The Negative Impact of Multi-Generational Welfare

Table 1 Percent of Births on Medicaid by StateThis is from my article published by the Oklahoma Council of Public Affairs in their February Issue of the Perspective Magazine.

Government welfare programs were originally designed to be temporary to help people get back on their financial feet. Today, that is no longer true. For instance, SoonerCare, Oklahoma’s Medicaid system, imposes no time limits on the recipients as long as they meet various income-eligibility requirements. As we have discussed in these pages previously (“Oklahoma Growing Increasingly Dependent on Medicaid,” April 2013), Oklahoma already has an unhealthy dependency on SoonerCare.

As a consequence, it is very easy for families to become trapped in multi-generational welfare, which robs them of personal responsibility and self-reliance. There is a multitude of anecdotal evidence that multi-generational welfare in fact exists. Now, new academic research by economists Gordon Dahl, Andreas Kostol, and Magne Mogstad verifies this reality.

In a new study (“Family Welfare Cultures (pdf),” National Bureau of Economic Research, Working Paper No. 19237, July 2013), the authors examine family welfare cultures by looking at Norway’s disability insurance system. Norway’s homogeneous demographic makeup helps to keep the focus on welfare policies. The authors found “strong evidence that welfare use in one generation causes welfare use in the next generation.”

What really makes this study remarkable is that the authors firmly trust they have found more than a simple correlation. Instead, they believe they have found a causal link between parents dependent on welfare and their children following in their footsteps.

The causal link they found can be summed up succinctly: children learn from their parents. The authors “find suggestive evidence … in favor of children learning from a parent’s experience” with government welfare. In other words, children are conditioned by their parents’ welfare experience that significantly increases the chances that they too will end up dependent on welfare.

More troubling, the study also found that “consistent with this increase in adult children’s welfare dependency, we find that parental DI (disability insurance) receipt decreases the probability that a child will work or pursue higher education.” Therefore, income-based welfare, like Medicaid, becomes a self-fulfilling, multi-generational prophecy—low-income parents on welfare hamper the ability of their children to achieve a better life for themselves.

Of course, the question remains, how big of a problem is this for Oklahoma? To better answer that question, let’s examine a relatively new data series that shows the number of births on Medicaid as a percent of all births for each state.

As shown in Table 1, this percentage ranges from a whopping 71 percent in Louisiana to a low of 27 percent in Virginia, with a median value of 45 percent. (The data come from the National Governors Association (pdf) as reported by the Henry J. Kaiser Family Foundation. The table is an amalgam of several years because not all states report the number of births on Medicaid every year. To fill the gap, we used the highest percentage reported between 2003 and 2009, the latest year of available data. Note: we used the median Montana value because the maximum value appears to have been misreported.)

Unfortunately, Oklahoma is in the very high range, with 62 percent of all births on SoonerCare, the fourth highest in the country. In absolute numbers, that represents, on average, approximately 30,000 babies that are born right into Oklahoma’s welfare system each and every year. These data strongly suggest that Oklahoma has a very significant multi-generational problem in the Medicaid system.

In conclusion, this analysis should give Oklahoma’s policymakers yet another reason to stop expanding the Medicaid rolls. (For starters, how about a moratorium on advertising for SoonerCare?) Oklahoma’s very high number of births on Medicaid strongly suggests that multi-generational welfare is a very real problem with dire outcomes for the parents and especially the children. Breaking this cycle will not be easy, and compounding it by increasing Medicaid rolls would be a step in the wrong direction.

The War on Children

Picture of Crowd of Children in Keene New Hampshire

The last few decades in America have not been good ones for children. As a nation we have declared a “war on children” where the needs, wants, and desires of adults take precedence over those of children. Let’s take a brief tour of the battlefield.

First, in 1969, California became the first state to enact”no-fault” divorce into legislation and no-fault quickly spread to other states (pdf). Whether the old system of divorce was optimal or not, its dissolution had the effect of elevating the wants of adults over the needs of children. Even to this day, children generally have no legal voice in divorce proceedings–except as pawns to be fought over by the “adults.”

