That Stimulus Sickness

EVERYBODY now knows what happens when the government decides to give everyone “affordable housing.” It takes a while, but eventually it takes down the whole financial system. That’s because, Virginia, when worthy Democratic voters that don’t pay their bills get mortgages, banks and Fannies and Freddies end up with toxic assets and nobody knows if they are worth anything..

So now our Democratic friends are proposing to stimulate the economy with a spending bill that, wait for this, increases the subsidies for health care. That’s according to the Wall Street Journal edit page.

The more we dig into the pile of spending and tax favors known as the "stimulus bill," the more amazing discoveries we make. Namely, Democrats have apparently decided that the way to gun the economy is to spend even more on health care.

The intriguing thing about all this is that experts now agree, both from the left and the right, that life-style is the key ingredient in health and life expectancy. This means that when the government increases the subsidy for health care they are gunning the engines on the national cigarette boat. So now we are heading towards the sound of the next big economic waterfall, the point at which government will have to cut back on health care, even faster than before.

The provisions are innocent enough. The Feds are going to increase the federal share of Medicaid reimbursement. They are going to offer Medicaid to the unemployed. They are going to subsidize Cobra benefits for people laid off. This is all very compassionate and thoughtful. Except for one thing:

When you subsidize people not to work, you get more nonworkers.

That’s the problem with the whole welfare state. People work because they have to. They work for food, for housing, for health care, for transportation. When the government subsidizes it then more and more people, especially the low-skilled, low-paid, decide against work. You can’t blame them. Who would work unless they have to?

We’ve been saying here for a while that the only way we are going to reform the welfare state is after it “hits the buffers.” We have mixed feelings about this. Good people, ordinary people are going to be hurt. And even people that never gave into the temptation of the welfare state are going to be hurt.

On the other hand, if you believe that “free” health care or “free” education isn’t going to cost you in the end, we’ve got a bridge we want you to look at.

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Christopher Chantrill blogs at www.roadtothemiddleclass.com. His Road to the Middle Class is forthcoming.