Election 2012

Forget Romney: Should We Be Concerned That 49 Percent of Households Get Government Money?

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Let's leave aside at least for a minute the flap over Mitt Romney's 47 percenters. Should we be concerned that somewhere around half of Americans live in households that get a direct cash benefit from the government?

To the right is a chart created earlier this year by Reason contributor Veronique de Rugy of the Mercatus Center.

Using data from the third quarter of 2010, de Rugy found that just three programs—Social Security, Medicare, and Medicaid—account for the overwhelming majority of the payouts.

…government at all levels spent $7,500 per capita on 50 benefit programs designed to help citizens. Social Security, Medicare and Medicaid account for $7,000 of the per capita total.

Should high rates of government payouts matter? Yes, and not because of politicking that is ultimately designed to get one or another candidate elected as president. The numbers and percentages matter because government at all levels is broke and the only way it's going to get less broke is by spending less money. If you're relying on federal tax revenues staying above 19 percent of GDP for more than a quick cup of coffee, you're dreaming.

To underscore it: We need to spend less money, not more money. Yet increasing outlays is precisely what both the GOP and the Democrats plan to do. Writing in February, just after Barack Obama released his budget proposal for 2013, de Rugy notes

President Obama released a budget plan this week that proposes to increase spending from $3.8 trillion in 2013 to $5.8 trillion in 2022.

As limited-government types wonder how to reverse this trend, they need to confront the following: Americans in every possible demographic group are increasingly dependent on government. That makes it that much tougher to cut spending.

Arguably, the real scandal of Romney's fundraising comments is that his own party has passed a budget plan that does nothing to cut spending. Indeed, the GOP House this year passed a version of Vice President candidate Paul Ryan's plan that would increase annual spending from around $3.5 trillion to $4.9 trillion in 2022.

Does anyone seriously think that Medicaid, the nation's insurance plan for the poor that's funded jointly by the feds and the states, as it is currently operated is a good program? Would anyone other those who are forced into it choose it if given a viable alternative? Almost certainly not, and with good reasons.

I support a tax-based social safety net for those too poor or incapacitated to help themselves, but Medicaid should not be confused with quality care that is cost effective. It is, in fact, the basic reason why states are so broke (along with spending on education, but that's another issue). Whoever wins in November will need to overhaul Medicaid. Period.

Then there's Social Security and Medicare, the other two programs that account for most of government payouts to people. As de Rugy and I argued in our August-September Reason cover story, "Generational Warfare," these programs are both fiscally and morally bankrupt. Everyone agrees they are mathematically unsustainable in their current guises; there is simply no way to generate the revenues necessary to pay expected benefits. Worse still, they take money from relatively poor and relatively young people and give to relatively wealthy and politically connected people (retirees). So not only is the transfer going in the wrong direction, it robs the young of money that might be used to build savings over a lifetime of work. So whoever wins in November will need to overhaul Medicare and Social Security too. Period.

I have no interest in defending Mitt Romney, for whom I will not be voting in November (nor will I cast a ballot for the incumbent). But Romney is right when he flags as a problem high levels of government spending on those who can get by without it. He may well be wrong in all his particulars—GOP voters are a big chunk of the 47 Percent and their checks break the government bank just as much as those who lean Democratic—but he's right on the larger issue.

Hell, he might even have a chance in November if he would only generate an economic plan that grows out of that insight rather than one that simply echoes Obama's proposal. Gallup finds that 54 percent of Americans agree that "the government is trying to do too many things that should be left to individuals and businesses." That number is down a bit from a recent high of 61 percent but it suggests that Americans recognize that the free-lunch days are numbered, that even after years of a recession that was tough and a recovery that's even worse we need to change what we're doing.

But hope and change is so 2008, right? This time, both sides seem to be more interested in the same old, same old that got us stuck in this ditch in the first place.

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  1. I support a tax-based social safety net for those too poor or incapacitated to help themselves…

    Brace yourselve…

    1. Nothing like a big fat English fail for a first post.

      Goodnight everybody!

      1. Oh, wasn’t a reference to the english fail in the headline of the post? 2nd fail in less than an hour. I don’t think it’s too demanding to expect an online publication to at least not-fail in the 10-15words it takes to introduce a post. Postrel would never have let this happen, I’m canceling my subscription, and since I can’t recall any more rules from the drinking game, in conclusion, also fried chicken.

        1. Your post is exactly what I expect from someone who supports the Libertarian Party line!

          Drink again.

          1. For a magazine called “Reason”…

  2. Americans in every possible demographic group are increasingly dependent on government. That makes it that much tougher to cut spending.

