Wednesday, April 27, 2011

American Dependence on Government Assistance Highest Ever

From the National Center for Policy Analysis Daily Policy Digest:

Americans depended more on government assistance in 2010 than at any other time in the nation's history, a USA Today analysis of federal data finds. The trend shows few signs of easing, even though the economic recovery is nearly two years old.

  • A record 18.3 percent of the nation's total personal income was a payment from the government for Social Security, Medicare, food stamps, unemployment benefits and other programs in 2010.
  • Wages accounted for the lowest share of income -- 51.0 percent -- since the government began keeping track in 1929.

The wage decline has continued this year.

  • Wages slipped to another historic low of 50.5 percent of personal income in February.
  • Another government effort -- the Social Security payroll tax cut -- has lifted income in 2011.
  • The temporary tax cut puts more money in workers' pockets and counts as an income boost, even when wages stay the same.

From 1980 to 2000, government aid was roughly constant at 12.5 percent. The sharp increase since then reflects several changes: the expansion of health care and federal programs generally, the aging population and lingering economic problems.

  • Total benefit payments are holding steady so far this year at a $2.3 trillion annual rate.
  • A drop in unemployment benefits has been offset by rises in retirement and health care programs.
  • Americans got an average of $7,427 in benefits each in 2010, up from an inflation-adjusted $4,763 in 2000 and $3,686 in 1990.
  • The federal government pays about 90 percent of the benefits.

Source: Dennis Cauchon, "Americans Depend More on Federal Aid than Ever," USA Today, April 26, 2011.

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For more on Tax and Spending Issues:

For an excellent commentary and further elaboration see TANSTAAFL at Small Thoughts.


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