NC Budget and Tax Center

According to a new report released by the conservative Cato Institute, the “welfare system provides such a high level of benefits that it acts as a disincentive for work.” This so-called hidden prosperity of the poor theory just doesn’t stand up to reality.

The report’s findings should not be seriously considered by any policymaker, or anyone else, because there are several major flaws in the analysis. The authors incorrectly assume that a “typical” family qualifies for and receives assistance from all seven of the most common safety-net programs while non-working families get none. There are two crucial blunders with this methodology.

First, the authors greatly exaggerate the public benefits that most people living in poverty actually receive. To bolster their case, the authors assume that the “typical welfare family”—which they define as a single mother with two children—receives each of the following services: Temporary Assistance for Needy Families (TANF), SNAP (formerly food stamps), WIC (a nutrition program for pregnant and postpartum women and young children), Medicaid, housing assistance, utilities assistance, and emergency food assistance. But this is simply not the case in North Carolina or anywhere else in the United States. The vast majority of poor people do not receive all the services they are eligible for, in part because there are not enough funds to allow that. Read More


Dean BakerOne of the country’s keenest economic policy observers, Dean Baker, has an excellent take down of Washington Post columnist Robert Samuelson’s latest demands that the U.S. slash social spending this morning at the Center for Economic and Policy Research website. His message: America’s obsession with near-term deficits remains utterly illogical and counterproductive: 

“First, the budget is only constrained at the moment by superstition. There is no obstacle to the government borrowing more money to meet needs and put people back to work. We are not spending more money because we have superstitious people with large amounts of power who are making claims about the dangers of deficits that they cannot support with evidence. Rather than lecturing seniors, who have a median income of $20,000, on the need for lower Social Security and Medicare benefits, Obama could try to confront the people spreading superstitions about deficits….

…In fact, according to the Social Security Trustees projections, Read More


Senior Researcher Arloc Sherman of the Center on Budget and Policy Priorities put up an extremely helpful and illuminating post yesterday afternoon on the group’s Off the Charts blog about poverty.

It shows a critical fact that is frequently misrepresented or not reported in the public debate:  While poverty has been on the rise over the last decade, non-cash public benefits like housing assistance and food stamps (SNAP) do make a significant difference in keeping it in check.  He notes that because the “official” poverty rate is based on pre-tax cash income, it ignores important non-cash benefits that, when factored in, lower the poverty rate.

This does not mean, however, as conservatives frequently try to argue, Read More


This morning, Raleigh’s News & Observer was kind enough to publish an essay I wrote that details some of the history of unemployment insurance in the United States, its importance in making our economy work more effectively and the recurring, counter-productive efforts by various misguided groups to undermine it. Unfortunately, space limitations forced the elimination of  a couple of passages from my original draft.

Happily, the folks at NC Policy Watch (for whom I hope to be contributing on an occasional basis in the days to come) have been kind enough to allow me to publish the entire piece below. I hope you will enjoy it.

Unemployment compensation: A win-win for business and families Read More

NC Budget and Tax Center

During last summer’s hard-won debt deal, President Obama and Congressional leaders agreed to a set of spending cuts designed to reduce the Federal budget deficit, including a $54.7 billion reduction in defense spending for FY2013.

Nine months later, however, leaders in the U.S. House are set to renege on this agreement by reversing the scheduled defense cuts and making up the resulting short-fall by making an additional $34 billion cut over the next ten years to the Supplementary Nutrition Assistance Program (SNAP)—otherwise known as food stamps—a program that was explicitly exempted from the spending cuts outlined in the original debt deal due to their disproportionate impact on the most vulnerable.

These cuts will prove devastating to low- and moderate-income families that rely on this assistance to adequately feed their families.  As Politico reports:

“An average family of four would face an 11 percent cut in monthly benefits after Sept. 1 and, even more important, tighter enforcement of rules would require that households exhaust most of their liquid assets before qualifying for help. This hits hardest among the long-term unemployed, who would be forced off the rolls until they have spent down their savings to less than $2,000 in many cases.”
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