone due to years of massive entitlement programs and spending. The EU did pull together support from Germany, France, the International Monetary Fund, and the U.S. Federal Reserve to collaboratively build a $950 Billion dollar bailout, all in mid-May. This package is only meant to keep the PIIGS from collapsing for three years. After that, the clock is reset for the new governing leaders to deal with.

This past April, more than 10,000 students, union members, and other beneficiaries took to the London streets in support of the U.K.’s entitlement programs. The U.K. government is suffering under a crushing debt burden, largely brought about by welfare spending. In fact, the British pound is expected to drop to one US dollar  according to some economists. This was the same pound that cost $2.11 not more than two years ago. Currently, it trades down around $1.45. As an aside, the Euro has also been devalued to the $1.20 range.

Europe is in a crisis.

But what brought about this crisis? It wasn’t debt incurred from the soft imperialism that America has been pursuing for over a hundred years. What was it? The mandatory 30 days paid-time off per year may contribute. In the U.S., paid time off is roughly 16 days per year, about half of its overseas partner. The average Greek retirement age is 58-60 which contributes to the unproductivity and overall economic inefficiency. How can a system, with an incredibly low birth rate of <1 child per family (according to some sources), survive much less thrive with increasing burdens and decreasing productivity? It is impossible, and politicians will continue to kick the can down the road until the present environment becomes so demanding that drastic, draconian measures previously unheard of will force cuts to the social safety net.

Now, what does this have to do with the Wassail theme of the seven lean years?

Much. Consider that the United States is not far behind. While we do not have it as dire as the PIIGS and overall EU economy, it is definitely calamitous. California received a federal bailout last year to close its budget gap. Chances are, if you have bonds in your retirement portfolio, you helped bail them out. They are the Build America Bonds, and pay a nice 7% interest rate. Consider that the state of Illinois is not paying its bills (this is the new “stick my head in the sand” economic policy). Consider that the state of Pennsylvania is offering to waive all late penalties, and substantially reduce the interest charges on back-taxes owed by its citizens…but for a limited time only! (45-55 days, I believe) They apparently need the money. Last, consider that the governor of the state of New York recently signed into law a mandatory 1 day off per week for 100,000 state workers. This amounts to a 20% pay cut. And, it’s coming to a local government, near you.

As a last morsel of introductory data, according to the Commerce Department Bureau of Economic Analysis, in 2008 the total compensation package (pay + benefits) for a public employee was $119,982 compared to a mere $59,909 for a private sector employee. The public arena received a full 1/3 of the $787 Billion stimulus package, and unemployment for (overpaid) public workers has been estimated as low as 4.5% within just the past few months. Add to that the security of a government job, and you have the makings of a newly entitled class that will surely keep those in power that approve their compensation package. And this, all in a recession…

Clearly, any sane-minded person who is intellectually honest will admit that the previously cited facts have been the result of years of entitlement spending. This spending has worked because developed world governments (US, UK, & EU) have been able to borrow at very low interest rates and finance consumption. Borrowing to finance investment in infrastructure would be one thing. But, borrowing, even at 1%, to have steak over rice and beans is another thing. The markets for low interest borrowing are coming to a halt. The hangover is next.

However, this is not an argument for unfettered capitalism. People need to be taken care of. Jesus clearly states that the poor, oppressed, widow, orphaned, and hungry should be helped. Did Christ not spend a large amount of time with the poor, instructing them and teaching them, and even feeding them with a couple of loaves and a fish?  While it is obvious that such rampant entitlement policies are wrong, if not outright immoral, it would be foolish to jump headlong from one ditch to another. Social safety nets are appropriate. But, they should be administered by the Church. Only the Church can provide the right strings attached to the assistance that will keep the people honest. Only the local churches can establish the needed mentor/mentee relationships with those in need of aid. The government bureaucratic system can only require that you submit your tax returns annually to make sure you still qualify for the aid and are not milking the system. Social workers, regardless of the good intent involved, cannot care for your soul as can a local elder or deacon.

Given that the Church should be responsible for providing aid, it is also clear that the Church is incredibly weak and inept. That being the case, what are we to do in the short-term? Hungry bellies must be fed; there is no lofty paradigm that can answer that practical dilemma. Who is to provide the need? The question is not who should provide the need; that’s already been answered.

Only recently, a new statistic came out that over 40 million Americans are on food stamps. The recession has taken its toll. But, people also must be fed. Granted, there are likely several million who are beneficiaries of the system that should not be. What should be a Christian’s response? People need food, and many current incomes simply cannot provide in totum. But, shouldn’t the Church provide? Others are on TANF, temporary assistance for needy families. This is welfare. But shouldn’t the Church provide this welfare?

The current Christian view on entitlements is deceitfully hypocritical. It’s the kind of hypocrisy that is entirely believable and practiced by those who would never consider themselves hypocrites. We view those on welfare as almost beneath us, or simply put, lazy. This can definitely be the case many times. However, it is never that simplistic. We don’t consider our government-insured mortgage, government-insured student loan, or government-insured tax credits to be welfare. Why? Because they aren’t so obvious. But, wolves never appear in wolves clothing. They appear in sheep’s clothing. Arguably, the less obvious entitlements are the more disastrous (and expensive) to the U.S. economy. Food stamps won’t bring a government down. But, the government-led financial bailouts of your mortgage company might.

