Atlas Debunked: Private Charity vs. Government Assistance

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On CNN’s Your Money this weekend, Christine Romans ran a segment attempting to reconcile the economic and philosophical views of Ayn Rand. Her guest, Stephen Moore, was palpably elated to be included in the discussion of his self-proclaimed favorite book. Moore took no issue with Republicans cherry-picking Rand’s economic views while denouncing her avid atheism. He characterized Atlas Shrugged as a contemporary to the state of our economy – struggling, and hemorrhaging from the stabs of a failing government pulling out all the stops trying to fix it.

Some brief background on Stephen (no relation to Michael):

  • Senior economist on team that developed the Armey flat tax in 1995;
  • Member of Wall Street Journal Editorial Board;
  • Founder of Club for Growth, which invented the “RINO Watch” list;
  • Co-Founder of Free Enterprise Fund, which lobbied to privatize Social Security and repeal the estate tax.

After his spiel, Romans deftly noted that Rand leaves no room for morality or God in her books. Moore’s response ventured into the realm of the unreal as he chimes a popular Republican talking point: private solutions work better than public ones.

Moore:  “[…] conservatives believe you should help your fellow men, you should be charitable. The issue is whether the government should compel you to do it or whether government charity works better than private charity.

I would make the case, you know, give your money to the Salvation Army, not to the food stamp program.” (emphasis added)

Moore’s hardly alone in criticizing the efficiency of government-run programs. To justify turning Medicaid, food stamps, and housing vouchers over to the states (with funding cuts), Mitt Romney demonized the high costs added by Washington bureaucrats:

Romney: “[…]you have massive overhead with government bureaucrats in Washington administering all these programs. Very little of the money that’s actually needed by those that really need help, those that can’t care for themselves, actually reaches them.”    Meet the Press Debate, (01/08/12)

That’s odd. The Center on Budget and Policy Priorities disagrees. Their report found that more than 90 percent of spending on Medicaid, SNAP, housing vouchers, Supplemental Security Income, school meals and the Earned Income Tax Credit. A graph from the CBPP below provides a breakdown of program expenses.

Full circle- this brings us back to Stephen Moore’s assertion that the Salvation Army deserves your money more than the food stamp program (SNAP). According to the CBPP, “94.6 percent of federal spending went directly for food” in fiscal year 2010. SNAP currently serves over 45.5 million Americans, approximately 15% of the population. By contrast, 18% of Salvation Army’s costs are related to overhead according to their expenses from fiscal year 2010 (shown below). Overhead is assumed to be the aggregate costs of both the “Management & General” and “Fundraising” expense items.

By no means am I denigrating the work done by the Salvation Army, nor any not-for-profit providing such services. However, conservatives need to acknowledge not only the breadth of government-run assistance programs but their efficiency, as well.

SNAP versus the Salvation Army is a microcosm of the larger debate about the role and proper function of government – a debate in which one of the sides believes that the free market always wins.

Well, in this case, as in many others…Atlas Debunked.

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