Whose welfare?

Who is “poor” in California?

The state treasury raked in $5 billion extra this year, state officials say, but because of what state Finance Director Tom Campbell calls “autopilot spending,” we’re forced to pay out $10 billion extra—$5 billion more than we took in.

Special-interest groups say some of that can’t be helped—it’s for the “poor.” I wonder how voters would feel if they knew who the “poor” really are. The Legislature’s view of who deserves taxpayer help has made California one of the highest-taxing states. But California hasn’t proved too good at actually reducing poverty.

How about a semi-retired person, somebody over 65 who still makes up to $38,000 a year? Is that person poor? No, that’s a member of the middle class. But taxpayers must give that person rent “assistance” each year.

What about a person making $35,000 who owns a home worth up to $175,000? That’s the median income in California, and as a homeowner that person gets nice federal tax perks. But taxpayers are forced to “assist” this person each year with his or her property taxes, albeit in smaller amounts the more the person earns.

Much bigger chunks of cash fly out the door via CalWORKs—the state’s “welfare” program. Under CalWORKs, state and federal taxpayer money is given, for up to five years, to vast numbers of able-bodied Californians, including many who earn more than the poverty rate. Governor Arnold Schwarzenegger is seeking a slight trim in who gets these checks, but even his reduction would still leave California with the fourth-most-generous welfare programs in the nation.

As finance chief Campbell recently told me, “Whatever the program, we are often the most generous state in the nation, or very close to it.”

The problem is that each time the Legislature creates such an “entitlement,” it automatically ensures that “qualifying” people can’t be turned away, whether poor or not poor and whether California is broke or not.

That’s how we ended up with the nation’s Cadillac of health-care welfare programs, Medi-Cal.

On one hand, California is very frugal in reimbursing doctors for providing Medi-Cal treatment. A Kaiser Family Foundation study reflecting these low payments to doctors even has been used by some in the welfare lobby to argue that California is cheap to the recipients—rather than cheap to the doctors.

In fact, 6.5 million poor and non-poor Californians qualify for Medi-Cal, and they enjoy the most generous coverage in the nation, thanks to the Legislature. Recipients are guaranteed a deluxe array of free treatments provided only in California and five other states: free acupuncture, free chiropractic, free special rehab and free hospice care.

Such pricey extras aren’t required by federal Medicaid law. But the Legislature insisted taxpayers foot all these bills, even though many taxpayers can’t afford the kind of deluxe insurance that would provide them with such popular extras.

As a result of the uncontrolled system created by the Legislature, Medi-Cal is exploding—another skyrocketing, autopilot trajectory. Today, roughly 40 percent of all births in California are paid for by Medi-Cal, because mothers who earn double the poverty rate qualify. Since the Legislature has deemed this an “entitlement,” the legions who qualify can’t be turned away no matter how large the program balloons, deficit or not.

California, though an expensive state to live in, is not the most expensive in the nation. Yet, our Legislature insists that California taxpayers fork over the No. 1 payouts for couples on Social Security Insurance (SSI) and the No. 1 monthly checks for individuals on SSI.

It’s big of the Legislature—but the cash has to come from somewhere. California taxes are high but don’t provide enough dough to fund these rapidly metastasizing social-welfare programs.

That’s one big reason why the Legislature gradually has shifted vast amounts of spending away from fundamental, historic state responsibilities like maintaining California’s infrastructure. Today, by some analysts’ figuring, aside from special bond measures that voters approve, less than 1 percent of the state budget goes to transportation and infrastructure, while perhaps 20 percent goes to social welfare. Thirty years ago, those two numbers were almost exactly flip-flopped, with just a tiny portion going to social welfare.

Voters might agree with this choice by the Legislature, or they might not. But voters are largely in the dark about this flip-flop, so it’s hard to say.

What is clear is that, in the alternate universe inhabited by the California Legislature, politicians no longer feel responsible for basic infrastructure (perhaps they think God will take care of it). Moreover, legislators clearly believe that California taxpayers should transfer their money to somebody else’s pocket.

Gridlocked taxpayers got fed up with crumbling roads a few years ago and approved Proposition 42, which guaranteed that transportation taxes actually would be spent on transportation. But Proposition 42 contains a loophole: It lets the Legislature and governor take those taxes away from transportation during “emergencies.”

