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March 11, 2010

Relying On Government Coming to Tipping Point

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While conservatives and liberals keep score on who's winning or losing the latest debate over the size and scope of government, America steadily approaches a tipping point.

Our economy will be dramatically less free when we reach that point, our people ever more dependent on government for the basic necessities of life.

Anyone willing to look can see the disturbing evidence in the fallout from national policies.

In January, the annual Index of Economic Freedom published by the Heritage Foundation and the Wall Street Journal revealed the bad fruit of decisions by the Bush and Obama administrations. American economic institutions were so changed that the U.S. fell from the category of free economies for the first time in the index's 16-year history. We're now the land of a "mostly free" economy.

Last week, Heritage published the seventh edition of our Index of Dependence on Government. For the seventh year running, it shows growing dependence on government for such necessities as food, shelter, health care and retirement income once the province of civil society, not big government.

Some 60.8 million Americans now depend on the government for their daily housing, food and health care. That doesn't count federal employees.

On average, someone on government assistance gets more than four times as much taxpayers' money per year - about $26,150 - as he would have in 1962, adjusting for inflation.

The Index of Dependence stands at 240, up from a value of 19 during the Kennedy administration - a 12-fold increase. The rate of dependency accelerated over the past eight years, jumping 31 percent. And the evidence points to rapid increases ahead.

A year ago, Congress made a mockery of fiscal responsibility by enacting an economic "stimulus" that shattered a foundation of welfare reform - work requirements. Meanwhile, in six short years Social Security will not collect enough in taxes to pay promised benefits.

Nearly 80 million baby boomers are about to begin relying more on government, as the number of retirees doubles. They'll be eligible to collect from Social Security and from Medicare or Medicaid. These programs, which already make up 41 percent of federal spending, will account for nearly 62 percent in 20 years as 10,000 baby boomers a day retire.

In little more than a year, President Obama and his deputies have advanced programs to deepen and expand dependency. From initiatives designed to boost economic activity to "reform" that places government at the center of the health care system, the policy thrust is to increase Americans' daily reliance on Washington.

But dependency-creating programs were a staple inside the Beltway decades before Mr. Obama's inauguration. And President George W. Bush really stepped on the gas, particularly in programs related to health, education and income support for Americans of working age.

What makes the crisis worse is the rising percentage of tax filers who pay no federal income taxes. The Tax Foundation reports that 48 million filers, or 34 percent, paid nothing in 2008 - up from 20 million filers, or 21.3 percent, in 1980. The no-tax crowd will get bigger next year as filers take advantage of tax credits from the Obama administration.

Throw in a third index from the Urban Institute, and Americans face a perfect storm pounding the future of our republican form of government.

The Steuerle-Roeper Fiscal Democracy Index measures how much control elected representatives have over the federal budget. It tracks the percent of revenues that Congress doesn't allocate to mandatory spending. This index nearly hit zero last year, and the forecast has it stuck below zero in 10 years.

What this signals is the shrinking ability of the president and Congress to reverse trends that threaten to bankrupt the government.

It's time to take skyrocketing Social Security, Medicare and Medicaid spending off auto-pilot and turn the big three entitlements into 30-year budgeted programs, subject to debate every five years.

One thing is clear: Congress should not make matters worse - and voters should hold their representatives to account. No more legislation expanding dependency, taking folks off the tax rolls or using debt to finance government operations. After all, more debt creates another mandatory program: It's called paying interest.

Democracy itself cannot survive such trends. If Americans tolerate ever-greater outlays to support or provide income, health care, housing, food and education, then big government will overwhelm the delicate balance between those in need and those who provide the financial means to help them.

America is closing in on a tipping point that imperils our form of self-government. Now it's up to Americans to decide what to do about that rendezvous.

William W. Beach is director of The Heritage Foundation's Center for Data Analysis.

First appeared in The Washington Times

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