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Essay: Privatizing the anti-poverty programs

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Privatizing the anti-poverty programs

Introduction

This paper will look at the possibilities of eliminating the existing government anti-poverty programs. There are many arguments from economist that these programs, although advantageous, are more disadvantageous in their results. It is argued that these programs encourage people not to work because through the benefits of the programs they are placed better off than if they could work. Some of the programs are likely to break soon after their major contributors go into retirement and start sipping from the programs while other are believed to even encourage family breakups because of the attractive benefits which are available to the single mothers. This paper critically examines this issues and tries to show a solution on privatizing the anti poverty campaign.

A Background Overview

Anuradha Mittal and Peter Rosset (1999) give a very comprehensive analysis of the background of the poverty programs in the U.S. they claim that these programs do not work very well. They argue that the clearest evidence is the persistence of poverty at high levels and its continued growth over the past few decades. However they are quick to defend the anti-poverty programs claiming that it not that they can not end poverty but instead heaps the blame on the efforts put into these programs calling them, “incomplete and halfhearted” (Mittal and Rosset 90). They also blame the flawed theories on poverty to have contributed towards the increasing poverty.

The authors claim that over the past thirty years the U.S. poverty policies have been associated with many irregularities ranging from shortchanging mothers, stigmatizing the poor to incorporating race and gender biases. The authors’ further claim is that the consistent flaws in the poverty policies have continuously hobbled the government’s effectiveness in fighting poverty.

Government Anti-Poverty Programs

In the U.S. the poverty line is the main determinants of those who benefits from programs such as Housing subsidies, TANF, Medicaid, food stamps, school lunch vouchers and other programs meant to assist those are considered as poor or within a factor of the poverty line. At the level of individuals, wise personal decision in the areas of academic, investment and expenditure can help a lot in reducing poverty. Sound relationship decisions and bearing of children at financially appropriate time are also quite vital in the fight against poverty. However there exist inevitable factors that an individual has no control over and as a result the government should ensure that the factors are taken care of (Mittal and Rosset 91).

There are many claims that most of the government anti-poverty program discourages people from working. The welfare recipients are often better off as compared to working. Some of the programs are known encourage family break ups through their provisions of generous benefits to single mothers. Bouman (2008) appreciates that a step has been taken by the government to encourage families to work through the Welfare Reform Act of 1996 (Bouman 2008). The Act reduces the number of years a family can rely on the welfare. He however does not believe that the Act has done enough (Mittal and Rosset 91).

Some Government Anti-Poverty Programs and their Weaknesses

Under this section, some of the main anti-poverty programs will be reviewed and their advantages and disadvantages looked at. Some of these programs include the social security program, Medicare, Medicaid and unemployment insurance.

Social Security

This is a retirement program but also contains some welfare elements. Some of welfare elements include paying for widows, orphans and disabled people. A fraction of a person’s salary is paid to this program. At the age of 65 an individual qualifies for the social security income. Working for long will ensure more contribution to the program and will mean that the retirement benefits will be more (Mittal and Rosset 99).

Its Weaknesses

There is a general feeling that the program offers a false feeling of security. The program gives a false impression of a secure old age period. There are likelihoods that at the present time the program has surplus but in few decades the surplus is likely to run out. This is because many of the contributors (Baby Boomers) are likely to retire in several decades following leading to the drying up of the surplus which will make the program experience deficit (Mittal and Rosset 100). There are chances that if the social security is privatized it may work better.

Privatizing the Social Security

Biggs (1999) argues that the proposal to privatize the social security is supported by many economists and politicians. He writes that this will give people a chance to choose their retirement options. He writes that privatizing of the program will have to be done slowly in order to avoid impacting negatively on those who will soon be receiving their income from the program. Even if the privatized will require people to contribute Biggs (1999) is confident that the program will pay more to its members than what the current program is giving out. In addition people will have to make their own options in the manner of investing their money. He also adds that there will be a need for the people to be informed on better investment option s probably through middle and high schools or even through the public announcements in order to avoid major investing pitfalls (Biggs para.3).

Biggs (1999) presents a very clear calculation on how the privatization will work far better than the current one. He gives an example of a minimum wage worker investing a retirement fraction in a mutual fund. He claims that after such investment has been carried out for forty five years, savings of 1999 dollars would have accumulated. He further claims that the monthly interest alone will be around $1,200 which can service his/her monthly expenses. The principle amount in this case can be left untouched and can be passed down to the heir (Biggs para.4).

Medicare and Medicaid

Medicare is given to people over the age of 65 years while Medicaid is offered to those who are considered as poor. Mittal & Rosset (1999) writes that these two programs have been of great benefit to the poor and elderly through the assistance for the health costs. However he also writes that the same programs have coast the tax payers billions of dollars. These programs should actually be eliminated because of the amount of fraud associated with them and their inefficiency running. He argues that the scaling back of these programs will allow the government to lower taxes effectively enabling the citizens to pay for private insurance (Mittal and Rosset 103).

Other Anti-Poverty Programs

Other anti-poverty programs are unemployment insurance which is meant to benefit those who lose their jobs. Food stamp program provide electronic payments to the needy families. The TANF program provides cash payments to families. There are arguments that TANF is poorly managed and is an incentive for people not to work. Other programs include housing subsidies, head start, earned income tax credit and job training programs (Mittal and Rosset 104).

More Views on Privatization

Most economists believe that the best to fight poverty is by privatizing the welfare. There are strong views that the truly needy will get to be helped through private efforts such as local charities, churches, and neighborhood task forces. They argue that if a person is truly in need the neighborhood stands a better chance of knowing and lending the necessary aid.

Privatizing the program will free up billion of taxes which will raise the after tax income raising the standards of living for those who work. The anti poverty programs are bureaucratic and it is hard for the government workers to know is truly in need unlike the neighborhood task forces where a person lives. It very possible for the welfare programs workers to keep some people on the welfare so as to maintain their jobs (Biggs para.5)

Conclusion

The private efforts will be in a better position to fight the poverty war. The main challenge to the current programs is in efficiency and encouraging people not work. With the privatization of the welfare, it will be possible for only the truly poor to benefit from any welfare benefits. This will encourage those who can work to work.

Works cited

Biggs, Andrew. “A Poor Excuse for Opposing Privatization,” 1999. Retrieved on 26th January, 2010 from: http://www.cato.org/pub_display.php?pub_id=5006

Bouman, John. Principles of Microeconomics Digital Textbook. New York, NY: Bent Tree Press, 2008.

Mittal, Anuradhi and Rosset. America needs human rights, 1999. New York, NY: Wiley sons.

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