P
Patriot Games
Guest
http://www.newsmax.com/archives/articles/2007/4/15/215126.shtml?s=lh
Over Half of Americans On the Government Dole
NewsMax.com Wires Monday, April 16, 2007
Maybe the era of big government isn't over, after all.
As Americans finish their annual tax-filing flurry to meet a Tuesday
deadline, it is true that tax rates are lower than they were a few years
ago. But according to a different yardstick, the federal government's reach
is expanding.
Slightly over half of all Americans - 52.6 percent - now receive significant
income from government programs, according to an analysis by Gary Shilling,
an economist in Springfield, N.J. That's up from 49.4 percent in 2000 and
far above the 28.3 percent of Americans in 1950. If the trend continues, the
percentage could rise within ten years to pass 55 percent, where it stood in
1980 on the eve of President's Reagan's move to scale back the size of
government.
That two-decade shrink-the-government trend now appears over, if for no
other reason than demographics. The aging baby-boomer generation is poised
to receive big payments from Social Security and government healthcare
programs.
"New Deal programs persist," despite the Reagan revolution and its
aftermath, says James Galbraith, an economist at the University of Texas in
Austin. "They persist because they are largely successful and highly
popular."
Mr. Shilling's analysis found that about 1 in 5 Americans hold a government
job or a job reliant on federal spending. A similar number receive Social
Security or a government pension. About 19 million others get food stamps, 2
million get subsidized housing, and 5 million get education grants. For all
these categories, Mr. Shilling counted dependents as well as the direct
recipients of government income.
Many Americans, in surveys, say they don't like the way their tax money is
spent. And a majority now says, in a reversal from a year ago, that their
federal income taxes are too high, according to an April Gallup poll.
Yet at the same time, much of US population is on the receiving end of that
tax-revenue stream.
Government has always created jobs, of course, as it provides everything
from national defense to roads and schools. It is another type of spending,
however, that is really growing in scale: Government is in the insurance
business.
Healthcare and Social Security are the big programs poised for growth,
thanks to the arc of the baby-boom generation, longer lifespans, and rising
medical costs. Insurance-style programs also include farm subsidies and
efforts to relieve poverty.
The list could grow.
Some lawmakers hope to offer "wage insurance," a temporary benefit to
cushion the transition toward new jobs for workers laid off due to global
competition. At the state and federal levels, politicians are also
considering government's role in extending healthcare coverage to more of
those who are now uninsured.
All this reflects an ambivalent America. The nation prides itself on the
benefits of economic freedom. "The era of big government is over," President
Clinton declared as he prepared to put new limits on welfare spending in
1996.
Yet as a rich nation, America also sees the opportunity to offset financial
risks faced by its citizens.
"New Deal programs persist," despite the Reagan revolution and its
aftermath, says James Galbraith, an economist at the University of Texas in
Austin. "They persist because they are largely successful and highly
popular."
They are popular, but so is limited taxation among the people who spawned
the Boston Tea Party.
"You do have the yearning for cradle-to-grave paternalism, but as Americans
you also have the carry-over of the frontier spirit" of individual
opportunity, says Shilling. That's the trade-off that will define the scope
of government, he says.
This balance will be tested in the years ahead.
The Congressional Budget Office, in a long-range forecast prepared in 2005,
outlined a baseline scenario in which entitlement programs push federal
spending to 25.3 percent of GDP by mid-century, up from about 18.4 percent
today. That number could go higher still if medical inflation doesn't edge
downward.
Similarly, Shilling predicts that the number of "government beneficiaries,"
as he defines them, will grow to 60 percent of the US population by 2040
Against this backdrop, many Americans are understandably uneasy about the
fiscal path of their politicians.
Some want to scale back the federal budget. Others see new priorities for
spending, such as scientific research and global warming.
"It pays to invest in early education programs," says Fran Smith, who works
for an education-oriented community organization in Boston.
To afford it, she says, government needs to use money more wisely, more for
public goods and less for what she says are the "profit motives" that now
pervade Washington.
"For . working class people, the last thing we want is more taxes," Ms.
Smith says as she hurries to an afternoon meeting.
