Maine’s Spending and Welfare Problem

Fellow Mainers we have a problem. Our government can’t continue to spend more than it earns. And we can’t afford to tax more than we already do. Send taxes any higher and those making the income that is taxed will leave. Then the state is left with only those who receive – and then from where will it come…

Let’s start with the basics of household finance where you simply manage what you spend against what you actually earn every month… A practice not carried out by many in this day and thus a real problem for society as we think about government spending.

Part of the problem can also be attributed to the increases in acceptable debt levels held by households and businesses. Essentially we have been allowed to carry a lot more debt than in the past. Which means bondage to interest payments. People have been told it’s alright to spend more than they make. All they have to do in return is make interest payments. Of course, spend more than you make is much more fun and easier than spend less than what you make and save a little for later.

This process has made us feel like it is ‘OK’ to spend more than we earn. We don’t really think about it ever being paid off – much like government debt, it just grows for most.

We only begin to notice the problem with interest payments when our income falls or we have borrowed too much. Then we suffer. Bankruptcy, divorce, debt collectors and on… For those avoiding such scenarios, you typically just accept that a majority of your take home income is committed to debt service. You hope you will increase income to offset that situation but in most cases you also continue to borrow. Think of the mouse chasing his cheese in the wheel…

If this is happening at home here in Maine then we assume why can’t it happen in government right? Now let’s add the twist – those receiving welfare are not even having to be responsible for bringing in the income. It just shows up! And we are now a second and third generation into that cycle.

It starts to get messy at this point. People’s feelings get hurt. Battles over who should be taxed more or less and so on.

Well my fellow Mainers as a result of easy borrowing and the general attitude of society I have presented here we find ourselves squarely in the middle of a huge spending problem.

Right now the Governor and the Legislature are in deep debate and disagreement over ways to address the $220 Million DHHS shortfall over the next two years. Maine is a state with a small population of just over 1.3 million people of which 16% or 208,000 are over 65 and 21% or 273,000 are under 18. That doesn’t leave many to tax. Especially when you consider that about 400,000 Mainers are on one of the three primary forms of welfare. (Food Stamps, Direct cash assistance, Medicaid) Not to mention all of the other assistance programs.

Those numbers should give you a shiver. For those thinking that Medicaid isn’t welfare I ask you to go to the definition of Medicaid found here http://en.wikipedia.org/wiki/Medicaid or here http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Eligibility/Eligibility.html or here http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Benefits/Prescription-Drugs/Prescription-Drugs.html . My point is that even Medicaid defines itself as a ‘low income and low asset’ program which is welfare.

During the 2012-2013 period, the biennial budget, the state will spend 82% of general fund appropriations on Education (includes UMaine and Community College Boards of Trustees) and DHHS. An estimated $5 Billion dollars. While it will spend just $1.1 Billion on the remainder of the government during that period.

The numbers tell us that we have a problem. This isn’t political. This is just simple and basic math and figures. Too few people to tax. Too many people receiving benefits. Not enough money to go around. Very simple.

And yes we have challenges. My home town Machias along with Washington County are front and center in the poverty and welfare problem. See this recent BDN article and you’ll get the picture. http://bangordailynews.com/2012/02/07/news/down-east/census-data-shows-poverty-hitting-washington-county-children-hard/

But the answer is not more programs to save people. It is about people taking personal responsibility for their own well-being.

I ask you to support the Governor in his effort to make real change at DHHS. He is making the tough choices today, before the system simply breaks down. Tough steps today to avoid disaster tomorrow.