The story on the negative impact of divorce on children is being told in a new documentary called “Split.” This preview opens with some stunning statistics–over half of all children under the age of 16 will experience a divorce of their parents at a rate of 1 million children per year.

Second, the introduction of oral contraceptives, or “the pill,” in the 1960’s had two impacts on children–one direct and one indirect. The direct impact was that now children were no longer safe in the womb since the pill is an arbortificant–meaning that it doesn’t prevent the fertilization of an egg, it only prevents it from attaching to the mother. As such, the pill is really a chemical abortion.

The indirect impact of the pill was that casual sex was now possible on an unprecedented scale. Along with casual sex comes adultery and, consequently, divorce. The pill and divorce have proven to be a toxic pairing to American families.

Third, the war on children got even deadlier with the infamous Roe v Wade Supreme Court decision that legalized abortion throughout America. Now if chemical abortion wasn’t good enough, now you could legally hire a doctor to go in with the heavy artillery. This is the ultimate expression of putting the needs of adults over that of the children with the outright killing of the child. And, you thought government was suppose to help protect the innocent?!

Now we have moved into the nuclear age on the war on children with the arrival of same-sex marriage where children will be purposely created to serve the whims of adults. By definition, children can’t be born into a same-sex pairing, they have to “acquired” through adoption or a surrogate (be it a male sperm donor or female baby incubator).

The end result is the exploding of the legal system once designed to protect a child’s right to know their biological mother and father. Already, we are seeing bizarre cases such as three parents families. In essence, we have moved into the post-divorce world where a child can be born right into a step-parent situation. Historically, children involved in a step-parent situation received special care and attention.  Now, with same sex marriage, we have decided to impose it on them simply to cater to the perverse desires of adults.

Adding insult to injury, the war on children was greatly accelerated by an activist federal judge who recently ruled that the Constitutional Amendment defining marriage as between one man and one woman in Utah is unconstitutional at the federal level. This act of Judicial Tyranny will have far-reaching consequences and as Jennifer Roback-Morse succinctly put it in her “77 Non-Religious Reasons to Support Man/Woman Marriage” (pdf): “Same-sex marriage amounts to a hostile takeover of civil society by the state.”

Now, decades since the war on children began, the socioeconomic consequences are coming home to roost in the form of Demographic Winter. More specifically, lets look at some demographic data in Maine. Why Maine? Maine is a very interesting case study since it is demographically-neutral over time.  In other words, since it is overwhelmingly white and has been since the founding of the state then changes in variables are more easily identifiable without the worry of a shifting base.

As shown in the chart below, Maine saw robust natural population growth in the 1950’s adding approximately 12,000 Mainers every year as births easily outnumbered deaths. But starting in 1960, something ominous began to take hold. As noted above, the introduction of the pill appears to have played a major role in the decline of births which cut the yearly natural population growth in half.

Roe v Wade and no-fault divorce arrived in Maine together in 1973 although the immediate impact was muted by the largest in-migration into Maine in recent history with net migration of 68,922 people that decade. Many of these people “from away” in the 1970s were young, back-to-the-earth types who eventually went on to have families in the 1980s helping create the echo-boom generation.

Chart Showing Maine Births vs Deaths 1950 to 2012

Maine Births vs Deaths 1950 to 2012

Despite continued in-migration, Roe v Wade and no-fault divorce eventually caught up creating another prolonged slump in the birth rate that continues today. In fact, the drop in the birth rate has fallen so low that in 2012 Maine became the second state to record more deaths than births (West Virginia being the first). This dubious distinction puts Maine firmly in the grip of Demographic Winter.

Yet, it doesn’t have to be this way. In Maine, according to the Guttmacher Institute, approximately 2,800 babies are aborted each and every year. If those babies were born instead, Demographic Winter would not yet exist as this would generate a net natural population growth of about 2,600. This would not put Maine back to the 1950s, but it would certainly buy some much needed time to put the other genies back in their respective bottles–the pill, no-fault divorce and same-sex marriage.

Unfortunately, the war on children rages on in Maine and in states throughout America. Until very recently, it appeared that the war might be reaching a turning point with 30 states having Constitutional protections on traditional man and woman marriage (not including the potential overturning of the Utah Amendment). The recent federal ruling in Utah now casts doubt on that.

