Government Dependence Grows
Special Report - October 25, 2010
A new report from The Heritage Foundation Center for Data Analysis warns that a rapid increase “in the growth of dependence-creating federal programs” has resulted in a dwindling number of Americans paying taxes, while the country fast approaches a tipping point when half of the population will not pay for the government benefits they receive. The “2010 Index of Dependence on Government” was released on October 14 and marks the eighth consecutive year for the report, which seeks to warn Americans about the costs and risks of “growing dependence on government payment and programs.”
The Index of Dependence measures “the pace at which federal government services and programs have grown in areas in which private or community-based services and programs exist or existed to address the same of similar needs.” It looks at government programs in five areashousing, health care and welfare, retirement, higher education, rural and agricultural services.
In 2009, the Index grew by 13.6 percent. “Over the past year, the most changed variables were health care and welfare … rural and agricultural services … and housing.” In 2009, a staggering 64.3 million Americans depended on the government to provide their daily housing, food, and health care. Housing dependence was at its highest level in history. Since 2001, the Index has grown by 49 percent. Since it’s inception in 1962, the Index “has increased by more than 14 times.” The Index’s rapid growth “has been accompanied by a rapid increase in the percentage of people who do not pay taxes,” which “jumped from 14.8 percent [34.8 million tax filers] in 1984 to 43.6 percent [132.5 million] in 2008.”
The report cites two primary fiscal challenges of growing government dependence:
Entitlements: An increasing number of Americansroughly halfrely solely on the government for their retirement in the form of Social Security, Medicare, or Medicaidprograms which account for “41 percent of all non-interest federal program spending.
Growth in the Non-Taxpaying Population: A growing number of American pay nothing for dependence-creating programs from which they benefit, such as food, housing, and college financial aid subsidies.
According to the report, beginning in 2015, Social Security will no longer pull in enough tax revenue to pay for all the benefits promised to recipients. “Over the next 25 years, more than 77 million boomers will begin collecting Social Security checks, drawing Medicare benefits, and relying on long-term care under Medicaid,” the report states. This shift into retirement by the largest generation in American history will challenge these programs as never before. The report urges a reevaluation of these programs to operate as safety nets for “those who truly need” them, rather than continuing to be linked merely to age.
The report also addresses concerns about the country’s increasing level of public-sector debt. In 2009, “the federal government effectively [took] over half of the U.S. economy and [expanded] public-sector debt by more than all previous governments combined,” while also overseeing “the largest single-year expansion in total government debt in U.S. history,” much of which “can be traced to dependence-creating government programs.” These changes in the last year have exacerbated concerns about damage “to the republican form of government” and “to the country’s financial situation.”
The report additionally cites a May 2010 evaluation by the International Monetary Fund (IMF) that “ranked the U.S. in second place among countries that must reduce their structural deficit … or risk financial calamity” and predicted “that U.S. public-sector debt will equal 100 percent of its gross domestic product (GDP) by 2015 unless immediate actions are taken.”
It concludes that “[p]ublic policy appears to matter in the growth of the Index of Dependence on Government.” It goes on to warn that “[d]ependence on the federal government for life’s many challenges strips civil society of its historical and necessary role in providing aid and renewal through the intimate relationships of family, community, and local institutions and governments.”
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