• Get Ready Pick Up the Tab (Again)

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    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.


    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.

    Security Income (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.

    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.

    Food Stamp Program

    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.

    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.

    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.

    Food Stamp Offices Locations: . . .

    Assistance for Needy Families (TANF)

    or Temporary Assistance for Needy Families is a federal program
    that provides cash-assistance to low-income families.

    the HRA Web site for a map of NYC job centers, where you can
    apply for TANF and other public benefits.


    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. . . .

    School Breakfast/Lunch Program

    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.

    for Undocumented Immigrants

    regardless of status is eligible for the following benefits:

    Prenatal care for pregnant women and infants. Call 1-800-522-5006
    (Assistance available in any language).

    Violence Assistance. Call: 1-800-621-4673 (Assistance available
    in any language).

    Abuse and Maltreatment Hotline. Call 1-800-342-3720 (Assistance
    available in any language).

    Housing Hotline. Call 1-800-994-6494 (English and Spanish).

    Emergency. Call (866) 888-8777 (English, Spanish, Chinese,
    Haitian-Creole, Russian).

    Hotline. Call 1-800-825-5448 (Assistance available in any

    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

    children are also eligible for school breakfast and lunch

    Legal Services. . . .

    the Elderly. . . .

    ** 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.”


    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.

    why it is not going to end until the money runs out, i.e., until
    the purchasing power of the money runs out.


    In 1775-76,
    the American colonies revolted because of taxation without representation.
    The total tax burden imposed by England was about 1%.

    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.

    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.

    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.

    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.

    11, 2003

    North is the author of Mises
    on Money
    . Visit http://www.freebooks.com.
    For a free subscription to Gary North’s newsletter on gold, click

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