A Nation of Takers

The issue of welfare is the issue of dependency. It is different from poverty. To be poor is an objective condition; to be dependent, a subjective one as well. That the two circumstances interact is evident enough, and it is no secret that they are frequently combined. Yet a distinction must be made. Being poor is often combined with a considerable personal qualities; being dependent rarely so. That is not to say that dependent people are not brave, resourceful, admirable but simply that their situation is never enviable, and rarely admired. It is an incomplete state of life: normal in a child, abnormal in an adult. In a world where completed men and women stand on their own feet, persons who are dependent – as the buried imagery of the word denotes – hang.

Thus begins Nicholas Eberstadt’s small tome (134 pages), A Nation of Takers, with a quotation of the late Daniel Patrick Moynihan – the intellectual force behind Lyndon Johnson’s “War on Poverty.” Moynihan later worked in the Nixon administration attempting to pass the concept of the “guaranteed annual income” into law. It failed. When Republicans were swept into power in 1994, then Democrat Senator Moynihan agreed with critics that the welfare entitlement program was out of control, concluding "The Republicans are saying we have a helluva’ problem, and we do."

If the Founders were shown the product of their genius today, they would scarce believe that the country for which they risked life and fortune to create had become an entitlement engine – because no other national purpose consumes as much energy from the machine of state as welfare in its various manifestations. Almost one in five dollars received as personal income by American citizens today is a transfer payment for which no service is performed. During the most recent year for which data has been published, i.e. 2010, a staggering $2.2 trillion in money, goods, and services was transferred to people from the owners of that wealth. That’s an average entitlement burden of $29,000 for a family of four.

Since the year I graduated from college, the amount of money that government takes from productive citizens laboring in the workforce and transferred to non-productive citizens has grown 100-fold – a compound growth rate of 9.5% over the past 50 years. To put that in perspective, if I’d been given a savings account with a $1,000 balance as a college graduation gift to which was added $1,000 annually, a 9.5% yield compounded would make the $50,000 paid in worth almost a million dollars today.

How far has government drifted from the Founder’s purpose for it? The year I graduated from college, the central purpose of government was, well, to govern. Thus the feds spent to provide a national defense, public services, and infrastructure. Entitlement spending was less than a third of government outlays in 1960. In 2010, entitlement spending was two-thirds of government spending. Think about that. In the years since I entered the workforce, the purpose of government has inverted. Entitlements, which are nowhere mentioned in the Constitution, have relegated the role of government, as expressly stated in the Constitution, to a minor task based on the way tax receipts and borrowing is spent. Continuing on this road will make government a redistribution processor that happens to have an army and navy.

However noble its original motives, government spending for the “needy” becomes government spending for the “wanting” and that morphs quickly into a right, which is called an entitlement in welfare-speak. Entitlement spending is poured into six buckets: income maintenance, Medicaid, Medicare, Social Security, unemployment insurance, and other entitlements. The first two are poverty safety net entitlements, the next two are old age entitlements, and the last two are unemployment entitlements. The year I graduated from college, Medicare and Medicaid did not exist. They would not become the brainchild of Lyndon Johnson and Moynihan until I was five years into my career. Voters were assured at the time that these programs would consume a minor fraction of tax receipts. In 2010 they cost $900 billion.

FDR, the father of unsustainable Social Security, Lyndon Johnson, the father of unsustainable Medicare and Medicaid, and Obama, the father of unsustainable ObamaCare, are of course Democrats, which has been called the party of entitlements. But surprisingly the growth of entitlement spending has been greater under Republican presidents than Democrat presidents by the healthy margin of 8%. The biggest spenders were Richard Nixon, Gerald Ford, and George Bush 43. Moreover, rural counties, which tend toward political conservatism, are more dependent on government entitlement spending than urban counties, and the counties at the front of entitlement line are more often in red states rather than blue. Two-thirds of the most dependent counties in the US voted Republican in the 2008 Presidential election. Led by Republican presidents, however, both parties have collaborated to create the entitlement explosion over past decades. Votes, you know.

American society’s conversion into Tin Cup Nation happened relatively recently. When Alex de Tocqueville visited the US in the early 1830s, he was struck by how self-reliant Americans were compared to Europeans. His impressions were described in Democracy in American, in which he elaborated the concept of American exceptionalism (repudiated by Obama) noting that Americans were not only fiercely independent, but also politically informed, practiced in social cooperation on a large scale as evidenced by their social and voluntary associations, and possessing of accountability for their situation in an environment of unbridled opportunity – an attitude unlike that found on the European continent of his time.