America has been barreling down one of the largest social experiments in history on the most innocent of victims–children. If you are among the lucky to survive the trip down the birth canal and have an intact traditional family, you are now the exception. What are the consequences of this monumental frontal assault? No one knows, but we are all about to find out, ready or not . . .

States Should Push Back Against IRS “State of Celebration” Ruling

SCOTUS - DOMA  20990

This is from my article published by the Oklahoma Council of Public Affairs.

The U.S. Supreme Court recently struck down a part of the federal Defense of Marriage Act (DOMA) that made it illegal for the federal government to treat marriage solely as the union of one man and one woman — legally referred to as Part 3 of DOMA. The Court’s ruling, however, left firmly in place Part 2 of DOMA which says that the states are the final arbiter of how marriage is treated. The ruling did not implement so-called same-sex marriage (SSM) in 35 states where it is banned by statute or constitutional provision.

Despite the narrow ruling from the Supreme Court, President Obama is determined to undermine these 35 states through the use of federal executive power. President Obama bluntly stated that “It’s my personal belief — but I’m speaking now as a president as opposed to as a lawyer — that if you’ve married in Massachusetts and you move someplace else, you’re still married, and that under federal law you should be able to obtain the benefits of any lawfully married couple.”

On August 29 the IRS issued guidance for SSM (pdf), saying couples could file their federal tax return based on their “state of celebration” (the state where they were married) as opposed to their “state of residency.” Therefore, if a same-sex couple was married in a state that legally recognized SSM, then the federal government will forever recognize them as “married filing jointly” for tax purposes even if they move to a state that does not recognize SSM.

Some analysts agree with President Obama and the IRS, saying “state of celebration” makes for better tax policy than “state of residency.” They warn against decoupling a state’s tax code from the federal tax code, saying doing so would impose huge compliance burdens and economic inefficiencies in the process.

But there are several problems with that argument. First, decoupling from bad federal tax law is not a sin. If higher compliance costs result, it is not the fault of the states but rather the fault of the IRS.

Second, though some would argue that decoupling sends the message that a state is more concerned with its local preferences than with long-term economic growth, in fact quite the opposite is true. States that are protecting natural marriage as between one man and one woman are the ones maximizing long-term economic growth.

Professor W. Bradford Wilcox, who leads the University of Virginia’s National Marriage Project, summarized a 2011 study on the impact of marriage on the economy this way: “The core message … is that the wealth of nations depends in no small part on the health of the family.” Wilcox further says the study suggests that marriage and fertility trends “play an under-appreciated and important role in fostering long-term economic growth, the viability of the welfare state, the size and quality of the workforce, and the health of large sectors of the modern economy.”

Third, decoupling from the federal tax code is not an all-or-nothing proposition. States choose to conform — or not to conform — to various federal tax provisions all the time. The reason for doing so could be as superficial as the (+ or -) budgetary impact of conforming, or there could be legitimate disputes over what constitutes sound tax policy. If a state chooses to keep “state of residency” as the basis for tax filings, it will hardly impact all state taxpayers.

Only same-sex couples would face the prospect of filing two federal tax forms and two state tax forms — the same situation that had existed prior to the Supreme Court ruling. Put simply, under the provisions of Section 2 in DOMA, the IRS must take its cue on SSM from state law, meaning following “state of residency.” Therefore, the IRS cannot unilaterally allow same-sex couples the ability to file a single federal tax form as “married filing jointly” in states that do not recognize SSM — they must still file separate federal tax forms as “single” filers.

In the end, there is a very good policy reason for states to decouple from “state of celebration” and keep the current “state of residency” requirement. That reason is to push back against federal overreach which threatens to negate policies protecting natural marriage that were overwhelmingly supported by voters of these states — including Oklahoma, where in 2004 a full 76 percent of voters stated quite simply and directly that “Marriage in this state shall consist only of the union of one man and one woman.”

If Oklahoma policymakers passively adopt the IRS “state of celebration” ruling by conforming to the federal tax code, they will be in direct conflict with the will of the people, the Oklahoma Constitution, and the engine for economic growth. That is bad tax policy.