Tuesday, July 28, 2015

America’s tendency toward over-spending leading to catastrophe

Many years ago Beatle John Lennon compared America to Rome. Some interpreted his statement as being complimentary, that America was like the Roman Empire in its glory days: the place to be. Others took it to mean that like Rome’s eventual fate, America was declining and headed for the dustbin of history.

As it turns out, both interpretations were correct, depending upon the time frame of the analysis. From its early days America was a bright spot in the world, becoming a leader in many areas and doing things never done before. The rise of the hippie movement of the 60s and 70s spawned the flower children that viewed the U.S. as tarnished and wicked. And since then, particularly in recent years, America has been transitioning to resemble Rome’s decline. Perhaps a more accurate comparison for 2015 is Greece, where out-of-control spending is about to kill the nation.

There is a steady record of troubling statistics that U.S. presidents and Congresses have negligently ignored. For example, in 1971 the federal debt was $348 billion, about 34 percent of GDP, but today it is about $18 trillion, and is more than 100 percent of GDP. This trend caused Standard and Poor’s to downgrade America’s credit rating in 2011.

Federal assistance program payments have risen from about 21 percent of GDP in the 1970s to about 70 percent today. The Supplemental Nutrition Assistance Program in 2008 cost $37.6 billion, but by 2012 totaled $78.4 billion.

The 2014 Index of Culture and Opportunity, published by the Heritage Foundation, reports how food-stamp participation has soared from 2003 to 2013, growing by more than 26 million people. In 1970, the number receiving food stamps was well below 10 million, growing to more than 20 million by 2003, and nearing 50 million by 2013. The index also shows that total welfare spending has climbed by $246 billion between 2003 and 2013. In 2014 the federal government operated more than 80 means-tested welfare programs that provide cash, food, housing and medical care to poor and low-income Americans.

Heritage’s Robert Rector notes that government spent $916 billion on these programs in 2012, and roughly 100 million Americans – nearly one in three – received aid from at least one of them, averaging $9,000 per recipient.

Many will see the increase in these numbers as necessary support from the government for Americans in trouble. Some do truly need help, but many are simply availing themselves of easy money.

Government policies and actions have kept the economy stagnant since the recession of 2007, preventing job creation that would allow millions to provide for themselves, or at least to contribute to their own wellbeing. More than 93 million Americans desiring work – nearly one in three – are not in the labor force. These policies and actions are championed by politicians, many of whom subscribe to the same socialist ideals that are killing Greece, and who benefit from having large numbers of individuals and organizations depending upon them for their survival.

And, the common theme of government wreaking havoc by interfering with business economics rises to the fore, yet again.

One example of a foolish policy is when Obamacare reduced the number of hours of the full-time workweek from 40 to 30 in an attempt to force employers to cover some part-time workers. This resulted in thousands of full-time workers becoming part-time workers, who lost 11 hours of pay a week, as businesses suddenly faced massive new expense and were forced to counteract that by reducing the number of full-time employees by cutting their hours.

Had the leftists that threw together Obamacare in the dark, smoke-filled rooms of the Capital actually thought about what they were doing, they could have avoided some of the punishment they caused these workers. No doubt that thousands of those workers now qualify for government support as a result.

Ignoring the wisdom of not raising the minimum wage, Seattle, Washington raised its minimum wage to $11 an hour in April. And guess what? Some of the workers who benefitted from the increase are now complaining that since they are making more money they will lose their housing subsidy, and are asking to have their hours reduced so that they can keep the free money flowing. Seattle’s minimum wage is scheduled to rise to $15 an hour by 2017.

The American tradition of self-reliance, of working to improve one’s plight, has been replaced by the opportunity to benefit from “free money” from government.

“If we keep on this way, we’ll reach a tipping point where there are too many people receiving government benefits and not enough people to pay for those benefits,” Rep. Paul Ryan (R-Wis.) wrote in The Wall Street Journal. Currently, about half of Americans pay no income taxes. “That’s an untenable problem. The receivers cannot receive more than the givers can give.”

The politics of government largesse and the sensible policy of holding individuals and institutions responsible for their actions, the tradition of self-reliance upon which America became the wondrous nation it used to be, are inalterably opposed. The question is, how much more of this dependency can the country survive before it becomes a Greek tragedy?


TexasFred said...

We're a train hurtling towards the cliff and we don't have ANY brakes...

James Shott said...

Sure looks that way, Fred.