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April 09, 2010

Welfare Nation

On the prior post, Cousin Dave left a few interesting comments I'd like to highlight:

The biggest thing that sticks out for me is that since 1964, absolutely nothing has succeeded in stopping the growth of entitlements. If the entitlement spending were to be graphed by itself, with no year marks, you would have difficulty telling which party controlled the Presidency or the Congress during any period. The only place that might not look like a steady slope would be the late '90s, where welfare reform (Democrat President / Republican Congress) looks like it managed to check the growth for a while. But ultimately, all that succeeded in doing was pushing back the day of reckoning a few more years.

As the caption says, the chart demonstrates vividly that entitlement programs run on autopilot. Which was likely the intent all along.

This is an important point, and the reason I keep harping on the proportion of mandatory (entitlements) to discretionary (defense and national security) spending in the federal budget. In the classic guns vs. butter debate, it's quite clear that our government considers guns to be optional and butter to be a necessity. And yet which of us, alone, is capable of defending the entire country?

We are all capable of earning a living, saving for the future, and building up a nest egg for our old age. We may have to sacrifice present gratification to ensure future security, but nothing prevents us from making this choice. Private individuals cannot, however, keep the nation secure on their own. This is a legitimate - and deeply necessary - function of government.

As to Dave's "this was likely the intent all along", I commend to you the words of FDR on Social Security:

"We put those payroll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and unemployment benefits. With those taxes in there, no damn politician can ever scrap my social security program."

There's just one problem with FDR's grand design: payroll taxes alone don't cover the program's obligations. The second part of Dave's comment is interesting too:

What I'd be interested in seeing is a graph, over that same time period, of what percentage of the U.S. population is receiving government benefits. I recall a stat that said that at some point early in the history of Social Security (might have been around 1950), there were 42 people paying in for every person who was collecting. Now the ratio is approaching 2 to 1. I've long said that Social Security is a Ponzi scheme. I'd now like to amend that statement: every government welfare program is a Ponzi scheme.

First, the number of Americans receiving government welfare funds has doubled over time:

dependence on govt.gif

20 percent of Americans are dependent upon government for all or part of their income. And yet the percentage of all American households who will pay no tax this year is estimated to be 47%:

zerotax.jpg

I can't show that on the preceding chart because the axis maxes out at 40%.

Dave's right - our current entitlements programs are Ponzi schemes. The number of Americans receiving benefits has never been higher (over 20%). It is exceeded only by the number of Americans who aren't paying into the "system" (47%).

Even I can do that math.

CWCID

Posted by Cassandra at April 9, 2010 12:05 PM

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Comments

More slaves, produce more slaves. It's a sort of derivative of the trickle down economics the working class claim to hate.

Trickle down slavery.

Posted by: Ymarsakar at April 9, 2010 12:50 PM

I receive no entitlements.

What percentage of the 20% is made up of employees of the DOD folks and how much do they pay in?

Posted by: I Call BS at April 9, 2010 01:13 PM

20 percent of Americans are dependent upon government for all or part of their income. And yet the percentage of all American households who will pay no tax this year is estimated to be 47%:

People thought COmmunism was eradicated by the end of the Cold War.

It wasn't true. The Soviet Union went kaput, but their weapons here in the US remained viable and dangerous. Just without a controlling puppet master, they went kind of wild.

50 some odd percent of the American people shouldn't be voting. But perhaps they are the ones that actually are voting, as part of the 60% turn out. It's a rather interesting inverse scenario Athens and early America. Then the land owner class had voting power, not the landless or those requiring support.

Now instead of the Spartans running Sparta, now it is the Helots running Sparta, while the Helots are still slave farmers and the Spartans supreme land soldier-warriors.

God must have a sense of humor. Or maybe he's working on the Grand Finale.

Posted by: Ymarsakar at April 9, 2010 01:23 PM

What percentage of the 20% is made up of employees of the DOD folks and how much do they pay in?

Gee, I don't know. Let's think about that one for a moment. What percentage of DoD employees qualify for such benefits?

At age 65, retirees are eligible to collect income from Social Security and health care benefits from Medicare or Medicaid.[1]

As to what they pay in, we pay income taxes like everyone else. Care to explain the question?

