How to save Social Insurance and not bankrupt the States

Center on Budget and Policy Priorities.

With all this talk about how States that are required by their own Constitutions to Balance their Budgets every year. And most States facing Budget Deficit in the billions of dollars and some cases 10s of billions of dollars. Or in Texas case 20B$, which is a lot of money for a State Budget. And how they are going to pay down their deficit and debt and Balance their Budgets. And they are considering both steep Tax Hikes and have already passed them. As well as steep Budget Cuts that they’ve already passed. States have already cut back dramatically their State Budgets, including in education, Law Enforcement, corrections. Like privatizing some of their prisons, which has its issues. And cutting their Emergency Management Services. And aid to the poor and unemployed and other Social Services. So they can avoid bankruptcy and in some cases have no choice but to take these drastic steps. As well as pass steep Tax Hike which can take a toll on the economy. I have a plan that would improve our Social Insurance System, pay for itself and allow our States to avoid bankruptcy.

TANF which essentially came about as part of the 1996 Welfare to Work Law. Mission is to help move people in poverty who aren’t working into Self Sufficiency by giving them temporary Financial Assistance and the ability to go back to school. So they can get the skills that they need to get a good job and move to Self Sufficiency. And start paying taxes. Its been very successful and has move millions of people out of poverty and into the Workforce. And up until the “Great Recession” of late 2008, we were making great strides in moving people out of poverty in America. And its not something that we should be gutting especially in bad economic times. What we should be doing is reform it in away that would take it off the States and Federal Budgets. So they would no longer have to look for a way to finance it. And find a way for it to pay for itself.

What I would to with TANF, Temporary Assistance for Needy Family’s, to be technical for you non acronym fans. Is to make it independent of the States and the Federal Government. Turn it into a Non Profit Aid to Needy Peoples Service, essentially private Social Insurance service. That would still be owned by the Federal Government. But operated independently, kinda like Fannie and Freddy by run a lot better. That would be financed with an increase in the Payroll Tax on workers and employers but we would cut taxes somewhere else. So it doesn’t turn into a net Tax Increase. As well as its clients paying back into it with their Payroll Tax plus and additional fee. Once they start working again. They would pay back what they took out like an insurance plan or a loan.

This could be financed in a way that doesn’t hurt the economy and that benefits its clients. But at the same time would be one less program that the States and FEDS would have to finance or cut. In bad economic times.

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About Derik Schneider

Blogger on everything that interests me and that I'm knowledgeable about.
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