Killing Dependency

So the House has voted to curb the food stamp program. It has decided to send a “no funding for Obamacare” budget bill to the Senate, and Senator Ted Cruz has vowed to use every available maneuver to protect that bill. Everyone in this town knows that these are moves without an endgame and without a purpose except to placate the let’s-pretend-populism-and-then-we-fundraise crowd. I warmly embrace two shrewd observers who (like me) despair of the insanity but (unlike me) have thought of a better way. I end, as usual, on a despondent note.

My dear friend and former AEI colleague (we’ve both moved on) Henry Olsen writes that, yeah, the food stamp program may be out of hand. But it does not begin to compare to the crop insurance program, which is “obscene”:

Farmers receive government subsidies averaging 70 percent of their premiums to purchase insurance that protects them against declining crop value. There’s no income limit for this subsidy: The vast majority of this taxpayer money goes to farmers who make in excess of $250,000 a year. The insurance policies are sold by private companies, and the government also pays those firms about 20 percent of the premium cost to cover their expenses. The companies get to keep the profits from the policies, so taxpayer money makes crop insurance a largely risk-free investment for insurance companies. Thus, the government uses taxpayer money to pay rich farmers to buy insurance from wealthy insurance companies, whom the government also pays to sell the policies to the farmers.

Crop insurance is even worse than food stamps at promoting dependency. Most food-stamp recipients receive only a couple of hundred dollars a month, a part of their income. Companies that sell crop insurance are 100 percent dependent on government payments for that business, and farmers are 70 percent dependent for their insurance — a rich subsidy that should strip away the idea of the farmer as a bold entrepreneur, while the welfare recipient is a burden on the public purse: The taxpayer spends more on the former than the latter. (Boldface added, for reasons below.)

Elsewhere, the Wall Street Journal’s incomparable Kimberley Strassel zeroes in on the administration’s decision to exempt congressional staffers—who enjoy very rich health care plans—from requirements that would have transported them into Obamacare’s wonderland. In early August,

[t]he Office of Personnel Management announced—with no legal authority—that Congress could keep receiving its giant subsidies. Oh, and the OPM also declared that each member of Congress also gets to define which of his staff is covered by the law. Chances are many staffers will never have to deal with the exchanges at all.

As Kim notes, gunning away at the carve-out would have multiple benefits: it would demonstrate a commitment against the entrenched Beltway culture, against special privileges for the already wealthy, against administrative lawlessness, etc. “If Republicans want to show that they ‘stand for something,’ she concludes, “this is it. If they really are willing to do ‘whatever it takes’ to oppose this law, there would be no more meaningful way to prove it.” Not to be, though: “[T]here has been nary a peep of complaint” from the GOP. They’re marching up Hamburger Hill.

Brother Olsen and Sister Strassel aim to identify smart policies that are also smart politics; and the GOP emerges, as usual, as the stupid party. If we want to wring stupid stuff out of our politics and economy, the authors say, let’s start with the really stupid stuff—totally indefensible privileges for people who don’t need them. That’ll build credibility for bigger battles down the road. You can extend the model to other issues: subsidies for the producers of Teslas and the millionaires who buy them; for energy-efficient appliance makers and the purchasers of those products; for the producers of education and its consumers; and so on.

I’m totally with that program. What, though, if stupid is actually smart, politically speaking?

The harsh logic of an encompassing transfer economy is that you can’t make “takers” dependent on government without, at the same time, making a lot of “makers” similarly dependent (and vice versa). And the more that economy takes hold, the more Mr. Romney’s distinction between “takers” and “makers” seems not so much heartless (which he isn’t) but utterly clueless: even apart from Social Security and Medicare, everyone is a “taker” on one margin or the other. All we’re fighting over is the distribution (and on all accounts, the rich are winning).

Wealthy dependents are the very same people you need to combat the “dependency” problem in the first place: Salt-of-the-earth farmers and ranchers. Managers whose health care worked just fine until someone started babbling about the uninsured. Doctors. Lawyers. Indian Chiefs. Homeowners. Investors. CEOs. All things equal, the richer you get in this country, the more dependent you are on government—and the more likely you are to resent any notion that “you didn’t build this.”

Suppose Ted Cruz understands (as I think he does) that his core constituencies’ support depends, not on constituents’ actual independence from government (they all hang on the government teat) but from their denial that they are “takers”: what’s the legislator’s next move?

You militate against food stamp abuse rather than millionaire farmers; against Obamacare tout suite, not carve-outs. Stupid policy for sure. Stupid politics in the short run, very probably. But way more rational, from the best-intentioned politician’s view, than a program that tells voters, and conservative voters in particular: at the end of the day, you are the problem.