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Fix Entitlement Programs to Save the American Dream

Posted By Emily Goff On June 1, 2012 @ 10:15 am In Economics | Comments Disabled

The latest installment [1] in a National Public Radio (NPR) series considers how entitlement programs impact Americans’ opportunities. This is a welcome discussion, because growing entitlement spending [2] threatens the American dream for people of all generations.

Spending on the three main entitlement programs—Medicare, Medicaid, and Social Security—is projected to double as a share of the economy [3] within a few decades. Spending on Social Security is driven upwards as more Americans retire, while spending on Medicaid is driven upwards by rising health care costs. Medicare spending is driven both by demographics and rising health care costs.

Under President Obama, the nation is building a bridge of debt to the unsustainable future. America is already suffering from almost four years of trillion-dollar-plus deficits; debt held by the public stands at over 70 percent of the economy and is rising. Congress and the President should offer solutions that put these programs on a budget to reduce costs today and preserve them as a safety net for the future.

The nearly 80 different welfare programs the federal government operates [4] also need substantial reform. Instead of addressing the causes of poverty, Washington’s approach has been to pour more taxpayer dollars—close to $1 trillion annually [4]—into an increasing number of programs that tend to trap the poor in poverty. None of these programs includes functional provisions to promote personal responsibility, such as work requirements and time limits. And the government has made it much easier for people to get on welfare.

For example, a recent government report [5] about the food stamp program (or, as it’s now known, the Supplemental Nutrition Assistance Program, or SNAP) notes that part of the recent growth in the number of participants is due to policy changes over the last decade “designed to increase SNAP participation among working poor households.” The report adds that states have “implemented a number of program changes to simplify the administrative process to apply for and remain on SNAP.” Not only does the safety net become an ensnaring net, but it increases the burden taxpayers must bear.

With such a failed a approach, it is no wonder that growing numbers of reports of welfare abuse have made recent headlines, from a million-dollar lottery winner receiving food stamps [6] to a Massachusetts drug dealer attempting to use welfare cash to post bail [7] to an Alabama nightclub advertising a “Food Stamp Friday” party [8].

In the NPR installment, Pam Malcolm, a resident of Elyria, Ohio, describes welfare abuse she has seen and expresses frustration at having to work hard while seeing people buy sushi and crab legs as if “they have a thousand dollars a month in food stamps.”

While dire, entitlement spending is not the sole threat to the American dream. Malcolm describes the substantial job losses in Elyria, saying, “It used to be a thriving area. It’s not thriving anymore because people aren’t working.” Yet the policy prescription recommended by some in Washington—that of tax hikes, stimulus spending, and more regulation—isn’t working to create jobs either.

America needs Washington to stop threatening tax hikes (preventing Taxmageddon [9] is a good start) and curb its torrent of regulations, both of which are preventing businesses from growing or starting in the first place. Follow that with pro-growth tax reform [10] that cuts tax rates and eliminates the tax bias against saving and investment, and employers will be much more inclined to hire new workers.

Americans need solutions from their leaders. The Heritage Foundation has a plan to Save the American Dream [11]. This plan simplifies and improves the immensely complex tax system, paving the way for robust economic growth. It gets spending under control by returning government to a more limited role and restructuring and strengthening the entitlement programs. For welfare, it means rolling back spending to pre-recession levels once the economy recovers, instead of letting costs continue on an upward path, as well promoting personal responsibility through work.

Saving the American Dream [12] balances the budget within 10 years and keeps it balanced. Under the Heritage plan, the American dream—embodied by opportunity and freedom—will be secure for both current and future generations of Americans.


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

URL to article: http://blog.heritage.org/2012/06/01/fix-entitlement-programs-to-save-the-american-dream/

URLs in this post:

[1] latest installment: http://www.npr.org/2012/05/31/154005722/right-fears-entitlements-are-killing-american-dream

[2] entitlement spending: http://www.heritage.org/federalbudget/entitlements

[3] projected to double as a share of the economy: http://www.heritage.org/federalbudget/entitlement-spending-double

[4] nearly 80 different welfare programs the federal government operates: http://blog.heritage.org/2012/04/20/welfare-tackling-the-fastest-growing-part-of-government-spending/

[5] government report: http://www.ers.usda.gov/publications/err132/

[6] a million-dollar lottery winner receiving food stamps: http://www.huffingtonpost.com/2012/04/17/amanda-clayton-michigan-lottery-winner-food-stamps_n_1431777.html

[7] a Massachusetts drug dealer attempting to use welfare cash to post bail: http://blog.heritage.org/2012/04/20/2012/04/13/welfare-money-being-used-to-post-bail/

[8] an Alabama nightclub advertising a “Food Stamp Friday” party: http://blog.heritage.org/2012/04/20/2012/04/02/welfare-is-cool-at-food-stamp-friday-party/

[9] preventing Taxmageddon: http://www.heritage.org/research/reports/2012/05/tax-increase-preventing-taxmageddon-is-congress-s-summer-job

[10] pro-growth tax reform: http://www.heritage.org/research/reports/2012/05/2012-tax-policy-two-step-taxmageddon-then-tax-reform

[11] Save the American Dream: http://www.savingthedream.org/

[12] Saving the American Dream: http://savingthedream.org/

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