"Educate and inform the whole mass of the people...They are the only sure reliance for the preservation of our liberty." ~Thomas Jefferson

America's Hooked on Entitlements

Since writing earlier this year that Americans need to want less from government and the damage done by government handouts, there were several news items that have caught my eyes and ears recently that cast enormous doubt on whether Americans, including members of the Tea Party, are really serious about the reforms that are needed to curb the out-of-control spending and debt we're facing.

The first story was in the Wall Street Journal, which reported "nearly half of the people in the U.S. live in a household that receives at least one government benefit, and many likely received more than one."  Even more startling than this statistic is how this percentage has been trending over the past several decades.  According to the article:

The 49.1% of the population in a household that gets benefits is up from 30% in the early 1980s and 44.4% as recently as the third quarter of 2008.

Next was an article about how nearly half of all veterans returning from Iraq and Afghanistan are claiming disability benefits.  I'm not begrudging those who have returned from war with serious, horrific injuries such as the loss of a limb, traumatic brain injury, etc.  However, according to the article,

America's newest veterans are filing for disability benefits at a historic rate, claiming to be the most medically and mentally troubled generation of former troops the nation has ever seen.

A staggering 45 percent of the 1.6 million veterans from the wars in Iraq and Afghanistan are now seeking compensation for injuries they say are service-related. That is more than double the estimate of 21 percent who filed such claims after the Gulf War in the early 1990s, top government officials told The Associated Press.

What's more, these new veterans are claiming eight to nine ailments on average, and the most recent ones over the last year are claiming 11 to 14. By comparison, Vietnam veterans are currently receiving compensation for fewer than four, on average, and those from World War II and Korea, just two.

These numbers indicate a disturbing trend.  How can veterans returning from WWII, one of the deadliest wars the United States has ever participated in, have less ailments and be able to return home, give rise to the "Baby Boom," and become productive members of American society once again?  Even veterans from Vietnam, who had the worst homecoming in American history, claim less ailments and take fewer government handouts.

Some contributing factors may be the weak economy and high unemployment.  Many returning soldiers are probably unable or unwilling to find jobs.  Also to blame may be the government's aggressive campaign to attract more dependents (i.e. voters) (have you heard about the ads that glorify being on Food Stamps?).  According to the Associated Press article:

Government officials and some veterans' advocates say that veterans who might have been able to work with certain disabilities may be more inclined to seek benefits now because they lost jobs or can't find any. Aggressive outreach and advocacy efforts also have brought more veterans into the system, which must evaluate each claim to see if it is war-related.

 Finally there was the recent poll taken by Bobby Gunther Walsh from WAEB 790 right here in the Lehigh Valley:

IF IT MEANT SAVING THE COUNTRY AND GETTING IT OUT OF ECONOMIC TROUBLE, WOULD YOU BE WILLING TO GIVE UP YOUR SOCIAL SECURITY? 

  24%:   YES. I CARE THAT MUCH ABOUT THIS COUNTRY. IT IS STILL A SMALL SACRIFICE COMPARED TO THOSE MADE BY OTHERS.
 

  76%:    NO. I AM ENTITLED TO IT. LET THE SACRIFICE COME SOMEWHERE ELSE.

 What makes the results of this poll the most disturbing is that WAEB 790 is a conservative talk radio station, and many of Gunther's listeners probably consider themselves part of the Tea Party.

Being unwilling to give up an entitlement is human nature.  This is understandable. But, like the oft quoted history of a democracy

states, "A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy..."

What's not understandable is that the Tea Party was supposed to be different.  At least that's what I thought.  At least that's why I stood up and started a local Tea Party group.  The Tea Party was supposed to be about curtailing the out-of-control spending and debt that would inevitably lead to higher taxes (we're seeing that rear it's ugly head now).  This is what I said in my remarks at the very first Tea Party rally on that sunny April Saturday morning in 2009.  I am fully ready to accept the fact that I must continue paying into the Ponzi Scheme of Social Security so that today's retirees can collect the benefits they are expecting and counting on.  I also know I will never see the money I contribute to Social Security ever again, AND I refuse to make my daughter and her children pay for my retirement!  This rejection of the government entitlement state has to start somewhere.  If we all stand around pointing the finger at someone else and say "take away their benefits, but don't you dare touch mine" then we will never reverse course and avoid going over the fiscal cliff.

The first two solutions I present to reduce the national debt and ultimately avoid default in the Debt Report published in March was reversing a culture of dependency and entitlement reform.  Here's the excerpt from the report:

Reversing a Culture of Dependency

First and foremost, Americans need to want less from government.  Over time, and especially since The New Deal of the early 20th century, Americans have demanded Washington provide them everything from food, shelter, clothing, jobs, healthcare and free college tuition.  They look to  government to ensure economic equality and a guarantee of success without taking risk or experiencing failure.

