6/15/2011 12:52 PM ET|
A big boom in government handouts
Nearly 20 cents of every dollar of disposable income comes from the government, often in the form of Social Security, Medicare or unemployment benefits.
Government social benefits accounted for almost 20% -- or 20 cents of every dollar -- of Americans' disposable income in March, a figure that's been growing amid a weak economy, stubbornly high unemployment and an aging population. As recently as the 1980s, that figure was closer to 12% or 13%, according to the U.S. Bureau of Economic Analysis. "That (20%) is a pretty big chunk of what people have as their disposable income," says Chris Christopher, economist at IHS Global Insight.
Government benefits -- also called transfer payments -- are made to citizens by federal, state and local governments through programs such as Social Security, Medicare, unemployment insurance and disability insurance.
Not surprisingly, the recession has accelerated Americans' dependence on government transfer payments. In this sputtering job market, many Americans are getting most, if not all, of their income from unemployment benefits. "The economy has been weak for the last three or four years, so more people are collecting unemployment benefits, and they're collecting them for longer," says Russ Koesterich, iShares global chief investment strategist and the author of "The Ten Trillion Dollar Gamble."
While the Great Recession can be blamed for the relatively recent spike in transfer payments as a proportion of disposable income, it doesn't account for the general upward trend seen since the late 1950s, the earliest data available from the Bureau of Economic Analysis. In January 1959, government social benefits accounted for about 6.7% of disposable income, on average. Twenty years later, that figure had jumped to almost 13%.
An aging populace has a lot to do with the overall surge in the level of transfer payments, experts say. As baby boomers age and retire, a larger proportion of the population will receive Social Security benefits and Medicare coverage, programs that are becoming increasingly costly.
If the economy fails to improve as quickly as economists hope, dependence on government support could increase even more, says Christopher, with transfer payments possibly breaching 22% or 23% of Americans' disposable income. "There are so many things that play a role in this, but as a percentage of disposable income, (transfer payments) aren't going down," he says. "If the economy doesn't keep getting better, especially on the employment front, things could get a lot worse."
While Americans are more dependent on the government than they were 20 or 30 years ago, how and when to wean consumers off government subsidies is a complex and delicate matter. "You still have a fairly fragile consumer, largely because of the labor market," Koesterich says. A host of other head winds confront Americans as well. For hourly workers, wages are growing below the rate of inflation, and many consumers are carrying far too much debt relative to their incomes, he says.
"The key point is that you're somewhat restricted in the short term with how much you want to be cutting back on spending, given this dependency," Koesterich says.
Spending more on entitlements might be a tough pill to swallow for taxpayers, who are already saddled with trillions of dollars in government debt, but experts fear sharp cuts could derail economic growth. But, budget battles in Washington and the looming debt ceiling have underscored the need to cut government spending and get the national debt under control. Add to that worries that bond investors could start demanding higher interest rates on Treasury bills, and the future of government social benefits is murky, at best.
"The paradox is that long term, it's not sustainable," Koesterich says. "But in the short term, how do you get out of this without creating yet another head wind for the U.S. consumer?"
This article was reported by Meg Handley for U.S. News & World Report.
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YOU BE HAPPY IT IS THERE, IF THE TIME COMES YOU OR SOMEONE IN YOUR FAMILY, , EVER NEEDS IT!The problem is the ones who need it most, can't seem to get it because its being given away to those that don't deserve it.
I don't know about other Baby Boomers, but I can't afford to retire and take advantage of Social Security, Medicare, etc. I plan on working until they pry my cold, dead fingers off my keyboard. So, based on that, and the fact that a lot of other Baby Boomers that I know are in the same boat because of the economy, I don't see how we're contributing to the deficit!!
