Tuesday, September 25, 2012

New Common Sense: Our Dependency Addiction

 

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Our Dependency Addiction

For most of American history, the average farmer, shop owner, or entrepreneur could live an entire life without getting much from the federal government except mail service. But those days have gone the way of the Pony Express.

Last year, the Wall Street Journal reported that
49 percent of the population lives in a household where at least one person gets some type of government benefit. The Heritage Foundation’s annual Index of Dependence on Government tracks government spending and creates a weighted score adjusted for inflation of federal programs that contribute to dependency. It reports that in 2010 67.3  million Americans received either welfare, Social Security, support for higher education, or other assistance once considered to be the responsibility of individuals, families, neighborhoods, churches, and other civil society institutions—an 8 percent increase from the year before.

These people aren’t necessarily dependent on government; many could live (even live well) without their Social Security check, Pell grant, or crop subsidy. That’s not the point. The problem is that Washington is building a culture of dependency, with ever-more people relying on an ever-growing federal government to give them cash or benefits.

This is a growing and dangerous trend.

The United States thrives because of a culture of opportunity that encourages work and disdains relying on handouts. The growth of the welfare statea confusing alphabet soup of programs  and entitlements such as Social Security or Medicare that are supposed to help low-income Americans make ends meet and do notis turning us into a land where many expect and see no stigma attached to drawing regular financial support from the federal government.

Consider means-tested social welfare programs. The federal government operates at least
80 programs that provide assistance deliberately and exclusively to poor and lower-income people. The benefits include cash, food, housing, medical care, and social services.

Yet when
poverty expert Robert Rector examined these anti-poverty programs, he found that only two, the earned income tax credit and the additional child refundable credit, require recipients to actually work for their benefits. Earlier this year, the Obama administration set aside the most well-known welfare work requirements, those specifically written into the 1996 Temporary Assistance to Needy Families law (TANF). The Department of Health and Human Services announced that the law’s clearly stated work requirements are no longer binding on state governments.

And while federal spending on the TANF program in particular has dropped, spending on means-tested aid in general (e.g. food stamps) has soared year after year and decade after decade.
Adjusting for inflation and population growth, the U.S. now spends 50 percent more on means-tested cash, food, and housing than it did when Bill Clinton promised to “end welfare as we know it.” Simply put, welfare spending has exploded and continues to grow.

Under a culture of dependency, poverty becomes a trap, and recipients get stuck. Long-term welfare recipients lose work habits and job skills and miss out on the marketplace contacts that lead to job opportunities. That’s a key reason the government should require welfare recipients to work as much as they can. What could be called “workfare” thus tends to increase long-term earnings among potential recipients.

Another problem is that we simply can’t afford all this spending.

The national debt is at
$16 trillion, more than the entire GDP of the United States last year. High as it is, that debt is about to soar. More than 78 million baby boomers are retiring on to Social Security and Medicare in the next 15 years, or so. Under Obamacare, Medicaid is set to explode as well. Within just one generation, total federal spending could reach nearly 36 percent of GDP, and the Congressional Budget Office says debt held by the public could reach nearly 200 percent of GDP.

That will crowd out virtually all other government spending, including national defense. Future Congresses could impose deep cuts in social welfare programs across-the-board or raise massive taxes to support these exploding programs. The results would be chaotic and unpredictable.

It doesn’t have to be this way.

We can reduce dependency on government and focus benefits on those who are truly needy. For example, by including work requirements and promoting marriage (being raised in a married family slashes a child’s chances of being in poverty by
80 percent), we’ll help rekindle the American Dream for everyone.

All poverty programs should be reviewed to make certain they’re helping people instead of harming them.
Welfare should help people up, not hold them down.

                      
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