One challenge for the nation is to define what is wise spending and what is
not. Some government largess is showered more on the well-to-do than the
needy. By giving a tax break for the interest homeowners pay on their
mortgage, for example, the government is effectively spending money to
encourage homeownership. But the deduction is far more valuable to people in
higher tax brackets than low ones.
"Arguably the mortgage interest deduction actually reduces the number of
homeowners, because it pushes up the price of housing," Len Burman of the
Urban Institute said last week in a seminar titled "Stupid Tax Tricks."
But, stupid or not, don't expect that popular deduction to bite the dust
anytime soon.
By some other measures - such as taxes or spending as a share of the overall
economy -the federal government isn't particularly large now. Even a
controversial war in Iraq hasn't changed that.
But as insurance programs embrace an aging population, government is on
track to grow.
For his analysis of government beneficiaries in the US, done last year,
Shilling looked at data from 1950 through 2004. His tally was conservative
on several fronts - including the care he took to avoid double-counting
anyone.
He added up the number of federal, state, and local government workers, plus
private sector workers who owe their jobs to government. He then tallied the
recipients of transfer payments (like pensions) and a few other substantial
programs (like food stamps). And he tacked on the dependents of these direct
beneficiaries.
He divided his total by the US population to get a "government beneficiary"
ratio for each decade. The ratio has risen, he found, from 28.3 percent in
1950 to a peak of 55.0 percent in 1980. It edged down in 1990 and again in
2000, and now has begun climbing again.
Looking at the big picture, especially entitlements for older Americans,
some experts worry about a fiscal undertow.
"I fear that we may be on the path to becoming a decrepit, high-unemployment
welfare state," says Daniel Mitchell, an economist at the libertarian Cato
Institute in Washington. Economists differ regarding whether, or at what
level, a high tax burden acts to dampen economic growth. European nations
have shown, for example, that advanced economies can maintain generous
social-welfare programs.
But Mr. Mitchell says these nations pay a price of more tepid growth.
Sweden, he says, has in recent years dropped off the global Top 10 list for
per-capita output. Ireland, by contrast, has kept the government burden low
and enjoyed rapid economic growth.
Over Half of Americans On the Government Dole
NewsMax.com Wires Monday, April 16, 2007
Maybe the era of big government isn't over, after all.
As Americans finish their annual tax-filing flurry to meet a Tuesday
deadline, it is true that tax rates are lower than they were a few years
ago. But according to a different yardstick, the federal government's reach
is expanding.
Slightly over half of all Americans - 52.6 percent - now receive significant
income from government programs, according to an analysis by Gary Shilling,
an economist in Springfield, N.J. That's up from 49.4 percent in 2000 and
far above the 28.3 percent of Americans in 1950. If the trend continues, the
percentage could rise within ten years to pass 55 percent, where it stood in
1980 on the eve of President's Reagan's move to scale back the size of
government.
That two-decade shrink-the-government trend now appears over, if for no
other reason than demographics. The aging baby-boomer generation is poised
to receive big payments from Social Security and government healthcare
programs.
"New Deal programs persist," despite the Reagan revolution and its
aftermath, says James Galbraith, an economist at the University of Texas in
Austin. "They persist because they are largely successful and highly
popular."
Mr. Shilling's analysis found that about 1 in 5 Americans hold a government
job or a job reliant on federal spending. A similar number receive Social
Security or a government pension. About 19 million others get food stamps, 2
million get subsidized housing, and 5 million get education grants. For all
these categories, Mr. Shilling counted dependents as well as the direct
recipients of government income.
Many Americans, in surveys, say they don't like the way their tax money is
spent. And a majority now says, in a reversal from a year ago, that their
federal income taxes are too high, according to an April Gallup poll.
Yet at the same time, much of US population is on the receiving end of that
tax-revenue stream.
Government has always created jobs, of course, as it provides everything
from national defense to roads and schools. It is another type of spending,
however, that is really growing in scale: Government is in the insurance
business.
Healthcare and Social Security are the big programs poised for growth,
thanks to the arc of the baby-boom generation, longer lifespans, and rising
medical costs. Insurance-style programs also include farm subsidies and
efforts to relieve poverty.
