The 2012 Index of Dependence on Government

The 2012 Index of Dependence on Government
William W. Beach is Director of the Center for Data Analysis at The Heritage Foundation. 
Patrick D. Tyrrell is Research Coordinator in the Center for Data Analysis. 


I encourage you to click the links above and read the entire report.  It has many great graphs and charts that show how things are getting out of control.  We are at a tipping point in our country.  After looking through the facts, there is no doubt about the sense of urgency we need to have about the direction of the USA, lest we become yet another mediocre European style socialized democracy.  


Excerpts:

Taxes


The percentage of people who do not pay federal income taxes, and who are not claimed as dependents by someone who does pay them, jumped from 14.8 percent in 1984 to 49.5 percent in 2009. This means that in 1984, 34.8 million tax filers paid no taxes; in 2009, 151.7 million paid nothing.


70.5 percent of federal spending now goes to dependence-creating programs, up dramatically from 28.3 percent in 1962, and 48.5 percent in 1990


Beginning in 2008, the federal government took over the operations of Fannie Mae and Freddie Mac and has since then spent more than $150 billion to keep them afloat and allow them to continue to provide mortgage credit to finance home sales. More than 90 percent of all single-family residential mortgage credit is now provided by these two government-sponsored, government-controlled enterprises, thereby extending dependence on federal assistance to middle-class and upper-middle-class households.


Medicare/Medicaid


 In 1970, 20.4 million individuals were enrolled in Medicare. By 2010, the number of enrollees had more than doubled to 47.5 million Over the next 10 years, the number of people enrolled in Medicare will increase dramatically. In 2011, the first of 81.5 million baby boomers became eligible for Medicare. In 2010, the size of the Medicare-eligible elderly population was 21.5 percent the size of the non-elderly adult population; the Congressional Budget Office (CBO) predicts that by 2035, this proportion will grow to 36.4 percent.


In 2010, 53.6 million Americans were enrolled in Medicaid, an increase of almost 3 million individuals in just one year, and 20 million since 2000. Medicaid serves a diverse population of the poor, including children, mothers, the elderly, and the disabled. Combined, the total national cost of Medicaid and CHIP in 2010 is estimated at $413 billion, and is projected to rise to $914 billion by 2020.


By 2020, Medicare spending will reach $922 billion, and total spending for Medicaid and CHIP will reach $914 billion, at which point government spending will represent 50 percent of all health care expenditures.


Welfare


The erosion of marriage and family is a primary contributing factor to child poverty and welfare dependence, and it figures significantly in a host of social problems. A child born out of wedlock is seven times more likely to be poor than a child raised by married parents, and more than 80 percent of long-term child poverty occurs in broken homes or homes where the parents never married. 


In 2009, 1.7 million children were born to unmarried parents. Contrary to popular conception, the typical single mother is not a teen, but in her twenties. Whereas in 1970, one-half of all out-of-wedlock births were to teens, in 2009, births to girls younger than 18 years of age comprise only 7 percent of such births. Sixty percent of out-of-wedlock births occur to women in their twenties. About 43 percent are high-school dropouts, and 36 percent are high-school graduates. Eighteen percent have had some college education; only 2 percent have a college degree.

In the TANF reauthorization, Congress, for the first time, enacted a healthy-marriage initiative, allocating $100 million in TANF funds per year—less than 1 percent of total TANF expenditures in FY 2006—to local organizations that provide voluntary marriage-centered services and skills training to recipients.

Yet, in February 2009, the Democrat-controlled Congress and the new Obama Administration enacted legislation that essentially overturned the fiscal foundation of welfare reform and reverted to an AFDC-style funding scheme. States now receive cash bonuses when they swell the welfare rolls.[Emphasis Mine]

Social Security

... the demographic forces that once made Social Security affordable have reversed, and the program is on an inexorable course toward fiscal crisis. To break even, Social Security needs at least 2.9 workers to pay taxes for each retiree who receives benefits. The current ratio is 3.3 workers per retiree and dropping because the baby boomers produced fewer children than their parents did and are now nearing retirement. The ratio will reach 2.9 workers per retiree around 2015 and drop to two workers per retiree in the 2030s.

Current retiree benefits are paid from the payroll taxes collected from today’s workers. Due to the effects of the recent recession, Social Security has not collected enough taxes to pay for all its promised benefits since 2010. Both the Social Security Administration and the CBO say that these deficits are permanent.

From 1983 to 2009, workers paid more in payroll taxes than the Social Security program needed in order to pay benefits. These additional taxes were supposed to be retained to help finance retirement benefits for baby boomers. But the government did not save or invest the excess taxes for the future. Instead, the government used the money to finance other government programs.

Higher Education

During the 2010–2011 school year, total federal spending on student aid programs (including tax credits and deductions, grants, and loans) was $169 billion—making total federal aid 142 percent higher than for the 2000–2001 school year (inflation-adjusted). In the 2010–2011 school year, federal grant aid increased to $49 billion, a 16 percent increase over the previous year—well ahead of the inflation rate.

Increases in federal student aid subsidies over the years have done nothing to mitigate ever-rising college costs. Tuition and fees at public and private four-year institutions rose by 7.9 percent and 4.5 percent, respectively, after adjusting for inflation, from the 2009–2010 academic year to the 2010–2011 academic year.

Farm Subsidies

 In 2009, the average farmer had a net worth of $915,019 (159 percent of the national average of household wealth); in 2010, an annual income of $84,440; while living in a rural area with a significantly lower cost of living than that of suburban and urban areas. The failure rate for farms is about one-sixth the rate of other businesses.

Yet, farm subsidies have become one of America’s largest corporate welfare programs. The majority of subsidies go to commercial farms, which report average incomes of $200,000 and net worths of nearly $2 million.  The bottom 80 percent of farmers receive just one-fifth of the subsidies

Conclusion

Americans have reached a point in the life of their republic when the democratic political process has become a means for many voters to defend and expand the “benefits” they receive from government (read: their dependence). This can only lead to a corruption of government and of self-serving voters.