Above all, de Tocqueville found Americans disdainful of a mendicant mentality, contemptuous of dependency and unearned charity, and disapproving of people who accepted the dole. Being poor was, for most early Americans, a common experience at some point in their lives through which they passed before industry lifted them and their families out of it. Handouts were refused as an affront to their dignity and independence. This attitude prevailed until well after World War II when the rising tide of post-war economic expansion lifted all ships. Families who had lived through the deprivations of the Depression, among them my parents and grandparents, were dismissive of “Mr. Roosevelt’s” efforts to make them dependent on government. Around my childhood’s dinner table, government versus church-based charity was a frequent topic of conversation. Even poor families like my parents, living in a rented row house with my maternal grandparents whose economic well-being was little better, steadfastly protected their pride.

As recently as my generation, the cultural aversion to government entitlements was deep-rooted and difficult to overcome. Arguably, Social Security only established a beachhead in American society through “Mr. Roosevelt’s” trickery. The generations following mine have softened in their resistance to the entitlement lifestyle, such that half of today’s households receive at least one government transfer payment, and many receive multiple payments. In 98% of the households with a 65-year old resident among its members one entitlement payment (usually Social Security) is received, and 95% of the households receive two (usually Medicare.) Shockingly, 35% of the households with no 65-year old member receive at least one entitlement benefit.

Perhaps more shocking: entitlements include free cell phones and service. Medicaid for the sick, shelter for the homeless, food for the hungry … cell phones for the unconnected? How far we’ve come … 73% of the people living in poverty now have cell phones with free or subsidized wireless service enjoyed by 1.4 million people – mission creep at its finest.

No longer are recipients of government assistance stigmatized as they had been in previous self-reliant generations. The transformation of society’s norms concerning handouts was changed by an over-generous government, and several presidents helped grease the skids. Since food stamps did not look like cash, their demeaning use was replaced by a plastic electronic benefits transfer (EBT) card that looked very much like a debit or credit card. One of the last things George Bush 43 did before vacating the White House was to strike the stigmata of “food stamps” and “coupons” from the federal lexicon in his last Supplemental Farm Bill. Conveniently ignored in this charade is the fact that almost half of the individuals receiving food stamp assistance have been “dependent” of it for nearly nine years. Obama’s vision of the America he intends to transform us into was on unabashed display in his caricature of Julia, whose cradle to the grave entitlements made the government her de facto husband.

The adaptation of lives dependent on government has now metastasized to second and third generations. The under-18 age cohort is the largest beneficiary of non-cash government benefits (usually food and housing assistance), recently standing at a mind-boggling 45% of households that have a member in this cohort. (See Table 543.) The same data table gives the ethnic breakdown of those receiving government assistance: 53% Hispanic, 51% black, 28% Asians, and 20% white. These figures make it hard to argue away the corrupting evidence of dependency’s natural outcome.

And this trend continues to rise. Notwithstanding the ebb and flow of employment and unemployment rates, the percentage of people living in households receiving government entitlements moves irresistibly upward. The number of people recently receiving poverty-related benefits is three times as high as the poverty rate. As inexplicable as this seems, it is because the expansive coverage provisions are hidden in the laws establishing the entitlements. For example, a family of four earning 400% of the federal poverty level – i.e. $88,000 – will receive $5,000 in ObamaCare subsidies to purchase insurance in 2016. A family earning $88,000 hardly seems “needy.” But it explains how the current growth rate of entitlements makes it only a matter of time before a majority of Americans will be slopping at the anti-poverty benefit trough regardless of their wealth and employment. When he finally got anti-entitlement religion, Moynihan warned that “It cannot too often be stated that the issue of welfare in not what it costs those who provide it, but what it cost those who receive it.”

When government perfidy succeeded not only in removing the social stigma of accepting government assistance but also established it as a civil right, then, as Shakespeare’s McDuff observed, “Confusion hath made its masterpiece” – or as might be said in today’s vernacular, society began to unravel.

In his 1984 book, Losing Ground, author Charles Murray carefully documented the flaws in the welfare state that was launched in the 1960s, growing like kudzu in the following years and creating a variety of disincentives for people who might otherwise have been compelled to improve their lives. Shorn of self-respect, mothers on welfare were paid additional assistance benefits when another child was born, even if out of wedlock, thereby encouraging more illegitimate births. One welfare mother in San Francisco, the capital of Moocher Nation, announced to its mayor, “I’ve got six kids and each has a different daddy. It’s my job to have kids, and your job, Mr. Mayor, to take care of them.” The City by the Bay spends three times as much on social services as it does its police and fire departments.

Unemployment and income maintenance entitlements compete so effectively with income levels earned by those working that an increasing number of recipient poor choose to stay home.  Even in economic boom years, more than a million healthy, working-aged males who were not students did not work a single day during the course of the year along with a few million others who could barely be considered employed since they were so frequently in and out of the workforce. Murray notes in his book that by lowering the punishment for criminal activity (which advocates argue was society's fault rather than the perpetrator aka the real “victim”) more criminal activity with longer criminal records is the predictable consequence. What you reward, you get more of – a fact apparently hidden from welfare architects.