Posted by: Cassandra at April 9, 2010 01:27 PM

The irony is that even now, the elites and aristocrats, those born to rule, are still in control. No matter who is voting or not. That has never changed in human history. Except on a few temporary occasions in special places with superlative people.

It's a physical law. Entropy always gets the last word in. Because it is always there making it much harder to create useful energy. It is always easier to destroy in a day what people spent years creating.

That's why human freedom is fleeting. Human dignity, temporary. And the sublime goals of human strength and honor, rarely achieved.

That, of course, increases the value of such attainments in the eyes of humans. For the more rare it is, the more we tend to value it. And the more people covet it.

I still say Obama's going to make Israel and Britain and Australia and Canada pay tribute in return for 'protection'. This'll help defray costs, in addition to destroying US security and national defense budgets.

What say you, Grim?

Posted by: Ymarsakar at April 9, 2010 01:29 PM

As to what they pay in, we pay income taxes like everyone else. Care to explain the question?

he complains that we blame the Left all the time, so he thinks of a better idea called let's blame the DOD.

The malfunctioning thinking process of people can't be fixed with a band aid.

Those that think power makes you free from responsibility, thinks it is true of their enemies as well as of allies.

For example, Bush was responsible for all the bad and never responsible for all the good, which also means Obama is responsible for all the good and free from being responsible for all the bad. The keyword here isn't responsibility. The key word is free.

To be free, isn't that what the glorious Leftist freedom fighters are fighting for.

Posted by: Ymarsakar at April 9, 2010 01:33 PM

47% of households won't pay FEDERAL taxes this year. The overwhelming majority of those are still paying payroll taxes, state taxes and local taxes, however.

Posted by: Craig at April 9, 2010 02:24 PM

Ymarsakar,

You'll be glad to know that ExxonMobil is owed $46,000,000 by the IRS even though it didn't pay any Federal income tax in 2009 to the US. It did, however, pay $15 billion in income taxes to the Caymen Islands and Bermuda.

Corporate freedom rules!

Posted by: Craig at April 9, 2010 02:29 PM

"With those taxes in there, no damn politician can ever scrap my social security program."

Put a tax on something, and it's there forever -- any time a politician claims a tax will only be temporary, he's proved himself to be a conscious and knowing liar.

Posted by: BillT at April 9, 2010 02:29 PM

47% of households won't pay FEDERAL taxes this year.

No kidding, Craig. That's where the money for FEDERAL entitlements comes from. And as I've already observed, payroll taxes don't cover existing Social Security obligations, so that doesn't solve the problem.

Posted by: Cassandra at April 9, 2010 02:32 PM

Craig, I don't know where you get your "evidence" but you really need to find more credible sources:

You'll be glad to know that ExxonMobil is owed $46,000,000 by the IRS even though it didn't pay any Federal income tax in 2009 to the US. It did, however, pay $15 billion in income taxes to the Caymen Islands and Bermuda. Corporate freedom rules!

That is just plain not true. ExxonMobile overpaid the IRS in 2008. The overpayment (instead of being refunded to the corporation) is being applied towards their 2009 taxes.

Facts matter:

http://blogs.forbes.com/energysource/2010/04/07/exxon-says-it-does-pay-u-s-income-taxes/

Posted by: Cassandra at April 9, 2010 02:43 PM

Neo has up a new post about Rhodesia. The country that Carter, Leftist useful tools, and various other international players helped make into Zimbabwe.

If you voted for Carter, welcome to the joy of actual real world consequences.

It sucks, but not as much as having to be a serf in Zimbabwe

People in the US and in other wealthier parts of the world have the luxury to play House and Dolls with the lives of others in far off places. Knocking stuff over, doing arm chair generalship, all that sounds fun to the Left and their Utopian, bullying, mentality.

Posted by: Ymarsakar at April 9, 2010 03:02 PM

What percentage of the 20% is made up of employees of the DOD folks and how much do they pay in?

Gee, I don't know. Let's think about that one for a moment. What percentage of DoD employees qualify for such benefits?

