by Gary North
People ask me why I'm so gloomy about America's economic future. I'm not gloomy about America's economic future — in the 22nd century. I am gloomy about its immediate economic future. That's because we are in capital-consumption mode. Businesses are not investing, and citizens are not saving. We are running a $500 billion payments deficit and a U.S. budget deficit to match. The dollar will fall. Count on it.
But my concern goes beyond the failure of individuals to save. It goes to the endless subsidies, at taxpayers' expense, of those who learn how to milk the welfare system. Consider these offers, which appear on a New York City Web site. Please pay attention to the following phrase: "regardless of your legal status." Maybe you have not seen anything like the following. That's because you haven't looked.
ACCESS TO PUBLIC BENEFITS **
Many immigrants in New York City are eligible for public benefit programs. Access to some benefits depend upon an immigrant's legal status, while other benefits do not. The following is a brief description of various benefit programs that may be of interest to immigrants.
Supplemental Security Income (SSI)
"SSI" or Supplemental Security Income is a cash benefit for the elderly (65 and older), blind or disabled. When you receive SSI, you should automatically receive Medicaid. SSI is a federal public benefit administered by the Social Security Administration.
You can apply for SSI at any Social Security office, or over the phone. You can arrange for an appointment (English and Spanish) to file your application by calling the national toll-free service at 1-800-772-1213 (TDD 1-800-325-0778). An appointment is not required, but may reduce the amount of time you spend waiting in an office.
The Food Stamp Program
The Food Stamp Program provides coupons and Electronic Benefits Transfer (EBT) cards to low-income families to buy food. This is a federal program operated by State and local welfare offices.
You can go to any HRA Job Center or Food Stamp Office (listed below) to apply for food stamps. Please be advised that there were recent expansions in immigrant eligibility for Food Stamps and many immigrants who were not eligible previously may now be eligible. See Food Stamp Flyer. There are 20 Food Stamp offices in New York City, open Monday to Friday from 8:30 a.m. to 5 p.m. Your application can take up to 30 days to be processed, but if you have an emergency you may be eligible for an emergency benefit within 5 days. If you apply for public assistance at a job center, you will fill out a Food Stamp application at the same time. Visit the HRA Web site for a list of NYC job centers.
All Food Stamp offices are now required to translate all materials into Spanish, Chinese, Russian, Haitian-Creole, French, Arabic, Korean, Vietnamese and Yiddish. If you need an interpreter, be sure you tell the office, and they will provide one for you free of charge.
The Food Stamp Offices Locations: . . .
Temporary Assistance for Needy Families (TANF)
TANF, or Temporary Assistance for Needy Families is a federal program that provides cash-assistance to low-income families.
Visit the HRA Web site for a map of NYC job centers, where you can apply for TANF and other public benefits.
All children, regardless of immigration status, are eligible for healthcare coverage in New York State, if their families meet the financial requirements. All categories of low-income legal adult immigrants are also eligible for Medicaid in New York. If you have a medical emergency, you have the right to call an ambulance and to receive care in an emergency room, regardless of your legal status. . . .
The School Breakfast/Lunch Program
The School Breakfast Program (SBP) and the National School Lunch Program (NSLP) are federally assisted meal programs that provide free or reduced-price meals to schoolchildren at participating public and private schools. In New York State, almost all public schools participate in the program. For eligibility guidelines, please visit the US Department of Agriculture Web site.
Benefits for Undocumented Immigrants
Anyone, regardless of status is eligible for the following benefits:
PCAP: Prenatal care for pregnant women and infants. Call 1-800-522-5006 (Assistance available in any language).
Domestic Violence Assistance. Call: 1-800-621-4673 (Assistance available in any language).
Child Abuse and Maltreatment Hotline. Call 1-800-342-3720 (Assistance available in any language).
Emergency Housing Hotline. Call 1-800-994-6494 (English and Spanish).
Food Emergency. Call (866) 888-8777 (English, Spanish, Chinese, Haitian-Creole, Russian).
AIDS Hotline. Call 1-800-825-5448 (Assistance available in any language).
