Oct. 28 (Bloomberg) -- Political dysfunction is often blamed for Congress’s inability to curb the U.S. budget deficit. An even bigger obstacle may be the American public.
A record 49 percent of Americans live in a household where someone receives at least one type of government benefit, according to the U.S. Census Bureau. And 63 percent of all federal spending this year will consist of checks written to individuals for which the government receives currently no services, the White House budget office estimates. That’s up from 46 percent in 1975 and 18 percent in 1940.
Those figures will climb in coming years. The 75 million baby boomers have only begun their long march into retirement, while President Barack Obama’s health-care overhaul will extend insurance coverage to more than 30 million additional people.
“The more households that are benefiting from the programs, the more difficult it is to rein in their costs,” said Bob Bixby, head of the Concord Coalition, an Arlington, Virginia- based group that promotes balanced budgets. “It’s a troubling phenomenon” and “it explains why it’s politically difficult to deal with these things.”
The increasing reliance on the federal safety net comes as a congressional supercommittee -- charged with coming up with a plan by Thanksgiving to find $1.5 trillion in savings in the U.S. budget -- faces mounting pressure to pare back spending. If the panel fails to meet its goal, $1.2 trillion in across-the-board domestic and defense spending cuts will be triggered.
It’s the Economy
Senator Jon Kyl, an Arizona Republican who sits on the 12- member supercommittee, said the swelling number of beneficiaries is “very distressing” because it means much of the population is “hooked on government” and will oppose any cuts.
The census figure showing 49 percent of Americans, or about 147 million people, live in households where someone gets a federal benefit, is from the first quarter of 2010, the most recent numbers available, according to the bureau.
A confluence of elements is helping drive up the number of beneficiaries. The biggest is the economy. With the unemployment rate stuck at about 9 percent for 30 consecutive months, demand for unemployment benefits, food stamps and Medicaid has soared.
The number of Americans receiving food stamps alone is up 72 percent over the past five years, to a record 45.3 million. Their annual cost, projected this year to reach $80 billion, tops the yearly budgets of most federal agencies.
Another cost-driver is the wars in Iraq and Afghanistan. Even with the Iraq conflict winding down -- Obama said last week all U.S. troops will be home by the end of the year -- the more than 2 million Americans who have served in one of the theaters have begun claiming promised health-care and education benefits.
Good, Bad News
Those medical bills could reach $55 billion over the next decade, according to the Congressional Budget Office. The number claiming education benefits is up almost 60 percent since 2009, according to the Department of Veterans Affairs.
“The good news is their survival rate, but the bad news is their survival rate,” said Bill Hoagland, a former staff director of the Senate Budget Committee.
Demographics also play a major role. The eldest baby boomers became eligible this year for Medicare, three years after beginning to receive Social Security checks. Though much of the debate over the programs’ finances has focused on what to do about spiraling health-care costs, the CBO said the main challenge over the next 25 years will be the number of people claiming benefits.
“Of the two factors, aging is the more important,” the CBO said in a June report. With 10,000 Americans turning 62 every day, the ranks of Social Security recipients are projected to almost double to 97 million by 2035.
Congress also has repeatedly expanded benefits in recent years, adding to the ranks of potential losers in any deficit- reduction deal.
A 2010 law eased eligibility standards for Pell college tuition grants, one reason the number of recipients is up about 70 percent in five years to a projected 9.4 million this year. The increase in veterans claiming education benefits is partly driven by a 2008 “Post-9/11 G.I. Bill” that expanded assistance to cover the entire cost of a college education, including tuition, housing and books.
Even in the face of calls to cut the deficit, Congress came up with a new entitlement program.
Last year, as lawmakers prepared to leave for the Christmas recess, they agreed to create a program for emergency responders to the Sept. 11 terrorist attacks, promising medical care for conditions ranging from panic disorders to sleep apnea.
More than 60,000 people have enrolled since the program opened for business in July.
“You’ve got to be seen helping everybody,” said Senator Tom Coburn, an Oklahoma Republican who was criticized when he temporarily blocked creation of the program. Coburn had complained that the government had already appropriated money for responders’ care, and Congress shouldn’t be developing additional entitlements amid so much concern over financing existing ones.
Senate Budget Committee Chairman Kent Conrad, a North Dakota Democrat, complained that opinion polls show the public neither wants benefits cut nor taxes raised.
A Bloomberg News-Washington Post poll earlier this month found more than four-fifths of Americans opposed reducing Social Security or Medicare benefits. A similar share said they didn’t want taxes increased on the middle class either, although they favored raising them on wealthier people.
“None of this adds up,” said Conrad. “One of the biggest obstacles to doing what has to be done is public opinion.”
--Editors: Mark McQuillan, Jim Rubin.
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