Entitlements Must Be Restructured

Monday, 22 Oct 2012 02:03 PM

By Herman Cain

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When you really think about it, it’s a stunning fact. There are now more people in America receiving government healthcare benefits — Medicare and Medicaid — than there are full-time workers in the economy.
 
It’s an eye-opener, but it’s more than that. It’s also evidence that we have a system that, by definition, cannot be sustained.
 
Medicaid and Medicare had a gross combined enrollment of 119,249,000 in 2011. At the same time, the U.S. Bureau of Labor Statistics said that 112,556,000 people worked full-time in the United States in 2011, including 17,806,000 who worked for all levels of government and 94,750,000 who worked for the private sector.
 
Who do you think pays for the benefits enjoyed by Medicare and Medicaid recipients? Private-sector workers, of course. Now of course, government workers pay taxes too. But where do you think the money comes from the pay the salaries of government workers at every level of government? From private-sector workers!
 
Without private-sector workers first paying taxes, there would be no government salaries from which to withhold taxes.
 
The bottom line is that private-sector producers ultimately must generate all the wealth that’s needed to support government at every level. We already know that the federal government is spending 25 percent of the nation’s entire $14 trillion economy, but when you include state, county, and local governments, then add in local school districts all across the country, government is actually spending more than 40 percent of GDP.
 
President Obama likes to say that we have such a large deficit because the rich don’t pay enough taxes. No. The reason we have such a large deficit is that there are not enough people producing in the private-sector to pay for the size of government, and one of the biggest costs in government is the healthcare benefits we’re paying to 119 million people — more than a third of the entire population.
 
It’s true that many of the current recipients have paid into the system during their lives, some for many years. But the bottom line remains that such a system is unsustainable.
 
It’s astounding to realize that in a nation with more than 300 million people, only 112 million are working full-time. We know that labor force participation is down during the Obama presidency, but you’re talking about just a little more than a third of the population.
 
I realize you have a certain subset of the population that are not candidates to work full-time — some are children, some are retired, some are stay-at-home moms, etc. — but you simply need more producers than this to sustain such a large amount of government at so many levels (not to mention the fact that the private sector might want to keep a little for itself).
 
The Obama administration’s view has always been that more government spending would “stimulate” economic growth, and this would lead to private-sector prosperity sufficient to support all of Obama’s spending. The opposite has happened. Economic growth is so anemic that we’ve been at or near 8 percent unemployment for most of Obama’s presidency, and labor force participation continues to decline.
 
But government spending never declines, so we’ve got fewer and fewer people doing the work that pays for more and more people to receive benefits.
 
No one should be surprised by this, by the way. It’s consistent with the history of major government entitlement programs. When Social Security was created there were 46 people paying into the system for every one drawing benefits. Today, there are three people paying in for every one drawing benefits. And yet it’s considered beyond the political pale to restructure the program.
 
I am convinced that if the public really understood these facts, it would not only accept restructuring of entitlement programs, it would demand them. That is going to require leadership from a president who will stand up and candidly lay out the facts to the American people. We already know the president we have now will not do that.
 
Following the conclusion of his presidential campaign, Herman Cain established The Cain Solutions Revolution, an organization whose mission is to educate the public and advocate for the policy solutions that drove his campaign for the presidency. Read more reports from Herman Cain — Click Here Now.
 

 
 

 


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