Tags: Dependent | America | us | economy

Derail the Gravy Train: US Must Stop the Handouts

By    |   Friday, 13 July 2012 03:52 PM

Promises from politicians are generally as worthless as Confederate money.

Almost all politicians make false promises and President Barack Obama is no exception.

After all, he said that he would cut the deficit in half, reduce unemployment below 7 percent, close Guantanamo Bay, and reduce the cost of healthcare, just to name a few of his broken promises. However, he seems to be keeping one of his most important promises -- to "fundamentally change" America.

Editor's Note: I Wish I Were Wrong — Economist Laments Being Right. See Interview.

He appears to be making good on this central, although vague, promise. The key to the transformation is being facilitated by a swelling in the ranks of the dependent class.

For example, the number of Americans on food stamps has doubled under Obama.

Now an astounding one in seven Americans relies on the government for food. Estimates are that the food-stamp program will cost the federal government $82 billion next year, more than twice what the government spends on roads and bridges. Curiously, the Department of Agriculture is currently mounting an aggressive ad campaign to encourage more people to sign up for the program.

As well, unemployment has remained above 8 percent since 2008, the longest sustained period of unemployment that high since the Great Depression. While implementing higher taxes and more regulation, the administration's answer to the swelling ranks of unemployed has been to extend unemployment benefits.

This extension certainly hasn't helped bring down the number of people out of work.

A fact that is more alarming than the stubbornly high number of unemployed is the increase in the number of long-term unemployed (those out of work six months or longer). According to the Bureau of Labor Statistics, this number has doubled under Obama, from 2.6 million to 5.3 million.

Many of the long-term unemployed are applying for Social Security disability benefits. The number of people making claims has been soaring. In May 2012, 10 million people were estimated to receive benefits. Last year, another 2.9 million applied and 35 percent were awarded.

Editor's Note: I Wish I Were Wrong — Economist Laments Being Right. See Interview.

While the portion of the population that depends of the government is soaring, here's where we are already. Nearly one half of all American households receive some kind of government benefits. About one half of all adults in the country pay no federal income taxes. That means the half who don't pay income taxes get the bulk of their income from the government, which means the ultimate source of the income is from the half that pay taxes.

Where is this going?

By enacting policies that slow economic growth and keep unemployment high while increasing eligibility for benefits, the administration is transforming the demographics, and likely voting habits, of the population.

We are seeing what is in affect a massive redistricting of the general electorate.

The United States is in danger of transforming into a country where the majority of citizens are not self sufficient but rather rely on the government for survival.

Four more years of a poor economy and four more years of increasing government handouts could tip critical mass. There could be an electoral majority that will invariably vote to receive wealth from the increasingly shrinking independent class.

As time goes on, the government will be the ultimate arbiter of how resources are allocated. The dependent side of the ledger will continue to grow and the independent side of the ledger will continue to shrink. The government will be the all-powerful allocator of resources to a dependent population.

Didn't we just defeat this kind of government in the Cold War?

About the Author: Tom Hutchinson

Tom Hutchinson is a member of the Moneynews Financial Brain Trust. Click Here to read more of his articles. He is also the editor of The High Income Factor. Discover more by Clicking Here Now.

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Friday, 13 July 2012 03:52 PM
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