Free or low-cost health insurance. All children, if otherwise eligible, are entitled to Health Care. Many adults are as well. Call HealthStat at 1-888-NYC-6116
All children are also eligible for school breakfast and lunch programs
Citizenship/ Legal Services. . . .
** This is a partial list of programs and eligibility rules
If you want to know why New York City has been the destination of choice for immigrants from Puerto Rico for half a century, here's why. The United States has open borders with Puerto Rico. But word got out about the city's welfare programs. Illegal immigrants got their agents to demand equal protection under the law. You have already seen some of the results: "a partial list of programs and eligibility rules."
WHEN WILL IT END?
It will end when the money runs out. That will be when creditors will no longer buy municipal bonds, and the Federal government no longer subsidizes municipalities. When I say "creditors," I include the Federal Reserve System.
But when will the FED cease to act as the lender of last resort? When hell becomes a resort center.
The FED will crank out money. Don't worry about deflation. When it comes to unbacked electronic money, there's a lot more where that came from!
When the money ceases to buy anything of value, then it will end. When the dollar is like Confederate currency was in 1864, then it will end. Not until then.
The question is: Will productivity continue upward, so that these tax-funded wealth-transfers can still be funded? That's where the lack of saving by Americans becomes a crucial factor. We are being funded by foreign investors, to the tune of $500 billion a year: the payments deficit. Those investors expect to be paid. They don't care if our domestic welfare programs continue to be funded. They want to be paid, either in interest payments (ha!), dividends (ha! ha!), or capital gains (ha! ha! ha!). Have you seen what interest rates pay these days? Or dividends? Considering taxes and price inflation, interest on CD's and bank accounts are negative. Bonds break even, but the risk factor is high: rising rates. As for dividends, they are under 2%. This means that there must be capital gains. But foreigners face a currency exchange risk. If the dollar falls, there must be capital gains of equal or greater value after taxes. Fat chance!
So, the welfare system will endure. It will continue to sap New York City of revenues that should be used for improving the city's roads or protecting the public from crime. When was the last time New York City or any major city granted tax cuts to residents? The ratchet is always upward. That's because there is always greater demand for free services than there is supply. There is always someone on the street who can be singled out by a special-interest group as a poster child of people's uncaring attachment to their own money. "There's more to be done." There will always be more to be done.
That's why it is not going to end until the money runs out, i.e., until the purchasing power of the money runs out.
A TAXPAYER REVOLT
In 1775-76, the American colonies revolted because of taxation without representation. The total tax burden imposed by England was about 1%.
Note: if anyone wants to pick up my share of the tax burden, I would be happy to let him have my right to vote. Too bad that deal is not available.
There will be a revolt when the voters finally figure out that they will not be able to milk the system for more than they are paying in milk. The voters today look at the Federal Government as if it were a cow with an udder with 290 million teats. When the tax burden becomes too great, they will finally figure out that they are part of the udder rather than the squeezing fingers.
But before this happens, the FED will start picking up more of the tab. The public will pay for the system, not by direct taxation, but by indirect taxation: monetary depreciation. That's why I don't worry about deflation. I look at that list of free goodies to immigrants, and I know for sure that there will be no deflation in my old age.
Ludwig von Mises was once asked if he had an inflation hedge. He answered: "Age!" He died in 1973. He was correct. He missed out on the big push in the second half of that decade, plus everything since then.
I don't have that hedge available to me (I hope). So, I will be asked to do my share: to pick up the tab.
Old people lose their ability to generate income. This is when they wind up at the mercy of that milk cow. But that cow has too many fingers grabbing for the available milk.
Mentally, I made up my mind at age 17 never to become dependent on Social Security. I had been warned about the statistical improbability of that pay-as-you-go boondoggle. That has forced me to keep looking for new opportunities to start side businesses. I want passive income that I own. I will have to pay taxes on it. That's the price of my personal independence from Social Security. I will not deliberately become reliant on the tender mercies of the government. I can see the tax revolt coming. The rebels-to-be are all young. They will not look fondly on my white hair.
Copyright © 2003 LewRockwell.com