The list could grow.
Some lawmakers hope to offer "wage insurance," a temporary benefit to
cushion the transition toward new jobs for workers laid off due to global
competition. At the state and federal levels, politicians are also
considering government's role in extending healthcare coverage to more of
those who are now uninsured.
All this reflects an ambivalent America. The nation prides itself on the
benefits of economic freedom. "The era of big government is over," President
Clinton declared as he prepared to put new limits on welfare spending in
1996.
Yet as a rich nation, America also sees the opportunity to offset financial
risks faced by its citizens.
"New Deal programs persist," despite the Reagan revolution and its
aftermath, says James Galbraith, an economist at the University of Texas in
Austin. "They persist because they are largely successful and highly
popular."
They are popular, but so is limited taxation among the people who spawned
the Boston Tea Party.
"You do have the yearning for cradle-to-grave paternalism, but as Americans
you also have the carry-over of the frontier spirit" of individual
opportunity, says Shilling. That's the trade-off that will define the scope
of government, he says.
This balance will be tested in the years ahead.
The Congressional Budget Office, in a long-range forecast prepared in 2005,
outlined a baseline scenario in which entitlement programs push federal
spending to 25.3 percent of GDP by mid-century, up from about 18.4 percent
today. That number could go higher still if medical inflation doesn't edge
downward.
Similarly, Shilling predicts that the number of "government beneficiaries,"
as he defines them, will grow to 60 percent of the US population by 2040
Against this backdrop, many Americans are understandably uneasy about the
fiscal path of their politicians.
Some want to scale back the federal budget. Others see new priorities for
spending, such as scientific research and global warming.
"It pays to invest in early education programs," says Fran Smith, who works
for an education-oriented community organization in Boston.
To afford it, she says, government needs to use money more wisely, more for
public goods and less for what she says are the "profit motives" that now
pervade Washington.
"For . working class people, the last thing we want is more taxes," Ms.
Smith says as she hurries to an afternoon meeting.
One challenge for the nation is to define what is wise spending and what is
not. Some government largess is showered more on the well-to-do than the
needy. By giving a tax break for the interest homeowners pay on their
mortgage, for example, the government is effectively spending money to
encourage homeownership. But the deduction is far more valuable to people in
higher tax brackets than low ones.
"Arguably the mortgage interest deduction actually reduces the number of
homeowners, because it pushes up the price of housing," Len Burman of the
Urban Institute said last week in a seminar titled "Stupid Tax Tricks."
But, stupid or not, don't expect that popular deduction to bite the dust
anytime soon.
By some other measures - such as taxes or spending as a share of the overall
economy -the federal government isn't particularly large now. Even a
controversial war in Iraq hasn't changed that.
But as insurance programs embrace an aging population, government is on
track to grow.
For his analysis of government beneficiaries in the US, done last year,
Shilling looked at data from 1950 through 2004. His tally was conservative
on several fronts - including the care he took to avoid double-counting
anyone.
He added up the number of federal, state, and local government workers, plus
private sector workers who owe their jobs to government. He then tallied the
recipients of transfer payments (like pensions) and a few other substantial
programs (like food stamps). And he tacked on the dependents of these direct
beneficiaries.
He divided his total by the US population to get a "government beneficiary"
ratio for each decade. The ratio has risen, he found, from 28.3 percent in
1950 to a peak of 55.0 percent in 1980. It edged down in 1990 and again in
2000, and now has begun climbing again.
Looking at the big picture, especially entitlements for older Americans,
some experts worry about a fiscal undertow.
"I fear that we may be on the path to becoming a decrepit, high-unemployment
welfare state," says Daniel Mitchell, an economist at the libertarian Cato
Institute in Washington. Economists differ regarding whether, or at what
level, a high tax burden acts to dampen economic growth. European nations
have shown, for example, that advanced economies can maintain generous
social-welfare programs.
But Mr. Mitchell says these nations pay a price of more tepid growth.
Sweden, he says, has in recent years dropped off the global Top 10 list for
per-capita output. Ireland, by contrast, has kept the government burden low
and enjoyed rapid economic growth.