Additionally, those "entitlements" come from monies that I've had taken out of my paycheck since I started working over 45 years ago.....the money they took from MY paycheck enabled another senior citizen to survive.....now it's my turn. Plus, if the government hadn't kept "borrowing" money from the SS accounts....we wouldn't have the problem of not having enough money to support our older people! They kept putting in IOU's, but never paid them back!! So, don't blame the Baby Boomers for the lack of money in the Social Security accounts. And, as for Medicare....if they'd hire enough people to check on fraud, etc., we wouldn't be having problems with Medicare either. There's so much fraud involved and not enough people in Government to follow up on it....what do you expect?
Not a word about how the government raided the SS funds we paid in...?
and used the money for other things..They just couldnt keep their hands out of the cookie jar
and left the American Taxpayers a IOU note....
I don't see how working for over 45 years and contributing into these funds my whole life can be considered a handout. Tell you what, just give me what I put into them back, even without the interest, and we'll call it even. If I got that, then I could actually retire instead of working until I was 70......
Just wait, you'll be older too. I guarantee it.
My son lives in New York City - pays $1800.00 month rent (with roommates), and they all work. Right across the hall the rent is paid by Section 8. They stay inside all day, play loud music and smoke pot. Police have been called, complained to Section 8 people - but nothing is done. This is not the only Section 8 in the building. My son works hard and sees people do nothing and have the same stuff as him - making him awfully bitter toward the government - these are the entitlements that are sucking up our economy.
Also, my mother is 79 years old and still works. She rents her apartment and it's the same thing. All these tenants don't work, don't look for a job, trash the apartment complex, and don't pay rent because the government is taking care of them through Section 8.
I think we would be dismayed and angry if we knew how much money was spent on these types of entitlements.
Oh, and I worked with a woman who quit after the first week because she was going to have to start paying $25.00 month to live in the housing project that she had lived in for free.
Check out how many Section 8'ers and housing project tenants have cable with all the bells and whistles.
On another note...why cant we put the people on welfare, food stamps, section 8....real entitlements and handouts (NOT SS OR Medicare, mind you!) to work for us??? In California the streets are a littered with garbage, and the state recently announced that they may have to close public parks because they cannot afford to maintain them. Really?? REALLY????? I got one hell of a solution....put some of those welfare recipients to work cleaning the bathrooms and mowing the lawns of those parks! They're not doing anything all day anyway, well, except maybe planning another pregnancy so they can get a bigger handout!
And while I'm ranting.....
MANDATORY DRUG TESTING FOR ALL HANDOUTS!!!!!
Neither Social Security nor unemployment benefits qualify as "government handouts." Folks have bought into those systems over the course of many years of hard work, and are rightfully being paid what is owed to them by those systems.
Example of a government handout: An illegal immigrant enters the U.S. either pregnant, or soon-to-be pregnant. As quickly as they calve, they apply for benefits for the new-by-birth U.S. Citizen, and are granted them. That's a handout.
Gifted Education Writer
Examiner (dot) com
Just in case some of you young whippersnappers (& some older ones) didn't know this.
It's easy to check out, if you don't believe it. Be sure and show it to your family
and friends. They need a little history lesson on what's what and it doesn't matter
whether you are Democrat or Republican. Facts are Facts.
Social Security Cards up until the 1980s expressly stated the number and
card were not to be used for identification purposes. Since nearly everyone in the
United States now has a number, it became convenient to use it anyway and the
message, NOT FOR IDENTIFICATION, was removed.
An old Social Security card with the "NOT FOR IDENTIFICATION" message.
Our Social Security
Franklin Roosevelt, a Democrat, introduced the Social
Security (FICA) Program. He promised:
1.) That participation in the Program would be
No longer Voluntary
2.) That the participants would only have to pay
1% of the first $1,400 of their annual
Incomes into the Program,
on the first $90,000
3.) That the money the participants elected to put
into the Program would be deductible from
their income for tax purposes each year,
No longer tax deductible
4.) That the money the participants put into the
independent 'Trust Fund' rather than into the
general operating fund, and therefore, would
only be used to fund the Social Security
Retirement Program, and no other
Government program, and,
Under Johnson the money was moved to
The General Fund and Spent
5.) That the annuity payments to the retirees would never be taxed
Under Clinton & Gore
Up to 85% of your Social Security can be Taxed
Since many of us have paid into FICA for years and are
now receiving a Social Security check every month --
and then finding that we are getting taxed on 85% of
the money we paid to the Federal government to 'put
away' -- you may be interested in the following:
------------ --------- --------- --------- --------- --------- ----
Q: Which Political Party took Social Security from the
independent 'Trust Fund' and put it into the
general fund so that Congress could spend it?