Yet, before we jump to accusation and finger-pointing, let us consider something else. If you file a tax return, and claim a tax credit (I doubt there are many who file but do not claim tax credits), you are receiving welfare. The Earned Income Tax Credit, which has been around for over thirty years, is a direct payment made from the IRS to taxpayers who qualify. Married families with children are those that benefit most, ranging from a $3040 payment for one kid to a $5667 payment for three kids. The amount received from the IRS can easily match if not dwarf the more obvious form of welfare, such as food stamps. We should be intellectually honest and admit tax credits for what they really are: welfare. But, shouldn’t the Church provide?

This is where it gets down to the nitty gritty. The social safety net system is so intertwined in our daily lives that none of us can claim we are not recipients of government aid; welfare. There is likely not one of us who do not receive welfare in some form or fashion.

Do you have a student loan? Is that not a below market interest rate, subsidized by the U.S. Federal Government via Sallie Mae? Do you have a mortgage? There is a 98% chance it is owned by Fannie Mae or Freddie Mac or the FHA (not talking about your servicer which is probably Wells Fargo or Bank of America). These interest rates are 2.0% lower than they should be. Consider the average value of a home, $300,000 and a 2.0% reduction means you are the beneficiary of $6,000 in welfare each year. Make this a pretax figure (somewhere around $8,000), and your annual welfare dwarfs someone who might be on food stamps. And, we already covered filing our taxes. All in all, a majority of our living comes from government subsidies, which is the same as aid, which is the same as welfare. Money is money is money. It does not matter how you receive it.

Now, with the cat out of the bag, what are we to do about all this? Shouldn’t the Church provide?

To answer that question, many faithful Christian families need social assistance. This should be the basics: food stamps, state health insurance, farmer’s market coupon programs, etc. The Church is in such pathetic condition and has not had 1/10 of the foresight necessary to fund such programs. Local churches should start now with ideas on how they can step in once these state-funded programs dissipate. Christian families should not feel as though they are stealing from taxpayers. Sadly, well-intentioned local churches want to provide and may impoverish themselves by doing so. Local churches are simply not ready to control such provisionary programs as food stamps; but they should start the process now and over time will grow to the required maturity and funding level.

If, due to the current economy, Christian men and women can’t provide, they should seek out state aid to supplement, as a temporary Band-Aid. By seeking out local church aid, unintended consequences can arise. Other families in the church, struggling just to get by as well, may end up impoverishing themselves by providing assistance. One family cannot provide assistance alone. It must be a collective, or covenantal, effort.

This may appear contradictory, but approach it holistically: Local churches need to provide for their struggling parishioners, but are not ready to do so. Should an ambitious local church start without the funding (money) needed, unintended consequences will likely arise.

Arguably, the Church should not provide a lot of what we have come to expect as the “American living standard.” Expect living standards to decline steadily throughout the next generation. In truth, regardless of what you or I think about these programs, many will likely be coming to an end within the next few years because the governing bodies simply are not able to continue paying for such social safety nets. Government jobs will decrease dramatically as states are forced to shore up their budgets with real, deep, and unpopular cuts. Tax credits will diminish, and subsidized mortgages will decline.

Prepare for a very different world than the one you grew up in. It will be much more competitive, and we will actually have to apply ourselves in our education and self-advancement to realize things that were once givens. This does not happen overnight, sure. But, to be sure, it will happen. Government Debt must be paid for, or defaulted on. Neither one catalysts immediate economic prosperity.

In sum, while the Church definitely should be helping the poor, a lot of the entitlement programs we all partake from (think mortgages here) should diminish. Others should be utilized by Christians, but only temporarily (think food stamps). The Food Stamp program is a great help to those who have experienced a massive economic disaster. But, it should not be used by Christians for long-term.

If you do not have an ‘escape plan’ for how you are going to stand on your own two feet eventually, then you are milking the system. The Food Stamp program is fine if used temporarily and as a means to get from A to B. But, you should not be staying at A. We Christians are required to provide for our families, and this means getting an education and a career and doing what it takes to do so.

Remember, these social programs will not be around forever. While they are, use them as a catalyst to propel your family forward, but not as an anchor to keep the status quo. What will you do when such programs cease to exist? Will you burden your local church that, while it arguably should have prepared for economic difficulties, has not prepared and is ill-suited to provide help? Will you bury your talent in the ground, awaiting the master’s return? Joseph had plenty of grain during the seven lean years, but we do not have a tenth of his foresight.

We must not suffer from short-term thinking. We must, however, work to better ourselves economically and further our careers so that we are prepared for the day when our brothers and sisters, who have not prepared, need our help because the social programs are defunded.

Here it is in bite-sized format. We all partake of government aid. This can be called welfare. Understand; the global debt crises occurring insure that these programs will not continue in current form. Use the aid as a catalyst to promote your family forward economically so that you can prepare to help your brother and sister who unwisely do not plan for such a day. Know that such a day is coming, and prepare for it. If you do not, there will be no excuse.

All in all, the Greek crisis should be a canary in the coalmine for us. In other words, if we are running with a group of people, some ahead of us and some behind, and a guy who is 100 feet in front of us just disappeared over the edge of an upcoming cliff, we should start turning around. You must start preparing to provide not only for your family, but the local church as well.

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