At age 65, retirees are eligible to collect income from Social Security and health care benefits from Medicare or Medicaid.[1]
As to what they pay in, we pay income taxes like everyone else. Care to explain the question?

Posted by: Cassandra at April 9, 2010 01:27 PM

Oops! what I meant to ask was: what percentage of the 20% is made up of MILITARY?

[standing back and ducking behind firewall to avoid shrapnel]

[schrapnel?]

Posted by: I Call BS at April 9, 2010 03:05 PM

what I meant to ask was: what percentage of the 20% is made up of MILITARY?

I'm not trying to be obtuse, but I'm totally confused by the question.

What do you mean by "military"?

Active duty? I'd say none because they don't qualify.
Retired military?
Former military (those who didn't serve long enough to earn any retirement)?

Some retired and former military collect Social Security, but then they paid into it just like everyone else.

Retired military have medical benefits (TRICARE and the like) but they don't come out of the entitlements pot. They also have military retirement but again, that's discretionary rather than mandatory spending.

I'm not sure what you're asking or even why that would be germane?

Posted by: Cassandra at April 9, 2010 03:18 PM

You'll be glad to know that ExxonMobil is owed [$46mm] by the IRS even though it didn't pay any Federal income tax in 2009 to the US. It did, however, pay [$15,000,000,000] in income taxes to the Caymen Islands and Bermuda.

Not exactly true. It recorded a refund of $46mm. But because of accounting rules, businesses don't always record credits and debits at the same time as cash flows.

For example, you have borrowed 100k on a 100k house. You stop paying the mortgage after paying only $5k of principal leaving a 95k balance. The bank forecloses, but it takes 12 months for the courts to adjudicate and grant the bank possession of the property. Three months later they sell the house for $85k because of its distressed condition leaving them a loss of $10k (95k owed - 85k selling price). Even though from a cash flow perspective the bank didn't actually experience a cash flow loss until 15 months after you stopped paying, they must, by law, record the loss at 6 months. Thus they record a loss a full 9 months before they actually experience it.

Accounting, it's clear as glass. Well, volcanic glass anyway.

Exxon's actual tax bill for 2009 hasn't even been calculated yet. So the claim that they pay $0 taxes is not factual.

But also notice Craig's slight of hand (which I reversed for effect). He'll include the zeros when Exxon records a gain, but not when they record an expense so that if you skim the numbers the former will appear larger, thus increasing the outrage.

Posted by: Yu-Ain Gonnano at April 9, 2010 04:13 PM

No representation without taxation. Might need to find some way to finesse the 24th amendment, but it makes sense to me.

Posted by: Kelly at April 9, 2010 05:17 PM

Social Security was another name for 'promoting the general welfare,' since it was the fund that was robbed.

We paid taxes on our income. We also paid taxes on every single *(&#$&@( thing we bought. We paid property taxes.

Yu-Ain got it right about revenue and accounting rules and when corporations declare taxes on earned revenue...not unearned revenue.

Posted by: Cricket at April 9, 2010 06:43 PM

You can't expect them to get that. That's not their purpose. It's only smart, like Obama, that will get to tell them what to do. They don't.

Posted by: Ymarsakar at April 9, 2010 06:47 PM

I still say Obama's going to make Israel and Britain and Australia and Canada pay tribute in return for 'protection'. This'll help defray costs, in addition to destroying US security and national defense budgets.

What say you, Grim?

That he doesn't care enough about any of them to make the offer. Maybe if they come to him with the offer, he might consider it.

Posted by: Grim at April 9, 2010 07:24 PM

No, that's not quite right. I don't think he would consider defending Israel.

Posted by: Grim at April 9, 2010 07:27 PM

Ah, but he wouldn't actually have to do any real defending. He can do it just like Chicago extortionists do protection.

Posted by: Ymarsakar at April 10, 2010 03:34 AM

"We are all capable of earning a living, saving for the future, and building up a nest egg for our old age. We may have to sacrifice present gratification to ensure future security, but nothing prevents us from making this choice. Private individuals cannot, however, keep the nation secure on their own. This is a legitimate - and deeply necessary - function of government."

This is exactly the point for me.

