As I understand it, CATO isn't so much right-wing as libertarian, which immediately has a small-government connotation to it. To support itself it often points out government fraud and waste, to which I happily acquiesce there is plenty (defense spending even the Joint Chiefs are explicitly against comes to mind).

Unfortunately, taking care of the less fortunate gets rolled into these arguments, only sometimes on purpose. It's rather difficult to individually consider the human benefit to welfare programs when congressmen/women with ties to defense-industry districts can just as easily make an argument for the jobs and wages paid to the working class because of those programs.

I think this is why (very much conjecture-ing here) there seems to be a groundswell of support for the idea of guaranteed income. If you can solve some of the individual woes people have collectively by giving everyone a basic income, it's easier to argue for and against government spending for individual programs, because far fewer will be able to have such a socially destructive effect if they are cancelled.

Just a thought.

They provide some pretty straightforward calculations to back up their point. Are the calculations wrong? If so, where is the first mistake?

The calculations aren't wrong (well, they might be, but it's immaterial). What is wrong is the belief that this is the way things have to be, and that the choice is a binary "keep the status quo" or "eliminate welfare".

Why do we cut the amount of welfare people get as their income increases? Well, there's the obvious reason, that their income should supplant welfare. Is that what happens? No. Their income ends up paying less than welfare, until they earn sufficiently high amounts.

Why is that? Because the system is broken. As a cynic, I would even say that the pressure to cut it off earlier, rather than later, largely stems from conservative pressures ("if they're able to work that minimum wage job for 30 hours, then they certainly should be able to work 40! Stop their governmental handout at 30 hours!" "Okay, then we'll just work 20" "If they can work 20, they can work 30! Stop their governmental handout at 20 hours!" Etc). That is, this broken system that they're speaking out against is -exactly the broken one they caused-.

What would actually make sense? Well, tailoring off welfare payments at some percentage of earned income. Let's say 50%.

That is, someone on welfare earns $50 one month from a job, their welfare payout reduces by $25. Take into account additional costs as deductibles; things like "Driving to the job took an extra $10 from me" - okay, fine, then your welfare payout is reduced only $15. The tax payer has saved $15 (as only $35 was paid to the welfare recipient), the welfare recipient came out ahead by $25 ($50 earned + ($25 welfare + $10 gas refund/deductible) - $10 gas cost; they walk away with $75, $50 of which they earned), -and- they're working toward rejoining the workforce. Welfare effectively stops once they've reached wages of 2x welfare + cost of incidentals, and until they reach that point, every extra dollar they earn is a net gain to them; there is no valley where their purchasing power actually drops because they chose to work.

While we're at it, if we're really concerned about people working, let's also fund more job training centers, more disability rehab and job placement centers, etc.

Why don't we do all of that? Because there is no political pressure to do that; conservatives would rather completely dismantle welfare, and liberals either aren't that concerned by the status quo, or are tired of trying to work with conservatives over the issue (and so it's become a shouting match where both parties have drawn lines in the sand and refused to compromise).

The fact that you don't like Cato does not mean you need to put quotes around <independent think tank>. I don't particularly care for any think-tanks - I prefer to think for myself - but Cato is respected enough to be quoted by The Economist and other major magazines/newspapers (though they may or may not agree with what Cato had to say).

Also, of all people, you picked Krugman to form your opinion about "vast right-wing conspiracy"? Really?

"The fact that you don't like Cato does not mean you need to put quotes around <independent think tank>."

Thank you for that grammar tip: I was indeed incorrect to use quotes there. I'm still learning!

" entire network of such entities by wealthy arch-conservatives and small-business organizations"

So, these 'evil networks' of small-business owners want less taxes to grow their business by making more money and employing more people?

I can't see how an employed and wealthy population could be a bad thing.

The dichotomy is between small businesses that will employ more people, and those organizations that put enriching themselves before preventing human suffering.

Lower taxes and higher owner incomes aren't 1:1 equatable to job creation or greater collective wealth.

Data: http://www.usnews.com/opinion/blogs/economic-intelligence/20...

And they do

https://www.imf.org/external/pubs/ft/wp/2014/wp14114.pdf

Not "evil networks" but "entire network".

"I can't see how an employed and wealthy population could be a bad thing."

It isn't. But what we're facing is a _small_ employed and extremely wealthy fraction of the population together with a _huge_ low-paid supermajority of the population.

Small business owners want fewer and less taxes, no unions, lower wages, lower healthcare costs, fewer worker protections, etc. Left to themselves they would drive wages to zero. Small businesses join others to support certain non-profits that lobby in Washington, DC on their behalf. Nothing illegal, but one must ask such questions as: "Where are the lobbyists for low-paid workers?" or "Who will support the workers' families after the workers die from inhaling toxic substances day after day?" These are questions in which the small businessman's lobbyist has no interest.

In one chapter "Conscience of a Liberal" Krugman histories the development of this relatively new conservative and wealthy network of individuals and not-for-profit corporations. Read/skim the book for details:

http://www.amazon.com/Conscience-Liberal-Paul-Krugman/dp/039...

One of Krugman's points is that the middle class is disappearing in the USA: wealth distribution now mirrors that which existed in the so-called "Gilded Age" of the Rockefellers, Carnegie et al (late 19th-early 20th century): a small percentage of extremely rich people and a large percentage of poor, with a very small middle class.

FDR's New Deal, by increasing taxes radically on the wealthy (both inheritance and income taxes) and increasing wages, brought a strong middle-class into existence. That middle class has been the engine of the US economy but is dwindling. The solution is to restore taxes and support the worker's causes.

Gilded Age:

https://en.wikipedia.org/wiki/Gilded_Age

"Why We’re in a New Gilded Age" by Paul Krugman:

http://www.nybooks.com/articles/archives/2014/may/08/thomas-...

The Rich, the Right, and the Facts: Deconstructing the Income Distribution

http://prospect.org/article/rich-right-and-facts-deconstruct...