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More Americans Receiving Government Benefits While Fewer Pay In

Posted By Stephen Keen On September 15, 2010 @ 2:30 pm In Economics | Comments Disabled

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The front page of today’s Wall Street Journal [2] brings some unsurprising yet alarming news about the nation’s fiscal situation. Simply put, the federal government is spending an increasing amount on benefits in the form of entitlements while simultaneously trimming the number of taxpayers paying the bill [3]:

Efforts to tame America’s ballooning budget deficit could soon confront a daunting reality: Nearly half of all Americans live in a household in which someone receives government benefits, more than at any time in history.

At the same time, the fraction of American households not paying federal income taxes has also grown—to an estimated 45% in 2010, from 39% five years ago, according to the Tax Policy Center, a nonpartisan research organization.

Heritage’s 2010 Index of Dependence on Government [4] tells the same grim story. In nearly every category measured, Americans have significantly increased their dependence on government. If this weren’t distressing enough, this level is before 19 million more Americans begin to receive federal aid to purchase health insurance under Obamacare.

If entitlement spending continues as scheduled under current law, Social Security, Medicare, and Medicaid alone will consume all federal revenue by 2052 [5]. Even if all of the 2001 and 2003 tax relief expires and the Alternative Minimum Tax isn’t fixed—significantly increasing taxes on more and more Americans each year—entitlements would still swamp the entire federal budget [6]. You don’t need to be an expert on the federal budget to understand that we are not living within our means. Without significant reductions in federal spending, the nation faces fiscal catastrophe.

Because strong policy action is needed to avert a Grecian-style fiscal disaster, The Heritage Foundation released a series of policy recommendations targeting the nation’s most urgent problems entitled Solutions for America [7]. Among other issues, the report outlines key policy recommendations to rein in federal spending [8], reform entitlements [9], and reform taxes. [10] Transforming this entitlement culture is a necessary ingredient.


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2010/09/15/more-americans-receiving-government-benefits-while-fewer-pay-in/

URLs in this post:

[1] Image: http://www.foundry.org/wp-content/uploads/welfare1.jpg

[2] front page of today’s Wall Street Journal: http://online.wsj.com/article/SB10001424052748703791804575439732358241708.html?mod=googlenews_wsj

[3] trimming the number of taxpayers paying the bill: http://www.heritage.org/budgetchartbook/top10-percent-income-earners

[4] 2010 Index of Dependence on Government: http://www.heritage.org/research/reports/2010/06/the-2010-index-of-dependence-on-government-dramatic-spike-in-dependence-projected

[5] consume all federal revenue by 2052: http://www.heritage.org/budgetchartbook/entitlements-historical-tax-levels

[6] entitlements would still swamp the entire federal budget: http://www.heritage.org/budgetchartbook/repealing-tax-cuts

[7] Solutions for America: http://www.heritage.org/research/projects/solutions-for-america

[8] rein in federal spending: http://www.heritage.org/Research/Reports/2010/08/Reining-in-Runaway-Spending-and-Deficits

[9] reform entitlements: http://www.heritage.org/Research/Reports/2010/08/The-Entitlement-Crisis

[10] reform taxes.: http://www.heritage.org/Research/Reports/2010/08/Tax-Reform

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