We keep struggling with the terrible dilemma of the safety net. No one wants to see babies starve, but few of the political fixes we try work out well in practice. The idea of forcing people to save for their own retirement or disability sounded nice, but it turned into a combination Ponzi scheme and wealth distribution scam. Like a lot of do-gooder schemes, it suffered from society's inability to be honest about its goals and their costs. And now we're going to expand the plan to include forcing people to save for their own future illness, but again what we'll really be doing is building in insolvency and "spreading the wealth."

There are able-bodied people who, if you put a safety net under them, simply will not hang on very tight to the trapeze any more. I wish it were just a few in every few thousand citizens, but it's not. It's enough to drag down a whole economy, and it's done exactly that every time it's been tried.

Posted by: Texan99 at April 10, 2010 10:39 AM

One of the reasons that the states and the federal government had property and age requirements was so that only those with a vested interest and proven responsibility could vote. They were independent - "had a competence" in the term of the day. Women, the young (under 21), and those without property were dependent on others and so could be coerced, according to early political thinkers. They could still contribute and support the system by serving in the militia, by training their children to be good citizens, and by working and gaining property until they reached the level where they could vote.

It seems we need to go back to that basic idea. Or perhaps go to something like "if you have not served X time in the US military, or worked for 10 years in private industry, or own Y amount of taxable property, or have received federal or state assistance for more than Z period of time, you may not vote in local, state and federal elections."

As far as assistance for those in need - require folks to have some skin in the game. You are responsible for 25% of your child's expenses, 25% of your medical care, or something like that. If you don't have the cask, you will pay it in labor to the community - picking up trash, assisting with disaster clean-up, something like that. Or more skilled tasks, for those who have the abilities and training but are down on their luck.
My $.02, since I won't get any benefits from Social Security, MediCare et al.

Posted by: LittleRed1 at April 10, 2010 02:48 PM

A simple application of LR1's proposal is to have those that had their lives saved under hazardous conditions on the taxpayer's time and helicopter usage, to pay back that time with either an equivalent time helping save others or an equivalent cash flow to not only payback their own rescue cost but to pay for a significant portion of a future rescue or attempted rescue.

This would make altruism pay for itself. And not leave the altruists bankrupted and replaced by Obamas.

Posted by: Ymarsakar at April 10, 2010 06:20 PM

The law won't change itself, nor will those involved in law change it. It's not their job, so to speak.

These things won't change until you re frame the basic Constitutional framework of what should be laws and what they should be for.

People always take the path of least resistance. There are rare individuals that don't, but those don't matter statistically. The Constitution should always refuse to give people what they want, and replace it with what they need.

People should be able to pursue happiness, be guaranteed in having their life not taken, and in owning what they have produced. There's no real way one can construct a stable civilization based upon anything else. Thus that is what America needs, because that is the minimum that is needed for the population to sustain the constructed framework.

Anything more and the system gets to be more complex, requiring more redundant or centralized planning. Not to mention the economic costs, inefficiencies, and corruption. Too little and it devolves into a sort of Confederacy, where everybody does their own thing. This produces factionalism and tribalism, in that people look out for their own. Similar to identity politics where the only thing that matters is one's own ideological group, not kind of overarching love of the nation.

Posted by: Ymarsakar at April 10, 2010 06:25 PM

DoD retirement along with all the other Civil Service retirement is 'entitlement'. Not sure why anybody would disagree.

That discretionary DoD budget funded every single year by Congress ALWAYS includes full funding for military retirement with COLA and etc.

One may quibble over semantics, or not. That shovel is still a spade. A rose by any other name?...

Posted by: Curtis at April 12, 2010 08:12 AM

Two points:

1. Unlike mandatory entitlement spending, DoD retirements are discretionary spending subject to annual review by Congress with the option of not paying them.

2. They are different from entitlements like Medicare or welfare because you don't have to perform any service or provide any value to get Medicare or welfare. They are paid out based upon need or identity.

A military or civil service pension is simply deferred compensation granted in exchange for working a certain number of years. They are earned rather than granted.

Different ball of wax.

Posted by: Cassandra at April 12, 2010 08:18 AM

I agree. I think the point about entitlements is that they are granted, regardless of what one has done to 'earn' them.

