The Corbett Administration Is Right to Include Assets in Measuring Wealth

     Under the Administration of Republican Governor Tom Corbett, Pennsylvania will include assets, in addition to income, in measuring people's wealth for the purpose of determining eligibility for food stamps.  The move, which bucks a trend accross the American Union, is permissible under the federal law that establishes the welfare program.

     The Commonwealth will deny food stamps to any otherwise eligible applicant with over $2,000 in cash in a bank or who owns a second car worth over $4,500.  The inclusion of assets as part of the means-testing to determine eligibility for food stamps was dropped by the Democratic Administration of Governor Ed Rendell.  In accordance with the policy of the Obama Administration to increase the number of food stamp recipients, the asset threshold has been eliminated in many other states, or at least has been raised. 

     The Corbett Administration has adopted a policy of cracking down on welfare fraud to reduce spending in order to avoid tax increases.  See also my post, Governor Corbett Signs Pennsylvania's Budget and Welfare Reform Legislation from July of 2011: http://williamcinfici.blogspot.com/2011/07/governor-corbett-signs-pennsylvanias.html.  The possession of significant assets by food stamp applicants is cited by critics as an example of waste, fraud and abuse, as the assets prove that the applicants can afford to feed themselves.

     Liberal supporters of welfare hysterically criticized the decision to reestablish an assets threshold to means-teast food stamp eligibility because it will remove thousands of recipients from the welfare rolls.  A seemingly reasonable counterargument has been raised that the assets threshold discourages people from saving for emergency, but this criticism misses the point that the emergency intended to be covered by the program is strictly a lack of money for food, not additional emergencies.  People are not entitled to someone else's money, especially if they do not need it for what it was intended.

     The larger reason I posted about this decision is that it reflects common sense that wealth should be measured based upon both income and assets, and not only annual income.  For example, we define a “millionaire” as one who has a million dollars, not one who earns a million dollars in gross income annually.  The federal government, however, defines poverty strictly in terms of income, thereby falsely categorizing many people as “poor” who are relatively wealthy in assets, especially when compared to the poor or even the middle class of foreign states.  A rich person who has a relatively bad year is no more poor than a poor person who has a relatively good year is rich.  A person's ability to save and manage money is part of the overall determination of one's wealth and is an independent factor in the macroeconomy.  Thus, an increase in mismanagement does not reflect a downturn in the economy and vice versa.

     Although there is less income temporarily in the current economy, it is important not to overstate the amount of poverty there is by failing to account for the increase in the standard of living of the poor.  The comparison of income data from year to year (adjusted for inflation) is helpful in discerning the rising or falling of the economy, but the figures always overstate the poverty of individuals.  The federal definition of poverty additionally overstates poverty by failing to account for differences in cost of living in different states that make the purchasing power of a dollar different from state to state. 

     Liberals see more poverty than there really is in order to justify more welfare.  Thus, they not only have a bias toward overstating it when conservatives are in power in order to oppose conservative policies, but also even when liberals themselves are in power.  The exaggeration of the amount of poverty also reflects general leftist opposition to the free market and support of more socialist policies.

     Conservatives should praise Pennsylvania for its leadership and its example should be followed across the Union, not only for determining the eligibility for food stamps or other welfare programs, but in other regards, as well.  They would also be making the case that the free market in America, not welfare statism, has produced wealth as never before in human history and improved the standard of living dramatically for Americans.