Yes, Mr. President, We Are A Nation of Takers

(The following blog post is redacted from an editorial in the Wall Street Journal of 25 January 2012 by Nicholas Eberstadt.)

In his second inaugural address, President Obama said, “The commitments we make to each other—through Medicare, Medicaid, and Social Security—these things do not sap our initiative; they strengthen us. They do not make us a nation of takers; they free us to take the risks that make this country great.”

But…there is a growing body of empirical evidence pointing to increasing dependency on state largess. The evidence documents as well a number of perverse and disturbing changes that this entitlement state is imposing on society.

For instance, since 1960, according to the Bureau of Economic Analysis, entitlement transfers—government payments of cash, goods, and services to citizens—have been growing twice as fast as overall personal income. Government transfers now account for nearly 18% of all personal income in America—up from 6% in 1960. The myriad welfare programs in America currently dispense entitlement benefits of more than $2.3 trillion yearly. That amounts to $7,400 per American man, woman, and child!

In 1960, the Office of Management and Budget, social welfare programs accounted for less than ⅓ of federal spending. Today, entitlement programs account for nearly ⅔ of federal spending. That is nearly twice as much as defense , justice, and everything else Washington does combined.

Today, 49% of Americans live in homes receiving one or more government transfer benefits—that is up almost 20 points from the early 1980’s. And despite what the White House suggested during the last election, this leap is not due to the aging of the population. Only about one tenth of the increase is due to upticks in old-age pensions and health-care programs for seniors.

Instead, the country has seen an expansion in public reliance on “means-tested” programs—benefits intended for the poor, such as Medicaid and food stamps. Today over 100 million Americans are accepting money, goods, or services from “means-tested” government programs. This percentage is twice as high as in the early 1980’s.

This might not be so bad if it had not been accompanied by a flight of working-age men from the work force. The Bureau of Labor Statistics reports that the proportion of adult men 20 years old and older working or seeking employment have checked out of the labor market—that is 13 percentage points more than between 1948 and 2008. This male flight from the work force includes 7% of men in their late 30’s, the prime working age group. Moreover, this happened before the recent recession.  This workforce opt-out was more than twice the rate experienced in Greece, the poster child for modern welfare-state dysfunction. America’s rate of workforce dropout is worse than practically any Western European economy.

It is common knowledge that America’s entitlement balloon has been keynoted by huge increases in disability benefits, mostly because of musculoskeletal complaints and mood disorders. Both of these problems are usually impossible for doctors to document objectively. Another burgeoning expense to the government and the taxpayer is a large increase in people on food stamps.

Transfers of wealth funded by other people’s money tend to foster a pernicious “something for nothing” mentality—especially when those transfers seem to be progressively and relentlessly growing year by year. This “taker” mentality can only weaken civil society; and this pattern is not sustainable.  

Generosity with our own money is a virtue; but generosity with other people’s money is not.