What I find ironic is that no one is going to give me any money to be a stay-at-home mom.
Not that I would take it. But if my kids turn out to be productive, responsible members of the community and of society, shouldn't I be granted something?

No. And you know why? Because IF I have done my job right, and my children are successful enough to be self-supporting, they will help me when my time comes.

This goes into another topic, but I look at the Amish and how they take care of their aging population...we should go and do likewise.

I don't think I should take money from someone unless they offer it and it is from their heart and hands to mine. I have paid likewise forward, and that is as it should be. We help each other because we can and want to...not because there is a mandate to do so with a bureaucrat to 'muddle through' the service.

I think the success of Soldier's Angels is a case in point. People are genuinely concerned for the cause and they have moved mountains.

We watch 'The Waltons' and while I find it rather silly at times, something my mother said about it has stuck with me all these years: Roosevelt didn't need the New Deal to pull the country together; people were doing that on their own. Had he left it alone, we wouldn't have had the problems we have now.

Posted by: Cricket at April 12, 2010 10:18 AM

On comment forums, I often find myself in arguments with people who can't understand the difference between private, individual charity and government entitlements. Or, to put it another way, between the kind of "socialism" that's practiced voluntarily within families or other close groups and the sort that's imposed by a government under force of law on whole groups of complete strangers.

As Cricket says, "I don't think I should take money from someone unless they offer it and it is from their heart and hands to mine." And that's how I want to give it, too. Someone in my local paper commented yesterday on an article about Christian healthcare ministries (a kind of voluntary, unenforceable medical insurance in the form of risk-pooling among like-minded people) that "healthcare was too important to be left to charity." What I hear in that comment is the idea that "my need to have someone cover my bills in a medical emergency is too important for me to have to trust to a personal connection (let alone a mutual, voluntary business contract) -- I want an impersonal guarantee from the government, financed by forced contributions via taxes imposed on other, wealthier people than myself."

What the Amish do, Cricket, is take care of their own sick and elderly. They also take care of their own neighbors if a natural disaster hits, and have traditionally refused any government help in that context.

The opposite of government control over charity is not heartlessness, it's private, personal, voluntary action. And for people who don't want to humble themselves to ask for such a thing, there's living well below your means, saving prudently, and building up a reliable intimate circle of family and friends, as well as a healthy community.

Impersonal and distant charity, such as government welfare checks, seems to corrode people in a way that personal assistance does not. I'm not sure why that is, and it's not something I could have predicted, but the impact of welfare on American families over the last 50 years leaves me in no doubt that it is so.

Posted by: Texan99 at April 12, 2010 11:02 AM

It gives people the idea that money is free. That it came not from a person, sweating and toiling like them, but from a printing press that provides infinite money (the federal fisc).

Humans are great at self-deception. Give them a means and they'll create a fantasy where what they are doing isn't harming anyone human.

Posted by: Ymarsakar at April 12, 2010 12:17 PM

The myth of the eternal teat is a difficult one to let go of.

Posted by: Texan99 at April 12, 2010 02:08 PM

"... the percentage of all American households who will pay no tax this year is estimated to be 47%:"

And we've been led to believe that it's the rich who pay no taxes. Something does not compute.

Here's another thing to chew on: who do we think those 23% who are feeding off the government (i.e., our) trough are going to vote for? The party that wants them to jet a job and work?

Posted by: ZZMike at April 13, 2010 01:31 AM

"47% of households won't pay FEDERAL taxes this year. The overwhelming majority of those are still paying payroll taxes, state taxes and local taxes, however."

True, but a fair percentage of those 47% (I don't have the numbers at hand at the moment) are receiving earned income tax credits. So not only will they pay no tax, but they will actually be taking money *out* of the income tax pool.

Posted by: Cousin Dave at April 13, 2010 01:08 PM

By the way, Cassandra, thanks for posting this. It's a topic that I don't think gets enough attention. Sorry I haven't commented earlier, but I've been away and offline for a few days.

Posted by: Cousin Dave at April 13, 2010 01:09 PM

Aaarhhg! Welfare world.

Posted by: Mark at April 13, 2010 11:02 PM

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