Immigration and Welfare Reform

Many of us on the libertarian spectrum would love nothing more than to have open borders where people can come and go freely. People of every stripe, coming from every part of the globe looking for a better opportunity to provide for their families. The problem, as many point out, is that while we welcome poor people in, our government does their best to keep them poor by incentivizing them not to work. Let me be a little more generous and say our government incentivizes them not to strive to get out of poverty. The fact is that being poor in America is exponentially better than being poor in a 3rd world country. They do this through entitlement programs, otherwise known as welfare programs. The problem with immigration isn’t immigrants, it’s the ever-growing burden of welfare programs that now takes up about 85% of our federal budget each year.

This wasn’t a problem in the early 1900’s when millions of people were coming to Ellis Island in search of a better life. There was basically no safety net for those people, they lived or died by their own effort. The vast majority of them survived, mainly because they had to. Of course there was poverty, how could there not be, but they worked hard and within a generation or two became the middle and upper class. That all changed with the social programs of FDR and later Lyndon Johnson. The war on poverty became an all-out assault on the poor. This was done purposefully to keep power in Washington and in the hands of the Democrat party. Even today, generally liberals love South American immigration because they get them on welfare and have voters for life. Republicans are seen as hate mongers for wanting to put a fence up along the border. They know full well the effect South American immigration would have on elections and the national debt. The reality is that these poor people are just pawns in the games Republicans and Democrats play with each other to see who can steal the most power away from a public much more concerned with pop culture than what is actually happening in the world that could affect their life.

So what’s the solution? How do we fix the problem, a broken government, so that immigration into and out of the country would at worst, not matter and at best, would be a net benefit to society? This is actually a challenge from a great blog that notices that lots of people are recognizing the problem, but not many are proposing solutions. This is my attempt at picking up the gauntlet of that challenge.

For this challenge, let’s keep the pie in the sky solutions such as ending all welfare programs and the Federal Reserve, repealing the 16th amendment and stick with things that would not require too much in the way of congressional backbone. Of course, this will take a major overhaul in some areas, so some backbone would obviously be required.

Solution 1:

Institute a flat tax with no deductions– Why a flat tax? A flat tax with one bracket and no deductions would not require the repeal of the 16th amendment. The revenue generated would be roughly the same as what we see today as far as which income bracket would pay what percentage of the taxes. No deductions means no lobbyists for tax favors. It would also mean a fair and transparent tax system. The tax code could literally fit on one piece of paper. We could in essence come close to eliminating the IRS with a flat tax, almost.

Get all entitlement programs under one roof– While searching for a list of every welfare program, I came across this, which lists the 13 main categories of entitlements, although there are over 100 welfare programs in total. Seems like half of the federal departments have their own welfare programs. While getting rid of most of the federal departments would be an ideal fix, it’s not doable, so we need to have a quantifiable way to figure out what is going where and to whom.

A massive audit of the regulatory structure of our government– There are so many regulations that it’s hard to tell what is legal and illegal sometimes. Eliminating bad regulations would save job creators billions of dollars a year. All regulations that have an estimated cost to business of 50 million dollars or more each year should be removed from the books immediately. This would include environmental and banking regulations. This could get done if the political motivation was right.

A balanced budget amendment- In order to keep most of the welfare programs we have today, we would absolutely have to force by law, a balanced budget amendment. The increase in tax revenues caused by the flat tax and reduced regulations should be able to pay for the increases in entitlements brought on by more immigration, but only if we tie the hands of the people who spend the money.

Root out government waste– It’s time to take seriously all the money that our government wastes each year. They would not have to spend a dime to compile a list of programs to cut. There are countless lists of waste that could be cut with one vote. These lists are gathered by any number of think tanks and taxpayer watchdog groups. Hundreds of billions of dollars are knowingly wasted each year on stupid stuff. Can that not be a thing anymore please? Here is a good read regarding federal spending. At the end of it you will find one such list of government waste.

By my standards, this solution is very noninvasive from the perspective of the welfare recipient. They would not see a noticeable change in benefits. It does nothing to address the big problems in entitlements (Social Security, Medicare and Medicaid). It would simply pay for most of what we have now by streamlining the government. If we had the right people in the House and Senate, this could be done. That’s a big if, though.

Solution 2:

Take solution 1 and add:

Privatize Social Security- Partially or fully privatizing Social Security would give the power of retirement back to the people. They would get better returns on investment and the government would not be able to steal their money for pet/wasteful projects. This would mean for brand new citizens, they could start saving for retirement without inadvertently taking money out of a system they did not pay into.

Replace Welfare programs with cash payments- This is often called a negative income tax (NIT). The idea here is that you could take all the welfare programs, eliminate them, and replace them with a minimum income guarantee. This would have the effect of transferring the responsibility of taking care of ourselves from the government officials back to us. We could literally take what we are paying for in welfare payments and half it with direct cash transfers. Think about the prospect of reducing the size of government by almost 50% while taking better care of the poor. The nice part about this program is that it’s not all or nothing. Right now the working poor have to worry about making too much money lest they lose government benefits. These welfare programs are creating giant incentives to not work, or work as little as possible, or work under the table. With the negative income tax, you can make more money and still get a proportional share of money back. It incentivizes work and self-reliance. We actually have a form of this right now, it’s called the “earned income tax credit”. That was a kind of compromise for the NIT and continues to be the most efficient form of welfare. There are many different types of NIT proposals, here is a more modern version. Any one of them would better for the country and for any immigrants who decide to come to this country and work. It also incentivizes becoming a citizen, but citizenship would not be necessary to work in the country if there were no benefits to abuse anyway.

These extra proposals would have a bigger effect on the welfare recipient, but in the end I believe it would be positive. These two things would be very hard to pass due to the fear involved in this type of change.

Anyway, this is my set of initial ideas to create a situation where mass immigration from South America would not be considered a problem by anyone. This should by no means be considered comprehensive. Just a conversation starter. Please feel free to add or subtract any idea to this list of things. And thanks to the Anarchist Notebook for inspiring me to blog again.

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