    But remember, suggesting that the policies of both major party are explicitly designed to increase dependance on the gov’t is just poppycock-conspiracy-nut-bullshit.

    1. *explicitly designed to increase dependance on the gov’t as a way to increase their influence/power…

  3. “Get your government hands off my Medicare!”

  4. The numbers Nick posts don’t even count the number of government workers at all levels.

    When you get right down to it, the United States is really one big welfare state–everyone has become dependant upon a check from the Central State in some form or another to survive. At some point, the math kicks in and you can no longer sustain the system you’re running because the limits of human scale and the plans/reality mismatch prevent it.

    1. Or people that work for companies reliant on government spending.

      1. This too.

        I mean, shit, just look at the state of our economy today–ever since the establishment of the Fed and the birth of the Central State in American life, we’ve had steadily increasing inflation that’s so distorted the value of a dollar that some goods and services can’t be purchased without massive sums of money anymore.

        If deflation can reduce the inflation-adjusted cost of a Macintosh to about 1/5 of it’s mid-1980s cost, then there’s really no good reason to not let it set in everywhere else, and get the purchasing power back to where average americans aren’t becoming debt slaves just to get a broken arm fixed.

  5. Is it just me, or does that last pic look like it was from The Walking Dead?

    1. He and Al Gore should get together for a zombie death match.

    2. It’s that mechanical motion
      Skin-tight when the nights are bloodless
      Lip-sync the latest notion
      From zombie drill instructors

      Throw out of all the parties
      Maybe it’s time for me to bed
      Now his eyeball’s runnin’
      Just like a razor down her leg

      Baby’s joined the walking dead
      Up from her grave
      Another white slave
      Nothin’ goes in or out of her head

      Never you mind
      Tryin’ to find
      A real live girl in your bed
      She’s joined the walking dead

      She likes this frenzy feeding
      She cuts across the dance floor
      Thinks she’s the only one bleeding
      He cuts his teeth on girls like her

      Just a little more makeup
      ‘Til she makes up for being used
      He hardly knows what he’s saying
      She hardly knows how to refuse

      Baby’s joined the walking dead
      Up from her grave
      Another white slave
      Nothin’ goes in or out of her head

      Never you mind
      Tryin’ to find
      A real live girl in your bed
      She’s joined the walking dead

      She’s walking

      With his eyes in your head
      With his tongue in your bed
      And your lips are swollen red
      From the kiss of the walking dead

      Baby’s joined the walking dead
      Up from her grave
      Another white slave
      Nothin’ goes in or out of her head

      Never you mind
      Tryin’ to find
      A real live girl in your bed
      She’s joined the walking dead

  6. Let’s leave aside at least for a minute the flap over Mitt Romney’s 47 percenters. Should we be concerned that somewhere around half of Americans live in households that get a direct cash benefit from the government?

    Apparently not, if the coverage of Romney is any indication.

  7. Reason beats dead horse. News at 11.

    1. Reason: beating dead horses since Day 1

      1. I recall that during the Postrel era, Reason only beat dead dressage horses.

  8. Who gives a shit about this? BORDERLANDS BABY

    The gameplay is just like the original, and they seem to have improved the AI on the enemies, so combat tends to be more tactical and crouch-and-fire-from-cover, which works for me (I’m a Siren). I’m already having fun and I haven’t even got high enough to unlock abilities or get any real weapons.

    1. I’m conflicted. I’m nearly done with FONV (well, my first playthrough, anyway), and really enjoyed Borderlands, but I prefer to get the GOTY editions with all the downloadable additional content built in.

      Can I wait? What are my options?

      1. YOU HAVE NO OPTIONS

        Look, I have a minuscule amount of free time and I still pre-ordered it, pre-installed it, and was playing it about 20 minutes after it was unlocked (there is some residual installation that needs to occur after the unlock). Of course, it’s literally the perfect game for me–nothing but killing, looting, paper-thin plot, and stupid goofball humor–and it might not be the same for you.

        1. nothing but killing, looting, paper-thin plot, and stupid goofball humor

          For the first time in my life, I am suddenly interested in gaming…

    2. How can you play well while you’re getting high?

      1. Are you kidding? I play best that way.

        1. Your wife is a lucky woman.

          1. You mean NutraSweet?

          2. We don’t impose heteronormative concepts on Episiarch, Tim. It…it isn’t applicable.

            1. I was simply pointing out: what woman wouldn’t be enchanted to return home from work, bags in hand, to the sight of her loyal hubby stoned on the couch playing XBox?

