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Wielding the budget axe in California

Wednesday, February 17, 2010

The LA Times reports on the latest proposed spending cuts in California, part of an ongoing process aimed at closing a $20 billion budget gap following last year's shortfall of about three times this amount that, if not for the billions of dollars in Federal stimulus money, would have produced an even more disastrous outcome.

Gov. Arnold Schwarzenegger's latest proposals to close California's budget shortfall would end public assistance for most new legal immigrants, eliminating emergency cash, food and medical aid for those who don't yet qualify for federal welfare.

The proposal would represent an about-face for the state. In 1996, Congress denied access to welfare for most legal immigrants who weren't citizens. California and other states established programs to fill the gap.

Now, officials say the state can't afford the price tag. Schwarzenegger's plan would save $304 million but leave tens of thousands of elderly, disabled and impoverished people with no safety net in a deep recession.
When families petition to bring relatives to the U.S., they are required to sign affidavits agreeing to support them financially for up to 10 years. But many of these families have fallen on hard times.
Apparently, most legal immigrants are provided with a broad range of federal assistance after living in the U.S. for five years and, given the commitment of support from the U.S. families who sponsored them, this does seem to be a reasonable approach, however, it seems clear that a lot of people have become dependent on this aid.

For the long-term viability of the state, it would sure be nice if they got to work on what they call at the Orange County Register, the $100,000 pension club.

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SadinUSA said...

"[M]ost legal immigrants are provided with a broad range of federal assistance after living in the U.S. for five years and, given the commitment of support from the U.S. families who sponsored them, this does seem to be a reasonable approach, however, it seems clear that a lot of people have become dependent on this aid."

The so-called 'family sponsorship' isn't enforceable because, not surprisingly, the family is also likely to be poor immigrants.

So, if you move here legally and settle in California, you'll get California welfare for 5 years as you wait to qualify for a "broad range of federal assistance."

That doesn't sound smart or reasonable to me.

Obviously, if you offer 'free money' to people, they will take it and 'become dependent' upon it.

The more 'reasonable' question is:

What happens if you don't offer free money to people?

Do you think maybe they'll deal with it?

This is like the ridiculous 2 year unemployment benefits now. People adjust their spending and see it, correctly, as a 2 year paid vacation. They don't start to look for work until their benefits run out. Not surprising...

What do you think would happen if the unemployment benefits ran out in 1 year? Do you think maybe they'd start looking for work after 1 year instead of 2?

All these government programs start out sounding nice (help people out with the rent for a few weeks as they look for a job) and end up becoming ridiculous give-away programs that are bankrupting this country.

California's massive budget and other problems simply portend the future for the entire USA.

As usual, California is ahead of the rest of the country. Sadly, in this case, they're leading us all over a cliff.

Dan said...

Unemployment and handouts to immigrants are entirely different. One group pays into an insurance fund, the other does not.

Unemployment is a joke, but not for the reason of duration you stated. Unemployment is an effective wage floor. If you don't have to work and can collect $x.xx/wk on unemployment, then any job that doesn't pay significantly more that what you can earn on unemployment is unappealing. And what about the decision to collect it? It's not really a free lunch. If you were working, which is a prerequisite for collecting, then you were paying for unemployment "insurance". You were coerced into paying this, it was not voluntary (it was/is stolen from you). Therefore, collecting unemployment is the same as "stealing from the thieves". Or you could simply rationalize it as collecting a benefit that you had already paid for.

I think we should not have gov't coerced unemployment insurance. But before we get rid of certain compulsory safety nets, we need to end gov't largesse to banks and the disaster that is fractional reserve lending; both of which create a need for social safety nets. We can, however, eliminate immigrant welfare immediately.

simplesimon said...

The issue is whether government 'safety nets' work or not. They do not work.

Any system that pays you NOT to work will result in fewer workers. The longer you pay someone, the longer they will stay unemployed. That's the point of the comment about UI.

Read the following if you care to see the scientific analysis:

Here's the abstract in case the link doesn't work some day:

"This paper tests the effects of the level and length of unemployment insurance (UI) benefits on unemployment durations. The paper particularly studies individual behavior during the weeks just prior to when benefits lapse. Higher UI benefits are found to have a strong negative effect on the probability of leaving unemployment. However, the probability of leaving unemployment rises dramatically just prior to when benefits lapse. When the length of benefits is extended, the probability of a spell ending is also very high in the week benefits were previously expected to lapse. Individual data are used with accurate information on spell durations, and the level and length of benefits. Semiparametric estimation techniques are used and compared to alternative approaches. The semiparametric approach yields more plausible estimates and provides useful diagnostics. "

Dan said...

I understand that social safety nets do not work. My argument is that duration is irrelevant. Sure there's some correlation, but duration isn't the only or even the primary driving factor. As stated in your abstract, "Higher UI benefits are found to have a strong negative effect on the probability of leaving unemployment." As I stated, I believe we should not have these safety nets. However, I also feel it is useless to correct something like unemployment "insurance", which is more of a symptom of the disease than the disease, and should focus our energy on real issues like wealth confiscation through inflation and other forms of gov't coercion/fraud which sinks all boats instead of lifting them.

simplesimon said...


The 'disease' is BIG government in all its forms.

You seem worked up over inflation and unspecified "other" forms of fraud.

I'm POed about monetary policy, fraud and corruption in government as well.