In time, Murray’s compelling evidence, along with arguments of many others, led to welfare reform which, though initially resisted by Bill Clinton, was finally signed by him in 1996. Welfare reform quickly removed almost half the people from the public dole – as Murray predicted would happen. This year Obama essentially gutted the work requirements specified to qualify for taxpayer-funded federal government assistance. Now the program is an unvarnished handout to able-bodied recipients.

Before entitlements became endemic in society, self-reliance and a strong work ethic motivated the acceptable ideal of manliness in America. Because they lacked the means, college for my parents and their parents was out of the question. Therefore, upon graduating from high school men like my father and grandfathers went to work and later married when they could afford it. In their day, men who were able-bodied but didn’t work were shamed by their communities and considered “shiftless.” Only during World War II did women enter the workforce, often replacing the men who had left to fight the war. Although women continued to work in large numbers after the war, society’s expectations for them to do so was never the same as men, nor is it today.

Notwithstanding, female participation in the workforce grew in the post-war years from about 30% to 60% in recent years. Over the same interval the labor force participation by men declined from about 90% in 1948 to 73% recently. The workforce participation rates for men and women are converging – not because of the inflow of women into the workforce but because of the outflow of men from it. The approach of retirement age explains only a quarter of the decline in working men. Nor can economic recessions explain a decline that has persisted over more than 60 years. The problem is not a dearth of jobs for men, it’s their not wanting one. There are fewer 30-year old men working in America than in Greece.

How has an opt-out of this magnitude been possible? Transfer payments for early retirement, supplemental income maintenance, and unemployment insurance now extending for two years are the prime movers in making it possible for more men to be unemployed than at any time since the Great Depression. When work becomes neither a necessity nor a norm in society, it becomes an option. More and more men who are otherwise able to work have exercised that option – corrupted by our entitlement society. In my lifetime men, once the protectors of society, have in large numbers become its exploiters.

One hyper-noxious means for this exploitation is our disability insurance system. Comprehending the arcana of this grab-bag of benefits requires more than the space remaining in this blog. I will devote the next blog to it since it is as big a threat to bankrupting the nation as any of our constellation of entitlements. Suffice it to say here that it’s not surprising that some Americans would turn their ingenuity to maximizing their take from an overly generous entitlement system, but theft by chiseling disability benefits was never intended to be an entitlement. Yet millions of people who otherwise consider themselves law abiding citizens feign impairment to work with impunity. The year I graduated from college 455,000 former working people were receiving disability payments. In 2010 the number had risen to 8.2 million. Either we as a nation are becoming a perverse Lake Wobegon, where all the people are below average in accident and injury prevention or something is amiss with the payment of disabilities.

In a society in which lifespans are extending, jobs have been transformed from danger-prone physical work in factories to no-risk knowledge work in offices. Even then mettlesome regulation protects workers in every facet of their work lives. Yet Americans are finding more and more ways to injure themselves, and doing so at younger ages. They are also getting more creative – more than half of today’s disability payments are made for “mood disorders” and injuries to the musculoskeletal system or connective tissue for which fraud is almost impossible to prove. It seems likely that a growing number of Americans are choosing disability as a career path as evidenced by the fact that the number of people receiving some form of disability payment almost equals those who don’t among industrial workers – 73 versus 100. Entitlements are corrupting our morality.

Combine these abuses with those I spelled out in a previous blog describing the unblushing plunder by Congress of incomes belonging to unborn generations. In order to pander current voters to retain them in office, Congress enriches Social Security benefits for current beneficiaries who didn’t pay for them requiring that they are paid (or stolen from) generations still working or unborn.

The preamble of the Constitution sets forth the purpose of government:

We the people of the United States, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity, do ordain and establish this Constitution for the United States of America.

Two years ago, the government was spending three times more for entitlements, about which the Constitution is silent, than for defense, about which the Constitutional is quite outspoken in Article 8, Section I – the famous “Enumerated Powers” of Congress. Yet Obama’s 2012 budget slashed in the coming decade half trillion dollars from previous official spending plans in order to increase domestic spending. Entitlement spending is gutting our ability to defend ourselves

Now Obama and the Republicans are squabbling in a game of chicken over spending cuts versus tax increases on the “rich” – i.e. those people who pay most of the money underpinning entitlements. If a deal is not forthcoming by year end, another half trillion will be cut from defense just as Iran is flexing its muscles by shooting down one of our drones over international waters and North Korea, whose leader is a child, has fired a missile ostensibly to place a weather satellite in orbit. All but fools know Korea’s missile shoot was to display its load lifting capacity. Hillary’s response to Korea was to arrange as many multi-syllabic words in a sentence as needed to confuse their diplo-speak meaning.

Without an army and navy that may soon be the best she can muster to threaten aggression by our enemies.