Today, more than 67.3 million Americans rely on assistance from the government costing about $2.5 trillion annually.  What is even more shocking is that these individuals receive an average of $32,748 in benefits, which is more than the average American’s disposable personal income of $32,446.  Meanwhile, 49.5% of Americans pay no federal income tax, and this number is growing.127

Authors Yaron Brook and Don Watkins documented this growing dependency on government in their article in Forbes Magazine in November 2011 saying, “Before America’s entitlement state, free individuals planned for and coped with tough times, taking responsibility for their own lives.”  Historian Walter Trattner added,

“Those in need. . . looked first to family, kin, and neighbors for aid, including the landlord, who sometimes deferred the rent; the local butcher or grocer, who frequently carried them for a while by allowing bills to go unpaid; and the local saloon keeper, who often came to their aid by providing loans and outright gifts, including free meals and, on occasion, temporary jobs. Next, the needy sought assistance from various agencies in the community–those of their own devising, such as churches or religious groups, social and fraternal associations, mutual aid societies, local ethnic groups, and trade unions.”128

In addition, American citizens created voluntary private benefit associations and private charities. According to the article, “By the mid-nineteenth century, groups aiming to help widows, orphans, and other ‘worthy poor’ were launched in every major city in America” that dwarfed the few government welfare programs at the time.  “In fact,” wrote Trattner, “so rapidly did private agencies multiply that before long America’s larger cities had what to many people was an embarrassing number of them. Charity directories took as many as 100 pages to list and describe the numerous voluntary agencies that sought to alleviate misery, and combat every imaginable emergency.

Some argue that this growth of the “entitlement” mentality was purposefully and carefully crafted over the last century by Progressive elements in both parties.129, 130 Through the use of what is essentially the Overton Window of Political Possibilities2, the American culture was slowly shifted away from the founding principles of self reliance to one of dependence on the government.  It is this culture of dependency that needs to be eradicated and a restoration to America’s roots of self reliance, independence and taking personal responsibility for one’s self, family and community is the only path to prevent the coming fiscal calamity.

This shift will take many, many years and will require education efforts to show Americans that government is totally incapable of taking care of them, and is not and cannot be instituted to do so.  Until this restoration of the American psyche occurs, the public will continue to demand “give-me’s” from their government, and the politicians will be more than happy to oblige if it means maintaining their power and influence over them.

Entitlement Reform

Entitlement reform issues, such as restructuring Social Security, Medicare, and Medicaid can only be seriously tackled once the public’s entitlement expectations are altered as mentioned above.  As was pointed out on several occasions throughout this report, entitlement spending is the fastest growing portion of the federal budget.  Both the GAO and the CBO have warned that as the population ages, future expenditures in entitlement programs such as Social Security and Medicare will become unsustainable.  The Congressional Budget Office (CBO) has indicated that:

Throughout the coming decade, spending on the government’s health care and retirement programs will increasingly strain the federal budget. In CBO’s baseline, total outlays for Medicare, Medicaid, the Children’s Health Insurance Program (CHIP), and subsidies offered through new health insurance exchanges, are projected to increase at an average rate of about 7 percent a year between 2012 and 2021—much more rapidly than nominal GDP. Moreover, as more baby boomers become eligible for Social Security retirement benefits, costs for that program also will grow faster than the economy for most of the coming decade.

Those trends will persist after 2021. The share of the population age 65 or older will continue to rise rapidly. In addition, under current law, federal health care costs per beneficiary will probably keep growing much faster than GDP per capita—as they have for the past 40 years. As a consequence, the growth of spending for Medicare, Medicaid, and Social Security will remain rapid. To keep annual deficits and total federal debt from becoming unsustainable, lawmakers will need to increase revenues as a percentage of GDP significantly above historical levels, sharply decrease projected spending, or pursue some combination of the two approaches.”25

In addition, Federal Reserve Chairman Ben Bernanke concluded this in a speech before The Washington Economic Club in Washington, DC in October 2006:

“Over the next few decades, the U.S. population will grow significantly older, a development that will affect our society and our economy in many ways. In particular, the coming demographic transition will create severe fiscal challenges, as the cost of entitlement programs rises sharply. I hope to have persuaded you today, however, that the economic implications of this transition go well beyond fiscal policy. From a broader economic perspective, the question is how the burden of an aging population is to be shared between our generation and the generations that will follow us. A failure on our part to prepare for demographic change will have substantial adverse effects on the economic welfare of our children and grandchildren and on the long-run productive potential of the U.S. economy.”131

If significant reforms are not undertaken, benefits under entitlement programs will exceed government income by over $40 trillion over the next 75 years.132 In a June 2010 opinion piece in the Wall Street Journal, former chairman of the Federal Reserve, Alan Greenspan stated:

"Only politically toxic cuts or rationing of medical care, a marked rise in the eligible age for health and retirement benefits, or significant inflation, can close the deficit."133

Options such as block grants to the states or privatization of these programs should be carefully examined and implemented for future recipients of these entitlements.  Current recipients and those to receive them in the near future should be grandfathered into the programs as currently structured.  In any case, reform is needed and the American public’s addiction to entitlements needs to be curtailed before the government is forced to institute sudden austerity measures as is currently being done in Greece, France, the United Kingdom and other nations in Europe.  The results of such harsh measures can be seen almost daily in the headlines.134, 135, 136, 137, 138

Other recommended solutions in the report include cutting wasteful spending, eliminating lifetime benefits of public servants, and stopping corporate welfare.  To read the full report, click here.

If the so-called "reformers" are not willing to give up their goodies and avoid driving the country into bankruptcy, then who will?  Real reform is extremely unlikely to start in Washington and with the political class.  They are too afraid of losing the next election.  It is the citizens of this country who need to demonstrate we are ready for and demand real reform by refusing to elect (or re-elect) anyone who does not develop solutions by sponsoring and championing real reform legislation.  No more "kicking the can down the road."  No more promises during election time and excuses and compromise when they get into office.  It starts with us!  Have we forgotten what JFK said in his inaugural address?  "Ask not what your country can do for you - ask what you can do for your country." 

 

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