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A nation of takers

Nicholas Eberstadt is the author of A Nation of Takers: America’s Entitlement Epidemic. The book, it should be noted, includes dissenting essays by Yuval Levin and William Galston.

President Obama seems to have been responding to Eberstadt in a key passage of his second inaugural address: “The commitments we make to each other through Medicare and Medicaid and Social Security, these things do not sap our initiative, they strengthen us. (Applause.) They do not make us a nation of takers; they free us to take the risks that make this country great. (Applause.)”

Let us pause to consider the import of what has been said. Here we have the Obama doctrine: transfer payments are the source of America’s greatness.

Nicholas Eberstadt responds:

[T]he country’s social-welfare spending is generating severe and mounting hazards for the nation. These hazards are not only fiscal but moral.

The evidence documents as well a number of perverse and disturbing changes that this entitlement state is imposing on society.

Consider:

• Over the 50-plus years since 1960, according to the Bureau of Economic Analysis, entitlement transfers—government payments of cash, goods and services to citizens—have been growing twice as fast as overall personal income. Government transfers now account for nearly 18% of all personal income in America—up from 6% in 1960.

• According to the BEA, America’s myriad social-welfare programs (the federal bureaucracy apparently cannot determine exactly how many of these there are) currently dispense entitlement benefits of more than $2.3 trillion annually. Since those entitlements must be paid for—either through taxes or borrowing—the burden of entitlement spending now amounts to over $7,400 per American man, woman and child.

• In 1960, according to the Office of Management and Budget, social-welfare programs accounted for less than a third of all federal spending. Today, entitlement programs account for nearly two-thirds of federal spending. In other words, welfare spending is nearly twice as much as defense, justice and everything else Washington does—combined. In effect, the federal government has become an entitlements machine.

• According to the latest data from the U.S. Census Bureau, nearly half (49%) of Americans today live in homes receiving one or more government transfer benefits. That percentage is up almost 20 points from the early 1980s. And contrary to what the Obama White House team suggested during the election campaign, this leap is not due to the aging of the population. In fact, only about one-tenth of the increase is due to upticks in old-age pensions and health-care programs for seniors.

Instead, the country has seen a long-term expansion in public reliance on “means-tested” programs—that is, benefits intended for the poor, such as Medicaid and food stamps. At this writing, about 35% of Americans (well over 100 million people) are accepting money, goods or services from “means-tested” government programs. This percentage is twice as high as in the early 1980s. Today, the overwhelming majority of Americans on entitlement programs are taking “means-tested” benefits. Only a third of all Americans receiving government entitlement transfers are seniors on Social Security and Medicare.

Under the Obama doctrine, we can see, America is becoming greater all the time. Just wait until Obamacare kicks in!

Eberstadt continues:

• As entitlement outlays have risen, there has been flight of men from the work force. According to the Bureau of Labor Statistics, the proportion of adult men 20 and older working or seeking work dropped by 13 percentage points between 1948 and 2008.

The American male flight from work is so acute that more than 7% of men in their late 30s (the prime working age-group) had totally checked out of the workforce, even before the recent recession. This workforce opt-out, incidentally, was more than twice that of contemporary Greece, the poster child for modern welfare-state dysfunction. The share of 30-somethings neither working nor looking for work appears to be higher in America than in practically any Western European economy.

• Arithmetically speaking, the recent American flight from work has largely been a flight to government disability programs. According to the Social Security Administration, the number of working-age Americans relying on Social Security’s disability programs has increased dramatically over the past two generations.

In December 2012, more than 8.8 million working-age men and women took such disability payments from the government—nearly three times as many as in December 1990. For every 17 people in the labor force, there is now one recipient of Social Security disability program payments.

But the pool of working-age government disability recipients may be even larger than those getting funds just from the Social Security disability programs alone. The Department of Health and Human Services reports that more than 12.4 million working-age Americans obtained disability income support from all government programs in 2011. That’s more than the total number of employees in the manufacturing sector of the economy.

• In recent years, the biggest increases in disability claims have been for “musculoskeletal” problems and mental disorders (including mood disorders). But as a practical matter, it is impossible for a health professional to ascertain conclusively whether or not a patient is suffering from back pains or sad feelings. The government’s disability-insurance programs were intended to address genuine need. On the current trajectory, the Social Security disability fund is projected to run out of money during Mr. Obama’s second term.

Not to worry: the Federal Reserve can pick up the slack. Eberstadt concludes:

The moral hazard embedded in the explosion of social-welfare programs is plain. Transfers funded by other people’s money tend to foster a pernicious “something for nothing” mentality—especially when those transfers seem to be progressively and relentlessly growing, year by year. This “taker” mentality can only weaken civil society—even as it places ever-heavier burdens on taxpayers.

Our modern house divided may precipitate another crisis:

I believe this government cannot endure, permanently half slave and half free.

I do not expect the Union to be dissolved — I do not expect the house to fall — but I do expect it will cease to be divided.

It will become all one thing or all the other.

Discuss.

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