The UI example was only raised as an example of how BIG GOVERNMENT always fails.

It wasn't portrayed as the #1 problem in our government that MUST be immediately addressed before any other issue. It was just an example of a well-intentioned program that causes vast waste and fraud.

God only knows where to start as the #1 specific priority except, in general, to elect people who agree that big government is not the answer and let them start somewhere.

You seem obsessed with pointing out that UI is a bad idea but not the WORST thing government does.

I guess that's true so I'll concede the point but what difference does it make? Do you want to change the example so we can agree on the absolute WORST thing government has ever come up? If so, go ahead.

I'm railing against the Nanny State and proposing that smaller government is better.

Do you agree or not? For example, how do you think the 'inflation' problem should be addressed? With more regulation? If so, you do NOT agree with my premise that a smaller government is the answer.

Anonymous said...

There will be 10%+ unemployment for years. The question is if these people don't get Fed/State money what will they do. Some can free load off others, some don't have that option. One thing is sure they won't starve, they have guns and knives and will use those tools to get by.

Dan said...


I don't think I was disagreeing with you.

Yes, I agree that Big gov't in any form, is the problem. I was addressing the post above my first post which may or may not have been you, that was attempting to equate welfare for immigrants with unemployment insurance. I meant for my argument to mean that while they are both part of the nanny state, they are different welfare issues with different consequences for dismantling them. I then tried to infer that, most of our welfare problems begin with big gov't (with the power to coerce and commit fraud) and that I feel a remedy to this illness needs to start by attacking the source of the issue and not outlier symptoms.

I'm definitely for less regulation, however, you can't back out regulation that regulates a fraudulent and corrupt system without fixing the fraud and corruption.

Far down on my list of eliminating Big gov't, in my opinion, are welfare issues. Because unless you fix the underlying disease, welfare issues will persist. As long as welfare issues persist, you'll get populous voting which will perpetuate Big gov't. If the market is not freely allowed to create jobs, then there will be no jobs for the jobless to occupy.

I'm certain this disease will fix itself, either through default/collapse or total gov't take over. I'm not certain if we've passed the point of peaceful remedy or not.

Not that this is the current case but: Even Mises was afraid to touch how to handle unemployed workers who have been displaced due to technological improvements in writing that there probably should be some sort of gov't assistance or "welfare" to retrain those whose job skills have become obsolete. (paraphrasing some chapter in Human Action) This kind of thinking leads me to believe that we can't totally shit on the those in the general category of "unemployed".

But I do agree with you. Big Gov't is the issue. It always has been and always will be.

Brittanicus said...

Talk about self inflicted wounds? Should the rigid immigration laws pass in the state of Arizona? Look out California--THE SANCTUARY STATE.Currently so many other states are teetering on the edge of bankruptcy, because of the illegal alien invasion. Millions upon millions of more decrepit, desperate illegal immigrant families will be heading your way? Think of it! Your utra-Liberal assembly ruling the roost in Sacramento, will have to borrow even more money from Communist China, just as our derelict political old mens club in Washington have done Your need to loan that extra cash, with astronomical interest to pay for even more "Anchor Babies" welfare. Be assured Illegal aliens know all the loop holes, to get at all that public welfare cash. and government entitlements. Arizona said enough is enough and while their own congregations of poverty stricken population, have have been cut back (just as California) on welfare subsidies to share with illegal immigrant families. The people of Arizona frustrated with the lying garbage from Washington, have taken their immigration laws into their own hands at last, while California still dishes out billions of dollars a year. We are told illegal aliens don't get food stamps, low Income housing or many other government entitlements. Why do you think Pregnant women sneak across the border, to siphon off taxpayers dollars.

* The Urban Institute estimates that the cost of educating an estimated 800,000 illegal alien school children in the nation's seven states with the highest concentration of illegals was $3.1 billion in 1993 (extrapolated to $4.6 billion in 1996 by FAIR), but this estimate does not at all take into account the additional costs of bilingual education or other special educational needs.
* It is estimated that the number of children born to illegal aliens each year is 165,000. This figure is based on the crude birth rate of the total foreign-born population (33 birth per 1000) and the size of the illegal alien population (five million).
* In 1994, California paid for 74,987 deliveries to illegal alien mothers, at a total cost of $215.2 million (an average of $2,842 per delivery). Illegal alien mothers accounted for 36 percent of all Medi-Cal funded births in California that year.

The joke is going to be on California when countless numbers in Arizona, pack up their possession and head for the neighboring state. Perhaps Governor Richardson will welcome these lawbreakers with open arms, as we already know he issues drivers licenses to them. Of course Utah and the great state of Texas may receive additional occupancy as well, who will expediently offer them welfare like the once Golden State. It's a crying shame that foreign nation get preference over our own pregnant mothers our sick and infirm. What excuse do politicians have to sell American jobs overseas, while importing discount labor. Enact amendment to the 1986 Simpson-Mazzoli bill, don't use propaganda to say the laws were broken--when never enforced. Tell your Washington and state Senators and Representatives what--YOU--want, and not--CONSPIRE--with the special interest lobbyists? Here's the Capitol Switchboard number 202-224-3121 ONE LANGUAGE, ONE FLAG AND DEPORT--ALL--ILLEGAL IMMIGRANTS. IT CAN BE DONE WITH THE NEW GENERATION OF E-VERIFY.

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