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GHEI: A nation of moochers
Availability of lavish federal benefits destroys work incentive
Question of the Day
Federal Reserve Chairman Ben S. Bernanke warned Tuesday against both raising taxes and cutting spending. In testimony before the Senate Budget Committee, Mr. Bernanke said we must protect the fragile economic recovery, which saw some 243,000 jobs created in January. The problem with his line of thinking is that it adds to our ever-increasing debt, which is not only a burden for the current generation but also means higher taxes on our children and grandchildren. It is hardly a sustainable fiscal future.
The more we delay bringing our books into balance, the closer our problems resemble those that have crippled Europe. Going by the latest Index of Dependence on Government, released by the Heritage Foundation on Wednesday, we may already be a lot closer to Greece than we thought.
The Heritage study found more than 70 percent of federal spending goes to dependence programs, which it divides into health care and welfare, housing subsidies, retirement, higher education and agricultural subsidies. The index grew a dramatic 8.1 percent in 2010 alone. Growth in agricultural subsidies is perhaps the most egregious example of subsidizing the rich. Farm incomes grew by $7,271 in 2010, while the average non-farm American household saw income drop by $500. Despite the improved situation, farm subsidies have not declined.
Worse, the number of people who do not pay federal income taxes and are not claimed as dependents by someone else skyrocketed from a modest 14.8 percent in 1984 to 49.5 percent in 2009. Almost one-half, more than 151 million tax filers, pay no taxes. Many of those people are on the dole.
Government benefits have become increasingly generous over time. The outlay for food stamps nearly doubled from $39.3 billion to $75.3 billion between 2008 and 2010, bringing the average per capita monthly benefit to $134. This all adds up. The total amount of government support per capita jumped from $7,314 in 1962 to $32,748 in 2010 (using constant 2005 dollars). Why work when you can do better simply living off government programs?
Therein lies the danger of government dependence. It reduces the incentive to seek employment and sets up a tension between those who pay taxes and those who receive benefits. The fiscal balance also worsens as politicians boost the freebies, hoping grateful recipients will deliver votes to keep them in office.
The growing role of government in providing services that were largely the domain of private philanthropy also weakens the fabric of civil society. When temporary assistance is provided to someone who is homeless or unemployed, there is a strong incentive for that person to find a job and for the assistance to remain temporary. When such assistance is provided via a government bureaucracy, through a welfare program or through housing assistance, there are few, if any, incentives to reduce the number of “clients.”
We urgently need to scale back this culture of dependency. Doing so requires holding the line against tax increases while simultaneously cutting spending and encouraging work. As the European experience has shown, doing any less is a one-way ticket to bankruptcy.
Nita Ghei is a contributing Opinion writer for The Washington Times.
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By Matt Kibbe
The short-term deal will assure long-term overspending
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