Naturally, every year since voters approved Proposition 42, both under Gray Davis and under Schwarzenegger, Sacramento has declared an “emergency” and spent transportation funds elsewhere.

Until taxpayers get truly angry, this 30-year pattern will continue, and California’s sorry infrastructure will go begging.

Taxpayers briefly got angry during the Davis recall, when Republican state Senator Tom McClintock of Thousand Oaks earned impressive public approval ratings by talking straight about all this during debates and speeches. He often spoke of the Legislature’s abandonment of spending on highways, reservoirs, power supplies and other infrastructure crucial to California’s economic health.

Now, Schwarzenegger is picking up on some of McClintock’s themes. He is promoting modest controls on welfare, plus he’s proposed a tool for across-the-board spending cuts that would take effect when state revenues drop too low. Both ideas already have resulted in intense opposition from legislators.

Republicans aren’t the only people talking about the autopilot crisis. Respected non-partisan Legislative Analyst Liz Hill—no fan of Schwarzenegger’s automatic-cutting idea—said on February 22 that the Legislature needs a way to “modify the cruise-control provisions of the budget” when the treasury is bare.

Actually, the Legislature has that power now. Legislators can rein in the open-ended, uncontrolled welfare programs they have created. But they won’t do it. The Legislature, which just got another terrible public approval rating, is incapable of fixing its own mess.

As Campbell told me, “It’s extremely difficult for the Legislature to take on these formulas one by one, because they weren’t approved by accident. These formulas are a result of a political system in which each program, each [entitlement], has a very active, very effective constituency.”

The Legislature is terrified of offending such powerful constituencies. Meanwhile, the media help fuel ignorance among voters, most of whom haven’t got a clue what’s been going on.

One well-known Southern California columnist, unhappy with Schwarzenegger’s proposed trims to Medi-Cal and other programs, wrote recently that cuts are aimed at “programs whose beneficiaries are least able to speak up for themselves.”

It’s a common refrain from media—the image of the voiceless poor desperately striving for attention in Sacramento. But it’s utterly untrue.

To the contrary, recipients of social welfare have the most powerful lobby in the capital—the highly organized and cash-rich public employee unions. Unions promote dramatic growth in social-welfare programs because such growth translates into more government jobs and bigger union fiefdoms.

Joel Kotkin, a senior fellow with Pepperdine University’s Institute for Public Policy, who released a report with economist Jack Kyser delving into economic decisions by California politicians, told me, “The exception is if the California Legislature says ‘no’ to welfare-expansion demands. Unions and welfare groups are linked at the hip, and the idiots in the Legislature throw money at them, not grasping whether it helps or hurts. The Legislature almost never does things to actually boost the economy that would truly help the poor.”

Recipients of social welfare also have powerful friends in “think tanks” such as the California Budget Project, often quoted by the media as budget experts, with no disclaimer explaining their aggressively pro-welfare bias.

With so much support from unions, think tanks and even journalists, there are few groups with more voice in the Legislature than “voiceless” recipients of social welfare. I’d rate the top powers over the Legislature as big labor, big health care, big financial institutions and big welfare. Interestingly, taxpayers rarely benefit from policies pushed by these four groups.

I realize decent people aren’t supposed to talk like this. But having read American Dream: Three Women, Ten Kids, and a Nation’s Drive to End Welfare by liberal New York Times reporter Jason DeParle, in which he shows through the lives of real people why 1996 federal welfare reform signed by former President Bill Clinton has been so successful, I’m feeling emboldened.

Before researching his book, DeParle, a brilliant guy whom I have met, believed that forcing able-bodied welfare recipients to work was a mistake. He’s since discovered otherwise.

California is complying with 1996 welfare reform on one hand—but on the other hand has created its own growing, state welfare system. The governor says he intends to bring sanity to the can’t-turn-anyone-away programs, while still helping those in most need.

I’ll be fascinated to see if Campbell and Schwarzenegger can make their case to the voting public, since it’s highly unlikely they’ll persuade the Legislature. Meanwhile, like millions of others, I’ll be checking out the latest programs. Maybe I qualify.