US in the midst of an entitlement crisis – By George J. Marlin

The following appears in the March 9-15, 2012 issue of the Long Island Business News:

As Democrats and Republicans slug it out in the public square over the so-called “fairness” issue, the facts are every year fewer people pay federal income taxes and more people become dependent on government entitlement programs.

In 1984, the percentage of people who did not pay a dime in federal income taxes and were not claimed as a dependent by a person paying taxes was 14.8 percent. Since then the percentage has increased every year and in 2000 stood at 34.1 percent and by 2010 it had risen to 49.5 percent.

In terms of real numbers, 34.8 million filers paid zero taxes in 1984 and 151.7 million paid nothing in 2009. As the 2012 Index of Dependence on Government report compiled by the Heritage Foundation recently reported, “The country is now at a point where roughly one-half of ‘taxpayers’ do not pay federal income taxes and where most of that same population receives generous federal benefits.”

The declining number of taxpayers is forking over hard-earned dollars to fund dependence-creating programs – housing, health care, welfare, retirement, higher education, rural and agricultural services – that are growing by leaps and bounds. In 2010, these programs consumed 70.5 percent of federal spending, versus 28.3 percent in 1962 and 48.5 percent in 1990. The Cato Institute has estimated that the Feds fund more than 2,000 subsidy programs, up 200 percent since the early 1980s. This explains why total federal spending between 2000 and 2010 grew 62 times faster than inflation, and antipoverty spending jumped 89 percent faster than inflation.

Social Security and Medicare, for example, have an unfunded liability of $45.9 trillion – about $200,000 per citizen. The number is huge because during the next 25 years, 77 million baby boomers will begin drawing Social Security checks and will begin receiving Medicare benefits. Ten thousand boomers a day will be eligible to start collecting checks.

Since these two programs are mandatory government obligations and are not part of the federal budget process, all federal revenues must first go to fund them before a single dollar can go to fund budgetary priorities like the armed forces. In other words, to keep the government operating, trillions will have to be borrowed annually.

Welfare expenditures have also been rising. The highly successful 1996 Welfare Reform Act which brought down the number of case loads by 57.5 percent between 1996 and 2010 was emasculated by the Obama administration. In 2009, President Barack Obama signed into law legislation that reverted the welfare system to pre-1996 funding programs that encouraged the swelling of welfare rolls and eliminated many of the Clinton administration’s reforms that encouraged self-sufficiency.

As a result, the national welfare system now consists of 70 programs, six federal departments and scores of state agencies, and will cost about $900 billion this year. A typical welfare recipient receives assistance from a half-dozen programs including Medicaid, food stamps and public housing.

And don’t expect spending on poverty programs to decline after the United States gets through the recession. Obama in his proposed 2011 federal budget projected spending $10.3 trillion on welfare over the next 10 years.

Reviewing these spending trends, the Heritage Foundation rightly concludes that all Americans who support our Republican form of government should be concerned. “If the citizens’ representatives are elected by an increasing percentage of voters who pay no income tax, how long will it be before these representatives respond more to demands for yet more entitlements and subsidies from nonpayers than to the pleas of taxpayers to exercise greater spending prudence?”

If Washington politicians do not learn to say no, do not effectuate genuine tax and entitlement reform and start promoting opportunity, not dependence, our nation could be buried under an avalanche of debt and could experience an economic and fiscal meltdown similar to Greece, Spain and Italy.

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