Diana Furchtgott-Roth is a fellow at the Hudson Institute, a Washington think-tank funded by the likes of Monsanto, Archer Daniels Midland, ConAgra Foods, DuPont and Fannie Mae. So I take her to be sympathetic to government intervention in the marketplace, especially rewarding large corporations like these who are sucking up government largesse by the bushel. So her latest article about unlimited government spending is more than a little hypocritical.

However, she does warn us about something: the continued growth of government spending in entitlements, exactly the area which is causing most people the most heartburn: programs like SNAP (Supplemental Nutritional Assistance Program), mortgage assistance and insurance. She says these programs are incentives not to work:

Since 2002 the labor force participation rate of workers 55 and over has increased by 6 percentage points, whereas the labor force participation rate of workers aged 16 to 24 and workers aged 25 to 54 has been declining. The biggest
decline in labor force participation rates can be observed for workers aged 16 to 24.

This is the result of perverse incentives (some would say they are intended) that cause people to decide that it’s better to keep their government checks coming in rather than go to work. She quotes author Casey Mulligan who concluded the same thing, “that the expansion in entitlement programs since 2007, such as insurance, the Supplemental Nutritional Assistance Program (formerly food stamps), mortgage assistance, and other means tested programs, have discouraged people from working.”

Such perverse incentives can also be measured by the labor force participation rate, which was nearly 64% in the year 2000, but now is below 60%. She notes than benefits have expanded from 26 weeks to 99 weeks, and that SNAP – the old food stamp program – has just been increased, with no time limit.

Then she raises this question: “Will we follow the 27 countries of the European Union, where benefits are generous [but] federal outlays as a percent of GDP average 49%? [Or] will we return to an era of personal responsibility where entitlements were [just] for the poor?”

It’s funny how she can see the speck in someone else’s eye and not see the plank in her own.

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