Americans Receive MORE In Government Handouts Than They Paid In Taxes
In the ongoing saga of the demise of the American economy Fox Business reported that "U.S. households are now getting more incash handouts from the government than they are paying in taxes for the first time since the Great Depression." This, of course, at a time when the current administration is more enthralled with trying to find some universe where increasing taxes actually increases tax revenues as a percent of GDP rather than actually cutting spending.
According to the report: "Households received $2.3 trillion in some kind of government support in 2010. That includes expanded unemployment benefits, as well as payments for Social Security, Medicare, Medicaid, and stimulus spending, among other things.
But that’s more than the $2.2 trillion households paid in taxes, an amount that has slumped largely due to the recession, according to an analysis by the Fiscal Times."
With the employment to population ratio now at the lowest level since 1984 it is no surprise that there are 44 million Americans on food stamps and that an estimated 59% of the 308.7 million Americans in this country get at least one federal benefit, according to the Census Bureau, based on 2009 data. An estimated 46.5 million get Social Security; 42.6 million get Medicare; 42.4 million get Medicaid; 12.4 million get housing subsidies; and 3.2 million get Veterans' benefits.
While the current House and Senate uselessly banter over trimming less than $4 Billion in actual spending off of the budget the handouts from the government have been growing. "Government cash handouts account for a whopping 79% of household growth since 2007, even as household tax payments--for things like the income and payroll tax, among other taxes--have fallen by $312 billion."
FOX Director of Business News, Ray Hennessey said “In a free market, profit is generated by hard work and enterprise...Because of the labor of the worker, companies generally have the ability to prosper and make more money, both for their employees and their owners, which in turn creates tax revenues."
That is normally how wealth creation occurs in America - the real American Dream. However, in today's bizarro world where the words "recession" and "depression" have all but been stricken from the dictionary - wealth creation is coming from DC, not from America’s entrepreneurs. in short, Americans have the government, not private enterprise, to thank for their wealth growth - but, of course, there are massive implications to this.
Hennessey asked all of the right questions; "if indeed more households have the government to thank for their wealth, does that mean those households are more inclined to re-elect politicians who are pushing for more government handouts? Does the workforce erode because it is easier to collect a check than answer to an alarm clock each morning? Is our competitiveness as a nation hurt because profit is generated not by American capitalism but by European-style socialism? Can we, as taxpayers, afford to carry the burden of government-sponsored wealth creation?"
The answers are quite obvious but the bottom line is that America can't grow its way back to prosperity on the back of social assistance. While the banks benefit from the massive capital infusions from the government - the average American is fighting to make ends meet as their cost of living rises each and every day one gallon of gasoline at a time.
This brings us to the hard truth. The budget deficit is set to grow over the next few years as interest payments alone absorb a chuck of the tax revenue at a time when that same dollar of tax revenue only covers entitlement spending at current levels as 78 million baby boomers begin their migration into the social safety net. The call by the American people at the last election was a mandate to reduce the size of government and spending, however, that has fallen on deaf ears and weak stomachs as the current electorate is log jammed by personal agendas and the the White House shelved the Bowles-Simpson debt commission report realizing that he can't make such hard decisions and hoping he can delay them until after the election.
The Fiscal Times reports that “the only other time government income support exceeded taxes paid was from 1931 to 1936...government transfers of income to households started to overtake personal taxes at the start of 2008, and the gap has been widening.”
The difference between what households received and what they paid in taxes is about $125 billion, equal to a little more than “three times the amount Republicans and Democrats agreed to cut from government spending through Sept. 30,” the Fiscal Times said.
The problem that is being ignored but which must be answered is; "What government policies will bring the U.S. labor market back to robust health, enough to drive economic growth, consumer spending -- and higher tax revenues? When will the U.S. government pull back from its intervention into the U.S. economy, so the economy can try to stand on its own?" It is a hard road that will have to be traveled - there are many voices that are proposing real solutions to the problem such as real tax reform, real ways to cut the spending gap immediately, real welfare and entitlement reform and policies to promote real economic growth and productive immigration.
The problem is the same problem that has faced every empire for the last 800 years - no government has ever done what was necessary to prevent economic ruin BEFORE the crisis occurred. America has the ability to CHOOSE where to fight our battles today - at some point those choices will be forced upon us.