The largest welfare program is the U.S. Tax Code

welfafre programI reported earlier this year on a CATO Institute study that showed that the average welfare recipient gets approximately $40,000 per year in benefits in California. This month, State controller John Chiang reported that “tax programs provide more support than Welfare programs” to needy families. The report goes on to say “the Federal Tax code is the delivery mode for the largest form of direct financial aid in the nation.”

The tax code is one big welfare program

Chiang compared the costs for California of Temporary Assistance for Needy Families (TANF) to the Earned Income Tax Credit (EITC), and the Children’s Tax Credit (CTC) provided to Californians.

- TANF costs rose from $21 Billion in 1975 to $31 billion in 2010.
- The EITC has risen from $6 billion in 1975 to $61 billion in 2010
- The CTC rose from $20 billion in 1998 to $28 billion in 2010

As a side note last month the Federal government reported that the IRS admitted sending out
approximately $11 billion in erroneous EITC payments each year over the past ten years and in recent years has sent $3 billion annually in tax refunds to people committing identity fraud.

One day this will add up to some serious cash.

Unemployment rate nationwide; California’s unemployment insurance debt

The Bureau of Labor statistics report for unemployment in October shows how little the President’s economic plans are helping minorities and the young. The rates reported:

- Whites: 6.3%: White Youth, ages 16-19: 19.4%
- Asians: 5.2%: Asian Youth N/A
- Blacks: 13.1%: Black Youth: 36%
- Hispanic: 8.8%: Hispanic Youth: 27.4%

In related employment news, the State of California announced that more than 220,000 Californians on unemployment extensions (quite an economic recovery!) will lose their benefit the week of December 28. Since the extensions were introduced in 2008, EDD has paid out more than $44.6 billion in unemployment welfare program extension benefits.

The State’s welfare program of unemployment insurance fund is currently $10 billion in the hole, owing the money to the Federal government as a result of the President’s unemployment extensions to ninety-nine weeks. California is currently only able to make interest payments to the Feds and has not announced how or when it will repay the principle. The state has paid $871 million in interest in the last three years and will pay an estimated $431 million in the next two years, the EDD has reported.

These dollars could have, of course, been used to provide services to California’s citizens had it not been for the debt.

Ethanol policy carries environmental costs

Speaking of Tax code as welfare program, witness the special treatment the Ehtanol Lobby gets in the Farm Bill. Even when ethanol fuel is not what it says it is.

“Ethanol policy carries environment costs” or so reports the Associated Press. In 2007 President Bush signed a law requiring oil companies to add billions of gallons of ethanol to gasoline predicting it would make the country “stronger, cleaner, and more secure”. Instead, according to the Associated Press, it has wiped out five million acres of land set aside for conservation (more than Yellowstone, Everglades and Yosemite National Park combined), destroyed habitat and polluted water supplies. In addition, AP reports, land owners have pumped out billions of pounds of fertilizers, some of which having leaked into ground water and/or contaminated rivers. Many environmentalists, the reports continues, now reject corn-based ethanol as bad environmental policy.

As a result, for the first time, the “ethanol lobby” has suffered a minor setback in Washington. The EPA is reducing the federal mandate for how much ethanol must be blended into gasoline. The decrease-16%-is small but may hopefully be showing a trend away from unproven environment solutions. The EPAs decision is based on scientific findings that “ethanol consumes so much energy and fertilizer and requires such vast amounts of plantings that the impact on air quality is at best neutral and may be negative on water quality”.

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  1. Richard Eber says

    Another factor with the ethanol lobby to be considered is the Federal Government’s insistence in 2012 producing this additive despite the crop failure of corn in the Midwest. This policy drove up the cost of all grains including corn With the price of feed going up astronomically, farmers had little choice but to cut their losses and slaughter young calves that were intended to provide meat for this year.. As a result beef prices in 2013 are elevated so that ethanol production could be maintained. by government bureaucrats..

    All this tells me that we can not count in government on any level, especially in Washington D.C., to make rational common sense decisions that effect the entire population.. It is scary to think what they will
    do in having more power in health care and other places where Federal power has continued to grow in recent years..

  2. says

    In reality, the Tax Code is the biggest welfare program for the government and the government class in terms of empowerment of bureaucratic morass which, in many cases, actually gets in the way of helping the people they claim to want to help with either incompetence, fraud, wasteful spending, favoritism, political horsetrading, and inertia. The buffet feeds itself.

    We need to remember that the Tax Code also carves out goodies for homeowners (mortgage interest expense), medicare, social security that are a boon to many needy citizens. A better way to get at this argument can be found in this recent commentary at First Things.