Nicholas Eberstadt presented a report at the American Enterprise Institute (AEI) on Wednesday on the growth of government over the past half-century and the effects of the welfare state’s expansion to the point that the majority of U.S. families now receive government assistance of some kind.
“The meaning and the nature of citizenship in the U.S.” has shifted, said Eberstadt, the Henry Wendt Chair in Political Economy at AEI. A nation driven by individual responsibility has changed “into an entitlement state based upon government transfers.”
Eberstadt said that the cost of social programs is “four times as high” as military spending; as a result, he focused on domestic spending, rather than defense or foreign expenditures.
Using data from the U.S. Bureau of Economic Analysis, he showed that the number of “transfer payments by the federal government to families, not adjusted for inflation,” has increased from $24 billion in 1960 to $2.2 trillion in 2010. Benefits today are almost one hundred times greater than they were 50 years ago.
The middle class received the largest amount of this growth in government handouts, according to Eberstadt. Data from the BEA showed that the largest growth in “Total Government Transfer Payments,” especially in the last 25 years, fell within Medicare and Social Security.
Eberstadt pointed to Census Bureau data showing that almost half of U.S. households receive at least one benefit. He insisted that this data, like all government data, is an underestimate.
Two more graphs from the Census Bureau supported his point that the increase in government beneficiaries “bears virtually no correspondence to trends of unemployment or the so-called poverty rate.” A greater percentage of American households receive government funds every year, regardless of their economic standing, at a rate of 3 to 4 % every decade.
“We have crossed the fifty percentile Rubicon,” he warned. “We now have more than half of American families receiving government benefits.”
As Eberstadt said, “the rise of the entitlement state has coincided with the flight from work for American men.” Bureau of Labor Statistics show that, while women have been joining the workforce in the past 60 years, men have been dropping out.
Jay Cost, staff writer for the Weekly Standard and author of the recent book Spoiled Rotten: How the Politics of Patronage Corrupted the Once Noble Democratic Party and Now Threatens the American Republic explained the rise of the welfare state.
“First of all,” he said, “both parties are to blame.” Before the Great Depression, the slight social welfare benefits already in place did not constitute a “modern social welfare state.” Democrats, through the New Deal, massively expanded the scope of the safety net.
Republicans opposed the New Deal, along with the healthcare plans proposed by Harry Truman, Hilary Clinton, and Barack Obama. Nevertheless, “the Republican coalition has expanded the welfare state,” Cost pointed out, with Nixon expanding Social Security and other Republicans “creating the education bubble.”
The American “system of government is uniquely incompetent to deal with this problem,” Cost said. Only when the U.S. faces a “crisis point,” will the country unite to stave off financial ruin.
Lawrence M. Mead, AEI adjunct scholar and professor of American politics and public policy at New York University, agreed with Cost’s bleak analysis. He brought out two major points: the unaffordability of the American welfare state and the dependency that it creates in its citizens.
Mead explained that while military costs are “not really out of control,” social programs, and more specifically health programs, prove “most threatening.” He pointed to Medicare as the most unaffordable government program.
With recent improvements in medicine, the elderly live longer, meaning there are more of them. Additionally, Medicare aims to provide healthcare, a vague good that can mean anything from a routine check-up to open-heart surgery. Therefore this program promises “unlimited benefits to a very large population,” he said.
“Although we can fix Social Security with increments, Medicare requires fundamental change,” he argued, adding that this is a change most Americans are unlikely to support.
“The Tea Party is against big government but not against Medicare,” he explained. Medicare was made intentionally obscure “in order that it may not seem to be a redistributive measure.” Such programs “appear like Santa Clause providing goodies, but without obvious costs.”
“Democracy has failed,” he said, bluntly. “We can’t expect voters to vote for restraint.”
Mead argued that Americans have grown lax and dependent on the welfare state. He pointed to the decline of men in the workforce as an example of this, noting Eberstadt’s numbers.
Health programs worsen the situation. “People look to doctors to save them from finitude,” he said. They prefer to ignore death and the prices for their actions. Overall, “Americans are giving up the degree of self-discipline they used to show.”
He concluded by stressing the importance of personal responsibility to freedom. Americans “have to assume responsibilities for ourselves in order to be worthy of our claims to a free society.”
Yuval Levin, Hertog Fellow at the Ethics and Public Policy Center, also stressed the growth in healthcare programs but gave reasons to hope for change.
Citing the Congressional Budget Office, he said, “the growth in the size of the federal government over the past 40 years has been entirely in the realm of health spending.” While non-interest federal spending constituted 18.1% of GDP, with 1% spent on health in 1971, it rose to 22.7% of GDP in 2011, with 5.6% spent on health. All other programs remained at 17.1% of GDP, with slight fluctuations.
Levin argued that wealth transfers “not from the rich to the poor but from the young to the old.” Middle class claims on federal benefits create “an ethic uniquely suited to undermining the moral basis of a free society,” he said.
Levin held onto some hope for the future. “The Republican Party in the last 2 years has embraced Paul Ryan’s plan” for healthcare overhaul, and “Mitt Romney is running on Ryan’s Medicare reform,” he said.