Devolving the Welfare State

     In the last several decades our nation has embarked on a well intentioned search for the holy grail of a government provided social safety net that will provide social benefits for the needy while allowing for a vibrant healthy and prosperous society. As is typically the case, reaching this holy grail is unachievable for any collective body for the same reason it was so difficult back in the mythical days of King Arthur -- mankind has little control over the broad spectrum of its own sins. The result of this quest is that our nation is facing a five trillion dollar debt with many more trillions in future liabilities. The question we, as a nation, are faced with is how to devolve this welfare state to one that fits both the goal of promoting a social safety net, yet also fits within the boundaries of a balanced budget process.

    There are some who believe the secret is to devolve the federal government welfare responsibilities to the States. This may have some merit from the point of putting new faces in charge with some latitude for experimentation and adaptation not available in the centralized federal format. However, this approach is still fraught with many problems, most of which are related to the mistaken belief that politicians are the anointed masters of the social safety net and government is to remain the best tool for controling this political enterprise and exercise.

      Where we should do is move the responsibility for welfare out of government to the private sector. Our constitution's preamble defines the proper role for government is to 'promote the general welfare', not provide it. Clearly we have moved away from that foundation and the result has been a five trillion dollar fiscal disaster that will strap our nation's children with 82% tax rates if allowed to grow unchecked. The question that is facing our nation is how to devolve the ponderous welfare state without jeopardizing the well being those most in need.

      Ours is a charitable nation full of individuals who have always felt compassion to help give a helping hand to those in need. Therein lies the clue to the solution -- CHARITY. What is needed is a tool to empower and promote our private charity sector while devolving power from the politicians, leaving the politicians with their proper role of promoting the general welfare through a system of government accredited private charities who get their guidance and support directly from the public.

       How might such a system work? The most obvious route is to implement a Taxpayer Directed Budget (TDB) with its provision that (when fully implemented) one could get full tax credit for accredited charity donations in lue of sending those tax dollars to government welfare programs that provide the same basic service. Briefly, under a TDB, taxpayers can optionally divides one's tax dollars up within ranges for the major activities that are set by Congress and the President. The TDB forms are sent to a Balanced Budget Commission that would oversee the process. Taxpayers could be provided a list of accredited charities for welfare, another for health, another for housing, the environment, etc.

       What is an accredited charity? There would be process whereby charities interested in meeting this standard would have to meet certain standards that the government oversees before it can become a valid recipient of tax credit charity donations. Obviously, this can be a can of worms, but existing accreditation processes generally have more checks and balances than our current bureaucratic welfare state in promoting cost effective service. It is easier to discipline when the oversight is separate from operations as there is a clear division of powers and duties. Conversely charity operations will have more latitude to be creative as their operations are largely separate from government.

       Each major activity (welfare, health care, housing, environment, etc) might have its own set of accredited charities (leaving out the military and national debt). All the charity credit checks (and TDBs) are sent into the Balanced Budget Commission (a mythical bipartisan Congressional Group that would oversee the Balanced Budget, kind of like base closure commission). The BBC would know what was or wasn't funded since it gets all the checks. It could act to fill in the 'cracks', either by government welfare programs, government subsidizing a charity (perhaps creating some) and/or by tweaking the accreditation process to give incentives for charities to expand operations to new concerns, or perhaps putting up welfare programs for bid (using the government welfare dollars to fund the charities that won the bid).

      The primary control beyond the natural structure of the TDB process is the 'marketplace'. People will put money in charities that they feel need support. Charities, as well as special interests, can make their case to the people that they are supporting a good cause. There would be little need for politician's to play the special interest political game as the Charity Market Place would be much more responsive as well as appropriately full of natural checks and balances.

    Many charities, such as the March of Dimes are really a conglomerate of charities under a larger umbrella. They will operate as conglomerates do, buying up and spinning off operations as they see fit until every reasonable niche of need would be filled, either by charity, charity/welfare, or welfare. Special interests can approach these charities with their needs and would likely get more response than lobbying government since the charity would be more flexible and adaptive than some government agency with 5 feet worth of manuals to follow.

     Obviously, the system would be phased in over a few years, with increasing charity credits allowed each year or two years, until the maximum desirable rate was reached. I have chosen that to be 100% of any activity for one's direct income tax dollars. It could be adjusted as deemed desirable.

      Given that many of today's government programs have an appalling 28% of money reaching the recipient compared to twice that much or more in the case of many private charity operations, it is possible that more welfare as charity can be provided with less overall cost to the taxpayer. The savings could be put towards paying down the federal debt, which would in turn promote lower interest rates, more prosperity, etc, etc.

     Basically, the resulting system would be very adaptable, very sensitive to needs, and generally quite cost effective. Best of all, it would operate outside of the realm of the politically driven government welfare state. Our nation's government could return to its basic rightful premise and foundation of promoting the general welfare. Individuals could get back to the living the American dream -- life, liberty and the pursuit of happiness including the satisfaction of personal participation in the helping others without an oppressive government middleman.

Always Right