Tuesday, September 4, 2012

Part #2 of Our History of Entitlements Spending and the Values of the Middle Class

The recent post on entitlements discussed the explosive growth of U.S. entitlements spending in America the past 50 years. Now let's turn our attention to a generally ignored but very important piece of the puzzle --- people getting benefits who could afford not to get them from the government but who in effect are passing along the responsibility to pay for them to future generations of taxpayers.

While I don't believe we've all internalized exactly what we're doing to future generations of Americans, They're Part of the Civic Compact says this in relevant part:

"Again, consider the low-wage worker in a full-time job that does not provide health insurance. Given current costs in the market, that worker is in no position to purchase insurance for himself. So he has three options: he can go without needed health care, seek charity care delivered through the voluntary sector, or participate in public programs financed mostly by taxpayers with higher incomes.

Having the government help him out with life's essentials does not contribute to dependence. Indeed, one could argue that it does just the reverse, by rewarding work. There is no necessary relation between the growth of means-tested government benefits and the increase in the kind of dependence we care about from a moral point of view.

There is a moral hazard, however. At some point the desire to ease the plight of the poor who are doing the best they can shades over into assistance for the not-so-poor whose lives would be harder but not unworkable without it. In the past five years, for example, the number of individuals participating in the Supplemental Nutrition Assistance Program (formerly known as food stamps) has exploded from 26 million to 46 million, and annual costs have risen from $33 billion to more than $75 billion.

Much of this stems from the Great Recession, which swelled the ranks of the unemployed. But some of it is attributable to the liberalization of eligibility standards and the expansion of benefits during the past decade. It is plausible (though hardly certain) that these changes may have encouraged dependency among some of the beneficiaries, especially those who were not living in poverty prior to receiving benefits. And there is certainly a case for revisiting them....

In 2009, for example, the Pew Social Mobility Project asked a representative sample of Americans what is essential or very important to getting ahead. Ninety-two percent said hard work; 89%, ambition; 83%, a good education. Asked about the role of government in fostering economic mobility, 36% of respondents thought it did more to help than to hurt, but many more—46%—endorsed the opposite view. A follow-up survey two years later revealed that the share of Americans who considered government helpful for mobility had declined to only 27%, while those who thought it detrimental had risen to 52%. . . .

Americans want a reasonable level of security in their retirement years, to be sure, and they think that government programs such as Social Security and Medicare are essential to that security. But they continue to believe that government is no substitute for hard work, ambition and the perseverance that enables young people to complete their education and put it to work in the job market. They think that government should make reasonable provision for the poor and disabled, but they do not believe that government should enable people who could provide for themselves to depend on the efforts of others.

Left unchanged, the programs that we have created in the past half-century will make it difficult to stabilize our finances, to invest in the future and to defend the country. These are compelling reasons to rethink and reform the entitlement state. But they have little to do with an alleged culture of dependence. America's distinctively individualist ethos is alive and well."

Summing Up

We have solid and well founded reasons for optimism about America's future.

We the People still share the traditional values of hard work, ambition, a good education and a strong preference for limited government.

Hard work, individualism, self reliance and a wariness of government programs are the components of American Exceptionalism.

Along with a shared sense of community and intergenerational connectedness as well, of course.

That still sounds great to me.

Thanks. Bob.

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