Majority of Americans Depend on Government Largesse

Bill Clinton once declared, “The era of big government is over.” Both Republicans and Democrats applauded.

What a joke.

Government grew under Clinton and grew even faster under his successor. Government is so big today that more than half the population gets a major part of its income from the state.

Rapid Growth

So says a study by economist Gary Shilling. Shilling, a Springfield, N.J., consultant and forecaster, says the portion of Americans feeding substantially at the public trough stands at 52.6%. In 2000, it was 49.4%. It seems unbelievable that in 1950, only 28.3% of Americans lived off the taxpayers. Shilling projects 60% by 2040.

One out of five Americans works for some level of government or for a firm that depends on taxpayer financing. One in five also draws Social Security or a federal pension. That number will grow as the baby boomers move on to Social Security, which, let’s not forget, is a transfer program.

Among other recipients of largesse: Nine million are on food stamps, two million received housing subsidies, and five million go to school on the federal taxpayer. In Shilling’s reckoning, dependents of recipients are also part of the group he calls “government beneficiaries.”

Wasn’t the welfare system reformed in 1996? On the surface, yes. Cash payments are available only for a limited time and recipients are expected to work eventually. Millions of women once on welfare have gone to work. But the idea that the taxpayer has gotten a break or that overall dependency has decreased is a myth. The Associated Press reported: “The welfare state is bigger than ever, despite a decade of policies designed to wean poor people from public aid. The number of families receiving cash benefits from welfare has plummeted since the government imposed time limits on the payments a decade ago. But other programs for the poor — including Medicaid, food stamps and disability benefits — are bursting with new enrollees. The result … is that nearly one in six persons rely on some form of public assistance, a larger share than at any time since the government started measuring two decades ago.”

The handouts go to the well off, too. Farm programs and corporate subsidies benefit big farmers and big business, and wealthy people draw large Medicare benefits. The Cato Institute says there are nearly 1,700 federal subsidy programs spending hundreds of billions of dollars a year.

According to Michael Tanner’s Leviathan on the Right, federal domestic spending under President Bush has risen 27% in real terms, while discretionary non-entitlement spending has gone up 4.5% a year. (Clinton’s annual increase was “only” 2.1%.)

Milking the Producers

Who’d have thought that a Republican President would challenge Lyndon Johnson’s spending record?

Government is “that great fiction by which everyone tries to live at the expense of everyone else,” wrote Frederic Bastiat, the great laissez-faire economist of 19th-Century France. Of course, everyone cannot live at the expense of everyone else, but people who understand nothing about economics try, egged on by politicians looking for an election-winning coalition.

Government has no wealth of its own. Before it gives anything to anyone, it must take from those who produced it. But the taking could discourage future production, leaving less to be distributed by the politicians. Productive Americans have forged ahead despite a constellation of transfer programs, but how long will they continue to do so?

The European welfare states are learning that producers don’t leave themselves available for milking forever. Their economies are sluggish, and unemployment is high. Government promises exceed resources, and citizens who were guaranteed lifelong security find their benefits shrinking.

Yet this doesn’t deter our champions of big government. Even the coming Social Security and Medicare train wrecks don’t faze them. So don’t expect government to stop growing. The Washington Post reports ominously: “In the four months since the midterm elections, the number of new lobbyist registrations has nearly doubled to 2,232 from 1,222 in the comparable period a year earlier.”

The lobbyists go where the money and the power is.

Thomas Jefferson said, “The natural progress of things is for liberty to yield and government to gain ground.”

It’s sad that that’s no myth.