FORECASTS & TRENDS E-LETTER
by Gary D. Halbert

April 29, 2014

Dependence On Government Has Become Epidemic

IN THIS ISSUE:

1. Government Dependence is at Epidemic Levels

2. Why We’re So Dependent on Government Benefits

3. Why the Welfare System Hasn’t Worked

4. The Non-Working/Single Parent Poverty Connection

5. Conclusions – How Did This Happen?

6. CBO Issues New Debt Projections & Warnings

Government Dependence is at Epidemic Levels

Did you know that the number of Americans getting benefits from the federal government each month greatly exceeds the number of full-time workers in the economy by a longshot? Sadly,it’s true.

Based on the latest Census Bureau data available, there were over 148 million non-veteran Americans who were on some kind of monthly means-tested government benefit programs in 2012, by far the highest number ever. Today, that number is around 167 million by some more recent estimates.

By comparison, the Census Bureau estimates that there were apprx. 103 million Americanswho were employed in full-time jobs for the entire year in 2012. That’s a gap of 45 million people. Thus, the number of people that are taking money out of the system is far greater than the number of people working full-time that are putting money (taxes) into the system.

[In case you’re wondering, the Census data released recently did not take into account the effects of part-time workers who in most cases also pay into the system, but in many cases also receive government benefits.]

As you’ll see just below, nearly 70% of all of the money that the federal government spends each year goes toward entitlement and welfare programs. This is why the only realistic way to balance our federal budget and reduce our massive national debt is to address and reform our entitlement and welfare programs.

Much of what the government does involves taking money from some people and giving it to other people.  Just check out the chart below from the Heritage Foundation, which shows that69% of all federal money is spent on entitlements and welfare programs.

Federal Money Spent on Program Government Dependence
Government Dependence

This chart is startling! So when politicians tell us that the main reason why we are being taxed so heavily is so that we can “build roads and bridges” and provide needed “public services,” they are lying to us. The main reason why the government taxes us so much is so that they can continue to maintain this broken system.

Editor’s Note: Some argue that Social Security and Medicare payments should not be included in a discussion about people’s dependence on government. After all, most people receiving these benefits paid into the system over the years while they were in the workforce, and the benefits they receive are tied to the amounts they contributed. (Granted, some people actually end up getting more out of the system than they paid into it.)

However, let’s face it, we are all dependent on the government to be solvent enough to pay out our benefits whether we paid into the system or not. Many people paying into Social Security and Medicare today are concerned that they’ll never get back what they put into the system. For those reasons and others, I have included Social Security and Medicare payments in this discussion.

Government Dependence  -Why We’re So Dependent on Government Benefits

We have become a nation that is hopelessly addicted to government benefits. The following are some statistics which show that government dependence has reached epidemic levels. These stats came from www.ZeroHedge.com which can be very opinionated, but most include solid references.

  • According to an analysis of U.S. government numbers conducted by Terrence P. Jeffrey, there are 86 million full-time private sector workers [103 million total full-time workers] in the United States paying taxes to support the government, and apprx. 148 million Americans that are receiving benefits from the government each month.
  • The U.S. government has spent an astounding 3.7 trillion dollars on welfare programs over the past five years.
  • While Barack Obama has been in the White House, the total number of Americans on food stamps has gone from 32 million to nearly 47 million.
  • Back in 1965, only one out of every 50 Americans was on Medicaid.  Today, more than 70 million Americans are on Medicaid, that’s one out of every six, and it is being projected that Obamacare will add 16 million more Americans to the Medicaid rolls.
  • In 1968, there were 51 full-time workers for every American on disability.  Today, there are just 13 full-time workers for every American on disability.
  • Over the next 75 years, the Social Security system is scheduled to pay out $134 trillion more in benefits than it will collect in taxes, according to the Trustees Report.
  • According to the most recent numbers from the U.S. Census Bureau, an all-time record 49.2 percent of all Americans are receiving benefits from at least one government program each month.  Back in 1983, less than a third of all Americans lived in a home that received direct monetary benefits from the federal government.

Bottom line: There is no question that government benefit programs and welfare in general are at epidemic levels and are completely out of control.

Does this mean I’m opposed to the government helping the poor and impoverished? Absolutely not! But the government welfare system is out of control and needs to be reformed to get more people back to work instead of them being permanently hooked on government assistance.  If not, the government will eventually be unable to pay benefits due to Social Security recipients and those truly in need.

Government Dependence  – Why the Welfare System Hasn’t Worked

When President Lyndon Johnson announced the “War On Poverty” in January 1964, the poverty rate was at 19%. A decade later, the poverty rate did fall to under 12%. However, in the late 1970s, the poverty rate increased back to 15%. While the rate fell back to below 12% in the late 1990s, it was once again back at roughly 15% by the end of 2012 (see lower chart below).

Number in Poverty and Poverty Rate Government Dependence
Government Dependence

More importantly, by the end of 2012, a record 46.5 million Americans were living at or below the poverty line. Over the long-run, the War On Poverty simply hasn’t worked and the number of Americans living in poverty continues to increase.

The same is true of the means-tested welfare system in which recipients must qualify to receive benefits. When major parts of the welfare system were legislated into place over the years, the stated rationale always was that these programs would be temporary benefits that would help most people get back on their feet and back into the workforce. But it hasn’t worked

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