The safety net shouldn’t shield people from consequences of 'moral hazard'

The ongoing U.S. government shutdown threatens not just some vital services and the paychecks of those who administer them. It increasingly undermines safety-net programs like SNAP benefits (Supplemental Nutrition Assistance Program, aka food stamps). The temporary loss of SNAP support is a real threat to the well-being of families in Ohio and across the country.

Regardless of party, we should all want to live in a society that not only provides robust opportunities for people to support themselves but also help when they truly need it. And shouldn’t we all prefer a system where fewer people genuinely need that help?

Nearly 1 in 4 children in Ohio and across the country receive government — taxpayer — assistance for basic food support. More than 1 in 3 did so during the Great Recession and nearly that many during the government-imposed pandemic recession. These numbers are unacceptable for any civilized society, but more money hasn’t solved it before and won’t now either.

The solution requires a growing economy and a culture that values and rewards a committed work ethic. It means recognizing that some choices typically have better outcomes than others and that the negative consequences of bad choices must be borne — at least to some degree — by those who make them. To do otherwise infantilizes people capable of the self-governance at the core of our system.

Economists use the term “moral hazard” to describe the circumstances where people engage in riskier behavior than they might otherwise because they know someone else will cover the cost of it. For example, flood-prone homeowners will rebuild on the exact same spot when they know FEMA will pay again.

This current budget battle — and all of our debates about social welfare programs — really is about where to draw those lines.

Senate Democrats are holding SNAP benefits hostage to extending “temporary” COVID-era Obamacare subsidies for families earning as much as $124,800 and more. Most of those same members of Congress explicitly set this taxpayer largesse to expire at the end of this year.

They should bear the cost of that choice, not families earning far less than $124,800. Instead, they want their Republican colleagues to force taxpayers to bail them out and are willing to leverage hungry children to do so. And, unlike the federal workers going without pay, those same members of Congress still get theirs on time.

But what about everyday choices Americans make about everything else? Should government take a position on your diet, exercise, education, where to live, what job to take or leave, or when to start a family? Citizens of a free country should reflexively reject such paternalism.

Drivers with a bad driving record appropriately pay more for car insurance. People who choose to live in hurricane, flood, or fire zones rightly pay more for homeowners insurance.

Shouldn’t those who smoke or drink and eat to excess pay more for health insurance commensurate with the risks of those behavioral choices? Other than smoking, Obamacare explicitly prohibits most of those actuarial consequences. But even though smokers can be charged more for health insurance, there are no restrictions on smoker’s use of other forms of government assistance. Smoking is expensive, with a pack of cigarettes today costing an average of $8.00

A pack per day smoker spends $250 per month on the habit. If they have children, not only are they setting a horrible example for them, but that same $250 is enough to provide each child with a nutritious diet for the month.

Early in my management career, I had an employee ask for a raise. He’d earned it, and I’d already submitted it to our payroll department the day before he asked. But we also had a good enough relationship that I could speak plainly with him. He was a pretty heavy smoker, and I mentioned he could get an immediate after-tax raise three times more than he just got by quitting smoking. He acknowledged that reality, but he didn’t quit.

I completely respected his choice, and it didn’t have any bearing on his work, for which I was happy to pay him a competitive rate. He should be free to spend the money he earned however he chose and his choice had no bearing whatsoever on the value of his work to the company.

He subsequently asked for a small loan, which we occasionally did for employees at the time. I agreed to do the same for him that one time but said any subsequent loans would be contingent on him quitting smoking, since the amount of the loan was less than his discretionary habit.

Readers might reasonably take issue with my paternalism, but the principle is the same for government assistance. Your money, your rules. My money, my rules.

Prior to the government shutdown, Ohio was expected to join 12 other states seeking permission to stop SNAP recipient’s from using those funds to buy high-calorie and obesity-promoting carbonated beverages. Surprisingly, our state didn’t seek restrictions on ultra-processed junk foods also linked to obesity.

Americans are some of the most overweight and least healthy people among developed nations. We eat too much, move too little, and much of what we swallow only vaguely resembles real food. Gluttony and sloth are deadly sins for a reason.

These are cultural failures as much as individual ones. Since taxpayers are paying much of the bill, we have every right to weigh in on it’s terms.

And while our federal legislators continue to duck their responsibilities, Ohio’s state senators recently passed a bill to require public schools to teach students about the “success sequence.” It’s a well-supported concept that those who finish high school, maintain a full-time job, and wait until marriage before starting a family are less likely to live in poverty.

I have mixed emotions on this legislation. I typically abhor government paternalism. But the evidence shows a strong correlation between these choices and better outcomes. Scoffers take note: it’s little different than promoting a nutritious diet and regular exercise in health class.

Some claim the cure is worse than the disease — that the stigma of these restrictions and recommendations is more harmful than the problems they seek to solve. But self-government demands confronting reality.

Cultures that reward the consequences of bad choices shouldn’t be surprised to get more of them.