A: It was Lyndon Johnson and the democratically
controlled House and Senate.
------------ --------- --------- --------- --------- --------- --------- --
Q: Which Political Party eliminated the income tax
deduction for Social Security (FICA) withholding?
A: The Democratic Party.
------------ --------- --------- --------- --------- --------- --------- -----
Q: Which Political Party started taxing Social
A: The Democratic Party, with Al Gore casting the
'tie-breaking' deciding vote as President of the
Senate, while he was Vice President of the US
------------ --------- --------- --------- --------- --------- --------- -
Q: Which Political Party decided to start
giving annuity payments to immigrants?
AND MY FAVORITE:
A: That's right!
Jimmy Carter and the Democratic Party.
Immigrants moved into this country, and at age 65,
began to receive Social Security payments! The
Democratic Party gave these payments to them,
even though they never paid a dime into it!
------------ -- ------------ --------- ----- ------------ --------- ---------
Then, after violating the original contract (FICA),
the Democrats turn around and tell you that the Republicans want
to take your Social Security away!
And the worst part about it is uninformed citizens believe it!
If enough people receive this, maybe a seed of
awareness will be planted and maybe changes will
But it's worth a try.
Actions speak louder than bumper stickers
On April 2, 2007 my wife was on her way to work. She didn't make it because a drunk driver needed her lane too. Her left arm was shattered (27 screws just in the elbow) and her right knee was crushed. Weeks in the hospital, almost two years rehabbing and now, while officially declared disabled, she works. The drunk had no insurance (do they ever?) and her alfa car insurance and united healthcare, combined, paid less than the ambulance and lifeflight bills. My USAA covered alot, but we were left with my wife needing full-time care for a couple months and 100's of thousands in medical bills. Sucks to be us, huh? WE WORKED and WE MADE IT! With NO gov't help. By the time she was qualified for disability, she was able to go back to work...........With an arm that doesn't bend, etc. The system is not set up for those who need help. It is set up to reward laziness and a sense of entitlement. Sorry, that's just the truth.
In my opinion, screwing around with social security is a criminal offense and should be prosecuted as such.
Alot of anger in these comments, and all within good reason! First off, I'm sorry for those of you that are struggling and want to work but cant due to age. Age discrimination is still alive and well!
I am also sorry for those of you disabled, who cannot seem to collect. Disability is so full of fraud, its almost as bad as welfare, food stamps, and section 8 (and I agree to the person below who said we need to get the illegals off those programs....why is that so friggin hard?). Anywhoooo....little storry; my ex and his family came here from Europe in the late 80's. Neither parent has worked a single day here in America, and both collect disability, food stamps, and section 8, because apparently they are both hurt. Yet his father helped us move at least 3 times...carring couches up stairs, etc. Seriously?!?! His mom does have a bad hip, but its from an accident in Europe, and should not be the responsibility of the American taxpayers to shoulder the burden. They even collected our American disability checks when they moved back to Europe for a short time! How are we letting this happen??? Yet my boyfriend, who has a shattered arm and ankle from his tour in Iraq cannot seem to qualify for a single red cent of disability, so he works and dopes up on drugs just to survive. Apparently, him risking his life wasn't enough of a sacrifice to get benefits, but my exes parents coming here and contribution nothing seemed to get them everything they need!
Its a sad world out there folks, and its not going to get better anytime soon, unless a new breed of politicians is born. The second coming of Christ will probably happen first....
And Hannityfansridiots, I seriously, SERIOUSLY hope you are not that naive....
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