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Of Course It’s Welfare

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Welfare by any other name is still welfare, even when it is not given to the poor, and even when it is called vouchers or subsidies. A recent article in the Wall Street Journal, “Denver Has a Plan for Its Many Luxury Apartments: Housing Subsidies” (abridged from the January 9, 2018, print edition article “Denver’s Fix for Luxury Glut: Subsidies”), provides us with a good example.

The city of Denver, Colorado, “has added 12,000 apartments since 2015 and an additional 22,000 are under construction,” according to CoStar Group, “commercial real estate’s leading provider of information, analytics and online marketplaces.” Yet, like other large cities throughout the country, Denver has a shortage of affordable housing for middle-class workers, with just 3.4 percent of units below the median rent vacant. The reason is that more than 90 percent of the new apartments in the city are considered luxury apartments with higher-end finishes and amenities such as gyms and roof decks. Thus, “there are currently 16,000 vacant units in metropolitan Denver, up 5,500 from three years ago,” according to MPF Research, the rental market intelligence division of RealPage, “a leading global provider of software and data analytics to the real estate industry.” And average rents in Denver are up 30 percent over the past five years. A typical one-bedroom apartment in Denver rents for about $1,200 to $1,600 a month.

But Denver’s government bureaucrats have a plan.

The city will use its glut of new high-end apartments to “house teachers, medical technicians and others who can’t afford the city’s soaring rents.” Said Denver’s mayor, Michael Hancock, “Instead of having these units sit vacant, if we can create opportunities to help some of our employees, our residents get into those units, that’s an immediate response.”

Under the plan, to be unveiled later this month, “the city, along with employers and charitable foundations, will pay the difference between what a lower-income resident can afford and the market rent of an apartment.” The details are as follows:

The Lower Income Voucher Equity program, or LIVE Denver, will be open to a range of tenants, from single residents making $23,500 to $47,000 a year to families of four with household incomes of $33,500 to $67,000.

Residents in this city of roughly 693,000 will receive subsidies to live in the units for two years, during which time a portion of their rent will be put into a savings account that can be used for a down payment.

The program has enough money to subsidize 400 units initially, and officials say they have about 100 units signed up so far. The city has requested units in new or recently renovated buildings. The city will do an analysis to ensure landlords charge market rates. City officials expect to spend about $500 a month subsidizing a single person and roughly $900 for a family.

Naturally, the program will “take managing to avoid upsetting residents of the buildings who are paying full rent.”

Mike Zoellner, a local developer who helped create the program, said that “he envisions landlords advertising their participation in the program to signal to tenants they could live in a socially conscious property.” But then he admonishes, “This is not a welfare program or anything like that. This is people who are working at hospitals, hotels and food service. We want them in our community and we want them in our building.”

But of course it’s welfare. It’s everything like that.

The money that the city of Denver says it has to subsidize 400 apartments was taken from Denver taxpayers. It is simply money redistributed from some Denver residents to other Denver residents. LIVE Denver is just another income-transfer program. It is no different from Lyndon Johnson’s Great Society welfare programs. In his remarks on January15, 1964, to the leaders of organizations concerned with the problems of senior citizens, Johnson said, “We are going to try to take all the money that we think is unnecessarily being spent and take it from the ‘haves’ and give it to the ‘have nots’ that need it so much.”

Receiving money from a government entity that you didn’t earn by working or providing a good or service is a handout. It is in fact the essence of welfare. True, those receiving subsidized rent undoubtedly paid the city of Denver something by means of sales taxes, but the “return” on their “investment” is astronomical.

When Americans think of welfare programs they generally think of programs such as Temporary Assistance to Needy Families (TANF), which pays assistance in cash directly to recipients to spend as they choose, or the Supplemental Nutrition Assistance Program (SNAP [formerly known as food stamps]), which deposits money for recipients on an EBT card each month that can be used only for prepackaged food items. But there are actually in the United States about 80 means-tested welfare programs that limit benefits or payments on the basis of the beneficiary’s income or assets.

Then there are other government programs that, like housing subsidies, are not generally thought of as welfare. Here are just three examples.

Vouchers provided by the government to send your children to the school of your choice are a form of welfare. Before the government can issue a voucher to one American for his children’s education, it must first take money from another American. Giving one group of Americans the choice of where to spend other Americans’ money to educate their children is immoral and unjust.

Medical care paid for or subsidized by the government is a form of welfare. That means that Medicare is just as much a welfare program as Medicaid. Although the main part of Medicare (Part A) is “funded” by a payroll tax “contribution” of 2.9 percent (split between employer and employee) on every dollar of an employee’s income, it is only partially funded, as the tax collected is nowhere near what is eventually paid out in benefits. And anyway, there is no connection between the Medicare taxes paid and the benefits received. Since no American is entitled to health care provided at the expense of another American, no American should be forced to pay for the health care of any other American.

Refundable tax credits are a form of welfare. Unlike regular tax credits that reduce the amount of tax owed, refundable tax credits are treated as payments to the government equivalent to federal income tax withheld. If the “payment” is more than the tax owed, the taxpayer receives from the government a “refund” of money that was never withheld from his paycheck — money that was first taken from an actual taxpayer.

The United States is a vast welfare state. This is true not only on the federal and state levels, but, as the LIVE Denver program shows, on the local level as well. But once government subsidies for housing are deemed to be acceptable, no reasonable or logical argument can be made against the government’s subsidizing any other service that is not “affordable.”

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