The best story of 2017! Will Congress give the American people a Christmas present?

From The Washington Post:

Republican officials say targeting welfare programs will help spur economic growth

By Jeff Stein | December 6, 2017 | 12:52 PM

Some House Republicans believe that Congress should cut Americans off government anti-poverty programs in part to help grow the national economy.

“For us to achieve 3 percent GDP growth over the next 10 years from tax reform, we have to have welfare reform. We need people who are mentally and physically able to work to get into the workforce,” Rep. Rod Blum (R-Iowa) said. “In my district, a lot of employers can’t find employees … Sometimes we need to force people to go to work.”

Other House Republicans similarly argued that there would be “no excuses” for poor Americans to need welfare once economic growth took hold. “Once we light this economy up, my brother, there’s going to be jobs for everybody. So there will be no excuses for anyone who can work to sit at home and not work,” Rep. Clay Higgins (R-La.) said. “If we pass tax reform, we have to have welfare reform. When you have a vibrant economy, there’s no reason for Americans to suffer on welfare.”

The House members’ comments reflect one aspect of the thinking that is driving congressional Republicans to say welfare reform may be the party’s biggest legislative priority in 2018. President Trump and top Republican officials have signaled prioritizing welfare cuts, including new restrictions on who can receive benefits like food stamps, housing assistance and direct cash welfare for the poor.

One key conviction underpinning their drive is that welfare programs make joining the American workforce less attractive for the poor, according to interviews with a half-dozen Republican members of Congress and conservative welfare analysts. But many economists note research that contradicts that conviction, and they say America’s social safety net is too small to play a major role in constraining economic growth.

There’s more at the original, but, coupled with increased immigration law enforcement, this could be a very good thing. Reducing the illegal immigrant population as much as possible helps to keep the available labor pool smaller, as those on welfare are forced to look for work. This increases the pressure to have wages go higher, even for the low-skilled, labor jobs.

But there is another problem:

‘Not enough jobs.’ Nine of the 30 poorest counties in U.S. are in Eastern Kentucky.

By Bill Estep | | December 03, 2017 | 11:45 AM | Updated December 6, 2017 | 10:57 AM

The poverty rates in nine Eastern Kentucky counties were among the 30 highest in the nation in 2016, according to new U.S. Census Bureau estimates.

The rate in Owsley County was third-highest in the country, at 45.2 percent, the agency estimated.

The highest rate in the U.S. was in Todd County, S.D., at 48.6 percent, and next was Crowley County, Col., at 48 percent, according to the report released Thursday.

The other Kentucky counties in the group with the highest estimated poverty rates were Clay, Martin, McCreary, Knox, Lee, Bell, Knott and Harlan.

Several have been hit hard by a sharp downturn in the coal industry, which has wiped out more than two-thirds of the coal jobs in Eastern Kentucky since 2011.

The estimates illustrate the challenge as officials, educators and business people work to diversify the economy and counteract the downturn.

Read more here.

One of the real problems with the post-recession economy is that while job growth has finally picked up, not all of the job growth has been where the unemployed live. We noted, last September, Amazon founder Jeff Bezos plan to build another headquarters for his company. Unfortunately, his stated criteria means that, if followed, the new Amazon headquarters will be in or near some major city, someplace where post-recession job growth has already been strong.

If (Bill and Melinda) Gates, and I assume Mr Bezos, believe that the United States should be helping the poor in other nations, shouldn’t their corporate investments in the United States be slanted to help poorer Americans? Rather than building a huge new corporate center in an urban area flush with corporate centers, Amazon should build in eastern Kentucky.

With one of the United States poorest populations — CNNMoney reported that Beattyville was recently “the poorest white town in America” — eastern Kentucky still has a decent, if now underutilized, rail network, and access to major roads via the Mountain Parkway. If Amazon were to locate in eastern Kentucky, you could be your last shilling that Governor Matt Bevin and the General Assembly would come up with the money to improve other infrastructure needs.

Both the University of Kentucky, in Lexington, and Eastern Kentucky University, in Richmond, are reasonably close, and Lexington’s Blue Grass Field, while not a large airport — thus not the cacophonous mess of Dulles or Charlotte or Philadelphia — would certainly serve Amazon’s needs. Putting Amazon’s new headquarters would lift wages and businesses all around the area, and hit the social agenda people like Mr Bezos would like to see.

There are other benefits as well: with the regions higher unemployment, Amazon workers would have fewer other options, and would be likely to stay longer; increased retention saves on job training costs, and more experienced workers are normally more productive. The far lower property costs in the region would mean that the land needed for the facilities would cost less, and lower wages in the area would mean lower construction costs.

To be sure, the same arguments could be made for other impoverished areas in the country; I write about eastern Kentucky because that’s where I live.1 But regardless whether in the Appalachians or some other less developed area, Amazon and a lot of other corporations, many run by people with liberal political views, ought to think about getting out of the wealthier places and spread their development where it would provide more jobs in areas which need more jobs.

Adding work requirements to welfare — something which President Clinton and the Republican-controlled Congress agreed to in 1996, but which has fallen by the wayside — is an excellent idea, but along with reducing the illegal immigrant population competing with low-skilled Americans for jobs, there needs to be a federal program to encourage economic expansion in those areas which simply do not have enough jobs for the people who would be coming off of welfare.

This is where reasonable Democrats could work with Republicans! The Appalachian Regional Commission exists “to innovate, partner, and invest to build community capacity and strengthen economic growth in Appalachia,” but hasn’t been very effective:

In partnership with the states and 73 Local Development Districts (LDDs), ARC has supported 662 projects in Appalachia totaling $175.7 million. These investments have been matched by more than $257.4 million and will attract an additional $443.3 million in leveraged private investments in Appalachia. They will also create or retain more than 23,670 jobs, train and educate over 49,000 students and workers, and benefit the more than 25 million residents in Appalachia’s 420 counties.

Sorry if I’m unimpressed, but they are bragging on $876.4 million — not billion, but million — over 662 projects, or $1.32 million per project. Sorry, but that’s chicken feed! Congress needs to establish some form of incentive to get much larger private industrial investments in the area. We have previously noted that “the CEO of Braidy Industries, Craig Bouchard, announced his company would build a $1.3 billion aluminum mill (outside of) Ashland, Ky., creating 550 jobs,” thanks in large part to Kentucky’s new ‘right to work’ law. Different companies would have different reasons to relocate to the Appalachians, but the biggest one will almost always be about money. Almost all Republicans, and many Democrats, in Congress have agreed that the current 35% corporate income tax is too high,2 realizing that reducing that tax should be a major help to American businesses and job creation.3 Targeted, significant corporate tax cuts aimed at companies which invest in Appalachia could well provide the incentive for businessmen to build new industries in poorer areas.

For Congress to begin to impose new work requirements on welfare recipients is a good thing, but it must be accompanied by other actions; it’s one thing to require people to work when they are in an area in which job openings exist, and something entirely different to do so where there are no jobs.

  1. I am retired, and not looking to work for Amazon; this is not some kind of personal plea for me.
  2. No Democrats have voted for the current tax cut bill, but many have expressed that sentiment in the past.
  3. This statement does not mean that I have changed my opposition to the tax cut bill; that opposition is based on the bill increasing the deficit and the national debt.

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