              1. Rachel Maddow?

              2. XBox?!? I have a PC with a GeForce GTX 560 Ti in it, not some shitty console. And NutraSweet doesn’t go shopping that much. Well, maybe he does.

            2. We were never formally married.

              1. “The woman lays the reef upon her intended (which I do recall) which represents his sovereignty. And he drinks of her wine. And then there’s a dance with a joining of hands. The marriage ceremony of the Triumph settlers –you sir, are a newlywed.”

  9. Don’t worry, it’s not our money.

    We borrowed it from suckers who think they’ll get it back.

    1. Including US banks, pension funds, money market accounts, etc. About half of the public debt is held by filthy furriners who we should be happy to screw. The other half is held by us.

      1. Not to worry, we will all get paid back with worthless dollars freshly printed by the Fed. That’s why we have such an awesome credit rating!

  10. “I have no interest in defending Mitt Romney, for whom I will not be voting in November (nor will I cast a ballot for the incumbent). ”

    The obligatory Gillespie disclaimer.

    1. He wants to make sure that everyone understands he does not have any Romney-cooties.

      1. You never know when somebody from Salon or the Huffington Post might be talent scouting…

  11. Why is there such an obsession with this shit? I know HuffPo has had it as their headline for two days to keep from talking about Obama fucking up relations with China, but why is Reason writing a dozen posts about it?

    1. What does it all meme?

      1. that mittens feels ur pain

    2. No, China keeps fucking up our relations with China. I don’t get this delusion everyone GOP seems to have that is only we had Romney in office, everyone else on the planet would suddenly stop telling us to get bent.

  12. “somewhere around half of Americans live in households that get a direct cash benefit from the government”

    I don’t think the graph actually says this. Neither medicare nor medicare is a “direct cash benefit.” Most other programs aren’t either, e.g. food stamps, section 8, etc. They are in-kind benefits. In fact, the only two that I can think of (other than refundable tax credits) that are direct cash are SS and AFDC.

    1. Should be neither medicare nor medicaid.

    2. All money is fungible.

      If you recieve food stamps it means you need to spend less of your own money on food leaving you with more cash on hand for other purposes. Similarly with all other “in kind” benefits. Unless they provide a good or service which you would otherwise not purchase (and medicare/medicaid are realistically the only candidates here) then the in kind benefit is no different from a cash benefit.

  13. I support a tax-based social safety net for those too poor or incapacitated to help themselves,

    Exactly what is “too poor”? If I lose the whole family nest egg, the house and the dog on a stock market gamble after losing my six-figure dream job, would I them be “too poor” to help myself?

    Or would I be “too poor” if I was a kid making minimum wage and living in my parents’ basement?

    Because for me, somebody that is defintively “too poor” to help himself would be a castaway in a desert island with no water, food or shelter of any kind – poor bastard. But even Robinson Crusoe was not “too poor” to fend for himself: he had a measure of wealth that helped him survive. He was certainly not “too poor.”

    1. Robinson Caruso became the defacto owner of all of the resources of the island the instant he landed on it giving him quite a bit of wealth indeed, especially given the health and vigor to harvest those resources for himself.

      However in modern societies there does not exist large tracts of unclaimed valuable land which a poor person could homestead so for those who loose a job and find themselves without the means to support themselves (whether because of bad luck or poor choices) clawing back to become a productive member of society can indeed be a very difficult thing.

      1. Re: Rasilio,

        Robinson Caruso became the defacto owner of all of the resources of the island the instant he landed on it giving him quite a bit of wealth indeed, especially given the health and vigor to harvest those resources for himself.

        That is what I said – he was wealthy enough to fend for himself.

        However in modern societies there does not exist large tracts of unclaimed valuable land which a poor person could homestead so for those who loose a job and find themselves without the means to support themselves (whether because of bad luck or poor choices) clawing back to become a productive member of society can indeed be a very difficult thing.

        Ok, but what then is “too poor” for surviving? Even runaways that live in the Left Coast can find plenty of resources to homestead, like grocery store dumpsters. And again, the condition is being “too poor” to survive at all, not “poor” as I would not want to be – I mean, how poor is that?

        1. Paranoid schizophrenics, Paraplegics, People with severe epilepsy, several dozen other medical/psychological conditions are obviously not ever really going to be able to effectively support themselves.

          The real point however is to deal with those who are in a temporary situation and provide a soft landing such that a setback does not become a permanent trap.

  14. re. the chart at the beginning of the article: LOL! That whole “welfare reform” thing that Gingrich was so proud of (Clinton was president and had campaigned on it). It’s about that last one TANF … 2% … No wonder it’s costing us 10s of billions of dollars more each year as a result. (sarcasm)

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