Monday, October 8, 2012

The Problem with Welfare

Eligibility for public housing and other public assistance depends largely on your reported income.   It is a system that is ripe for abuse.

As I noted in an earlier posting, our tenant in our rental condominium is elderly and having trouble paying the rent on her current income.   One of her employers took her down to the Social Security Office and get her set up with Social Security.  She may also qualify for SSI - Social Security Supplemental Income.  And of course, she qualifies for Medicare and Medicaid.

I did not relish the idea of tossing her ass out on the street, so I am hoping she can get this SSI, or something, or perhaps move back to Mexico.  She is here legally, with a Green Card, and that is about the same as citizenship, with the exception you can't vote.  Everything else, you are eligible for.  That is the law.

On a whim, I looked into housing assistance in the County.  The "Housing Choice Voucher Program", formerly known as Section-8, appears to be closed at the present time - at least in terms of the waiting list.   If it was available to her, it would be a pretty sweet deal for both of us, as the County would direct-deposit most of the rent, directly into my bank account.   As her income is under $20,000 a year (well under) she would qualify.   But the program appears to be "closed" according to the website, and since it is a holiday, I can't call to inquire.

But other programs exist, including pubic housing in some pretty nice buildings, as well as assisted senior living.   There are waiting lists for these programs, and I am thinking I should get her on the waiting list, as the condo she is in may eventually be demolished for a new high-rise, and it might just work out she comes to the top of the waiting list by that time.

The entire experience has an Alice-Through-The-Looking-Glass feel to me, as I never in my life have dealt with public assistance, welfare, unemployment, or any other form of government largess.  I did get a subsidized mortgage when I was younger.  But the $5000 in interest subsidy was paid back when I sold the house, so that was a break-even deal for the government.   And I think I got a Pell grant once.  It was like $500.   Yes, people in the middle-class do get forms of welfare, although as both a percentage of our income and in overall amount, not as much as compared to the poor.

I talked with my friend who works with the local Mexican population, for the church, to assist them with these issues.   I asked him why my tenant doesn't just return to Mexico.  "She will never go back, now!" he laughed.   I was stunned.  Why not?  Why not move back with her family - they have a house, a very nice house (I have been to it) and she has her children and grandchildren to attend to her.   And her meager Social Security benefits would go a long way, in that impoverished country.

He explained to me that she has it better here.   If she can get SSI, which it seems she will, her standard of living will arguably be better.   Plus, she has free medical care through Medicare and Medicaid.   Mexico has a socialized medicine program, but he was unsure if it would apply to someone who had been working in the USA for the last 27 years (and that is a long time).   In addition, once she returned, as he put it, she would be the Mama-sita, and dependent on her kids and forced to babysit great-grandchildren and act as a housemaid, to kids who she had not really seen much in the last 30 years.

Of course, this gets me wondering, there are likely quite a few Mexicans who do return to Mexico and collect their Social Security there.  What happens when they die?   I mean, who is going to tell the Social Security Administration they died?  Their kids?   With money being directly deposited to Mama-sita's account, the kids might, well, "forget" to call the Social Security Administration about this.  And while it might be fraud, are we going to send an investigator to Mexico City to figure this out?   Do we even have jurisdiction?   It is a frightening scenario, when you multiply by a million people or more.

But getting back to the story, I went online to Fairfax County's excellent website.  Fairfax County really is a State in and of itself, having a population greater than that of Vermont and an economy probably larger as well (certainly capping Rhode Island!).   I found out she could apply for various housing programs, including public housing and Senior Assisted Living, online.   So I set up a username and userID for her, and we will get her on the waiting list.

But the interesting thing is, the entire process is based on reported income (no mention of assets, or Net Worth - I would likely qualify!) and thus seems ripe for abuse.

For example, if you are an average Joe or José, working at the lower end of our economic spectrum, you might be taking jobs that pay cash, under-the-table.  Day laborers, for example, congregate at gas stations and wait for contractors with pickup trucks to pick them up for flooring or siding jobs, or whatever.  It got so bad at one gas station that the County actually built a "day laborer pickup area" complete with shelters and a toilet, for the immigrants to wait at.  I kid you not.  It is a rich county.

And this is true, not just for immigrants, but for U.S. Citizens of all colors and races.   You can qualify for this public housing (and other assistance) based on reported income, but of course, "under-the-table" income doesn't count.  Is this a great source of fraud?   Well, the folks who are getting away with this are not exactly getting "rich", but they are getting ahead.

For example, I wrote before about the GS-2 government clerks at the Patent Office, in their early 20's, who wore designer clothes, carried Coach handbags, and drove brand-new cars.  They could afford this on $18,000 a year by living with Momma in her Section-8 subsidized house, and not paying any rent.  Do they get ahead in this system?  Briefly.  But eventually, they move out of Momma's house and face a life of difficulty and deprivation, as they have to try to support themselves on their meager salary and government subsidies.

Mark saw the same thing during his brief sojurn with Linens and Things.   Burnt out after working 60 hours a week as a "manager" of a gourmet food store, he took an hourly job there.  There were young women there, making $16,000 a year ($8 an hour) which is not enough to survive on, in Washington, D.C.  Yet they had impeccable clothes, expensive hair styles (with extensions) and fabulous leather goods, and of course, new cars.  Again, by living in a bad neighborhood, with family, and collecting section-8 subsidies, they were able to live larger, at least for a while.

But of course, they never end up economically independent in this model - they never become millionaires, they never can quit their crappy, low-wage jobs.  They never climb up the ladder of economic success.   It is a trap for them - a velvet trap lined with bling, but nevertheless a trap.

And I am of two minds on this.  Some in the Union movement would say, "well of course they need these government subsidies, they are not paid a living wage!"  And they would be correct about that.  But if we paid a low-level clerk or store worker $25 an hour, they would likely not invest this surplus in a 401(k) or IRA, or use it to buy their own housing or do other fiscally responsible things (heck the middle class doesn't even do this, today!).

So, instead, we pay them less, and use government programs to "take care" of them, nanny-state style.   They have a little pocket change to buy some consumer crap, but their basic needs are kept safely out of their hands, an in that of the public housing authority.   

And some people think this is a bad thing, which in some regards it is.   But if we didn't have these sort of "safety nets" for people who are so stupid with money that they have to resort to "payday loans", then what would happen?

Some would likely learn economics the hard way - perhaps by living for days without eating, or being tossed out of their apartments, or losing their cars.  They might sober up and start taking better care of themselves.

Others would just fall off the edge of the world, end up homeless and destitute (real homeless, not just drug-and-mental-health issues homeless) and create an underclass like they have in India (well, like they used to have in India).  And I am not sure that anyone would stand for that, for very long.  It would be like living in a Dickens novel.

So, perhaps these programs are based on some assumption that the people at that end of the income scale will work the system to some extent.    That they will "cheat", but that such cheating doesn't amount to a lot of money (until that is, you multiply the amount by the number of people).   But one thing is clear to me - no one really gets ahead in the long run, living on public assistance.  Rather, it is a trap of dependency.

I will investigate these programs tomorrow when the Office reopens.   I am curious as to why the Section-8 program is "closed" - is the program not operating, or has the waiting list merely been closed?  One thing is for sure, it is not easy to get into these programs, as each has a fairly long waiting list.

An interesting twist on some of these programs is that not only is there a maximum income level you can make to qualify, but also a minimum.  They are not going to rent these units to people, unless they can come up with the minimum dollars to pay the rent.  Interesting.

Rental Housing Programs