U.S. Becoming a Nation of Dependents

The Obama administration is rapidly pursuing its vision of a “transformed” America–an America in which most people are dependent on government, and therefore the party of government, the Democrats, will be dominant. One of the administration’s prime vehicles for stimulating dependence is the food stamp program, which, as we wrote here and elsewhere, has exploded under Obama. Food stamps now make up 80% of “agriculture” spending, and the Department of Agriculture has come under fire for aggressively building up the numbers of food stamp recipients. The Department has put out literature explaining how to hold “food stamp parties” in one’s home to get friends and neighbors into the program. It also sponsored a series of Spanish-language radio ads encouraging illegal immigrants and others to get on the dole:

The government has been targeting Spanish speakers with radio “novelas” promoting food stamp usage as part of a stated mission to increase participation in the Supplemental Nutrition Assistance Program (SNAP), or food stamps.

Each novela, comprising a 10-part series called “PARQUE ALEGRIA,” or “HOPE PARK,” presents a semi-dramatic scenario involving characters convincing others to get on food stamps, or explaining how much healthier it is to be on food stamps.

The majority of the episodes end with the announcer encouraging the listener to tune in again to see if the skeptic applies for benefits or learns to understand the importance of food stamps to their health.

USDA removed these ads from its web site after Senators and others expressed outrage.

On Thursday, President Obama gutted the federal welfare reform that was enacted in 1996 and represents one of the greatest legislative achievements of the last thirty years. Obama waived, by decree, the requirement in the statute that recipients of federal welfare dollars work:

President Obama’s Department of Health and Human Services (HHS) released an official policy directive undermining the welfare reform law of 1996. The new policy guts the federal work requirements that have been the foundation of that law — one of the most successful domestic policy reforms in the 20th century. …

Contrary to some perceptions, the formula that made welfare reform a success was not giving state governments more flexibility in operating federally funded welfare programs. The active ingredient that made the difference was requiring state governments to implement those rigorous new federal work standards.

Today the Obama administration issued a dramatic new directive stating that the traditional TANF work requirements will be waived or overridden by a legal device called a section 1115 waiver authority under the Social Security law (42 U.S.C. 1315).

Obama’s maneuver appears to be of dubious legality, but laws don’t stand in the way of Obama’s rush to transform America. With work requirements gone, the welfare rolls will begin to increase again after years of decline following the 1996 reforms.

In the Age of Obama, helplessness can be a shrewd strategy. Pennsylvania’s Secretary of State, Gary Alexander, has calculated that a single mother will have more disposable income, counting government benefits, if she earns $29,000 a year than she would have if she earned $69,000 a year. Obama wants the word to get out: if you work hard to try to support yourself and your family, you are really just a sucker.

The result of the administration’s aggressive campaign of dependency, which aggravates trends that were already underway, is that even middle-income Americans are rapidly being transformed into wards of the state. This is dramatically illustrated by Greg Mankiw’s calculations of the progressivity of taxes and transfer payments:

Because transfer payments are, in effect, the opposite of taxes, it makes sense to look not just at taxes paid, but at taxes paid minus transfers received. For 2009, the most recent year available, here are taxes less transfers as a percentage of market income (income that households earned from their work and savings):

Bottom quintile: -301 percent
Second quintile: -42 percent
Middle quintile: -5 percent
Fourth quintile: 10 percent
Highest quintile: 22 percent

Top one percent: 28 percent

The negative 301 percent means that a typical family in the bottom quintile receives about $3 in transfer payments for every dollar earned.

The most surprising fact to me was that the effective tax rate is negative for the middle quintile. According to the CBO data, this number was +14 percent in 1979 (when the data begins) and remained positive through 2007. It was negative 0.5 percent in 2008, and negative 5 percent in 2009. That is, the middle class, having long been a net contributor to the funding of government, is now a net recipient of government largess.

I expect that these numbers have gotten even worse since 2009. Which means that the Obama administration is well on its way to achieving, if it has not already achieved, its dream of transforming America into a country in which a majority of citizens are dependents of the federal government.

Image courtesy Shutterstock.

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