Welfare Reform Worked

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Unleash Prosperity Hotline
Issue #741
03/29/2023
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1) Welfare Reform Worked – Time for Round Two
CTUP cofounder Steve Moore testified yesterday before the House Education and Workforce Committee this week on how to get Americans back to work by reforming welfare. In 1996 President Bill Clinton signed a historic bipartisan welfare reform (with the help of then-Speaker Newt Gingrich) requiring work and installing time limits for benefits.

Here were the results according to Brookings Institute scholar ([link removed]) and one of the chief architects of that bill, Ron Haskins:

1. Caseloads declined rapidly:

Between 1994 and 2004 the caseloads declined by 60%. The number of families receiving cash benefits hit the lowest level since 1969, and the percentage of children on welfare was the lowest since 1970.

2. Welfare recipients went to work:

"40 studies conducted by states since 1996 show that about 60 percent of the adults leaving welfare are employed at any given moment and that, over a period of several months, about 80 percent hold at least one job."

3. Record reduction in child poverty

“Between 1994 and 2000, child poverty fell every year and reached levels not seen since 1978... By 2000, the poverty rate of black children hit the lowest level ever recorded." The increase in total income [from work] accounted for this improvement.

4. More than $50 billion likely saved

According to CBO, the budget savings exceeded $50 (or closer to $100 billion in today’s dollars).

The bottom line: The pattern [from welfare reform] is clear, earnings up, welfare down.

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2) Gavin Newsom’s Energy Windfall Profits Tax Gambit
Californians pay BY FAR the highest gas prices at the pump. Last fall, California motorists were paying $2.60 a gallon above the national average – the equivalent of a $30 tax per fill-up.

Governor Gavin Newsom doesn’t blame the obvious cause – the state’s high gas taxes and an anti-fossil fuels regulatory framework that intentionally raises costs of oil and gas production. Instead, he blames “greedy” and “price-gouging” oil companies. Is Exxon more greedy in California than in other states?

Newsom wanted a windfall profits tax, but even the legislature dominated 2 to 1 by his fellow Democrats saw the folly of that. Instead, he signed into law this week a watered-down bill requiring energy companies to submit vast amounts of data to the California Energy Commission. Newsom freely admits the purpose of this is to impose an excess profits tax on oil and gas producers.

So Gavin, if your plan is to impose higher taxes on the oil companies, how is that going to bring gas prices DOWN?

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3) The Left Declares War on Air Conditioners
The Biden administration has learned very little from its abortive attempt to regulate gas stoves largely out of existence based on shoddy science.

Energy Secretary Jennifer Granholm ramped up her war on your appliances this week as she finalized rules for any new home and window air conditioners. Add AC to a growing list of home appliances the Biden regime has targeted: gas stoves, ovens, washing machines, and refrigerators. Granholm says these new regs will save money and help “tackle the climate crisis.” They also won’t blast as much cool air (just as the new wonder toilets don’t flush).

Glenn Reynolds of Instapundit proposes an alternative: start this ban on air conditioning in Washington, DC.

“We won two world wars with a capital city that was largely devoid of air conditioning,” he notes. “At least in the old days, Congress and senior bureaucrats used to flee the Washington heat for a few months, keeping them out of trouble. So no AC for DC!”

We only see one problem: most federal workers haven't been to the office in three years and counting.

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4) IRS Has Already Added 19,000 Agents for Next Year
We at CTUP HAVE TOLD congress that their first budget priority should be to save $50 billion by NOT hiring 87,000 new IRS agents.

They had better hurry up and rescind this money because Biden is planning a 25% increase in the IRS for next year with the money coming from last year's half-trillion-dollar "Inflation Acceleration Act."

Mike Palicz from Americans for Tax Reform reminds us that the White House flat-out lied when they said these new hires were only replacing retirees, even though the funding to double the size of the agency was ON TOP OF the IRS's existing appropriations.

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The White House swears on a stack of bibles these agents won’t be employed to target their political enemies. Then we read this chilling story in yesterday’s WSJ:

“House Judiciary Chairman Jim Jordan sent a letter Monday to IRS Commissioner Daniel Werfel and Treasury Secretary Janet Yellen seeking an explanation for why journalist Matt Taibbi received an unannounced home visit from an IRS agent. We’ve seen the letter, and both the circumstances and timing of the IRS focus on this journalist raise serious questions.”

Probably just a coincidence.

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5) Former Democratic Senator Blasts Biden’s “Unrealized Gains” Tax
John Breaux was one of the last sensible Democrats in Washington, and a real tax expert from his bipartisan work with Connie Mack on George W Bush's tax reform commission.

Here's his take on the Biden plan:

The latest plan circulating around Washington and state legislatures is a tax on “unrealized gains”—an effort to collect more revenue from the wealthy. But if enacted, the policy would have the opposite of its intended effect, allowing high earners to game the system further and transform how income and investment is taxed in this country...

High-priced accountants and lawyers will do what they do best: send their client’s money overseas, or set up more financial instruments, trusts and even charities that would exist mainly to hide wealth. The effect would be to further undermine the government’s ability to collect revenue and ensure the wealthy pay what they owe.

In addition to creating more loopholes than it closes, a tax on unrealized gains would have a chilling effect on investment...

Though the tax is unwise, it’s also unworkable. If you have ever received more than one home appraisal, you know that they can be wildly different. Imagine having to do this for everything you own every year...

History shows that after a new tax is adopted, its reach only grows. This is exactly what has happened with the income tax, whose once narrow scope has exploded since it was enacted in 1913. Our policy makers are pursuing a worthy goal in ensuring the wealthy pay their fair share. But they ought to keep this iron law of tax policy in mind, lest they make the problem worse.

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6) Washington Wrecking Balls

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