Monday, August 20, 2012

Dependency Nation

The dependency is growing, exploding actually, and it’s no accident.

According to data from the U.S. Census’s Survey of Income and Program Participation, almost 110 million Americans received some welfare benefit in 2011. As the Heritage Foundation points out, in 1962, 28.3 percent of federal spending was spent on dependence programs, while in 2010 that number had reached over 70 percent. Robert Rector, an expert on welfare policy at the conservative think tank, writes that a third of Americans partake in some sort of welfare program. Washington “currently runs more than 80 means-tested welfare programs. Roughly a third of the population receives benefits from one or more of these programs. (These figures do not include Social Security or Medicare.) Total welfare spending in 2011 came to $927 billion.”

 Welfare cases peaked in 1995 and then declined dramatically once time limits on benefits and work-for-welfare requirements were enacted by the reform bill. The percentage of the population receiving welfare per-capita fell nearly one-third by 2007. Tinkering with that kind of success (though, it is arguable that Obama views it as success considering he opposed reform in the 1990s) provides a fortuitous opening for Republicans on a number of levels. Romney has an opportunity to open up a favorable front in the coming weeks, especially in states like Ohio, where working class voters tend to pay their own way. Thus Republicans have a persuasive case to make that dependency is on the verge of growing into something dangerous. No, the Obama Administration wasn’t alone in creating the environment for the boom, but it has excelled at fostering it.

Last week, the Romney campaign finally took the Obama administration to task for weakening requirements in the popular bipartisan 1996 welfare reform, which allows states to waive work requirement as a condition of receiving welfare. In July, using a request by a number of governors seeking more flexibility in welfare management, Health and Human Services Secretary Kathleen Sebelius issued a memorandum in July allowing the work requirements to be stripped.

Because dependency not only costs dollars, it changes the political dynamic in an unhealthy way. In 1962, the first year measured in the Index of Dependence on Government, the percentage of people who did not pay federal income taxes–and were not claimed as a dependent by someone else who did pay federal income taxes–was around 24 percent. In 1969, it was 12 percent. In 2000, 34 percent. In 2009, nearly 50 percent.

When 40% or more of the tax payers are not contributing to the cost of services provided by the government – we have most certainly reached a tipping point. In fact – some of the 49% of citizens who do not pay taxes actually receive a tax return payment from the US Treasuring (IRS) even though they technically paid nothing. That’s right - some pay zero and then get money sent to them from the Federal Government. That is straight up wealth and income redistribution – what Washington technically calls – Federal Transfer Payments.

From here we either move toward total insolvency like Greece or that which is happening in Spain. Or, we stop this madness while we still have time to get this right (no pun intended)!

That is one of the foundational issues; if not the foundational issue in this year’s presidential election.

No comments:

Post a Comment