I'm pleased to be presenting these ideas to
those affiliated with the Heritage Foundation because much of what
I know probably came from their policy papers and books that I've
read over the last ten years.
you know, Washington is a town where everything that could be said
has been said, but not everyone has said it yet. Consequently, when
anyone in Congress gets up to talk, there is often very little
listening going on. But as we say in my home state of South
Carolina, "even a blind squirrel finds an acorn once in a while."
Well, I think I've found an acorn, so I hope you're listening.
The Coming Crisis
friends, I believe we are facing an eleventh-hour crisis in our
democracy that demands our immediate attention.
the next election, the majority of Americans will be dependent on
the federal government for their health care, education, income, or
retirement--at the same time the number of taxpayers paying for
these benefits is rapidly shrinking. How can any free nation
survive when a majority of its citizens, now dependent on
government services, no longer have the incentive to restrain the
growth of government?
we all know, over the last 50 years, American attitudes have
shifted from cherishing self-sufficiency and personal
responsibility to craving cradle-to-grave security "guaranteed" by
government. The result is that increasing numbers of Americans are
dependent on government for their income, careers, health care,
education, and other essentials. Government benefits--once
concentrated on "the needy"--now extend into middle- and
upper-middle-class households, even as more and more Americans see
their income tax liabilities decrease. Today, the majority of
Americans can vote themselves more generous government benefits at
little or no cost to themselves. As a result, most have little
fiscal incentive to restrain the continued growth of Big Government
and the entitlements it dangles before them.
Today, we will examine whether this is
even a problem--especially during times of peace and
prosperity--and if so, whether or not our Republic can survive this
state of affairs.
might feel a little like one of my clients from my business days
after I explained my proposal to help him develop a strategic plan
for his company. He said, "Let me get this straight: You are going
to interview me, my management team, my board members, some of my
employees, some of my customers, and research my competition, and
then you are going to tell me what I need to do." I said, "That's
he said, "So you are going to borrow my watch and tell me what time
it is, and then you are going to charge me $25,000." I said, "Yes,
of what I'll be talking about you already know. But like pieces of
a jigsaw puzzle, the whole picture isn't clear until you snap all
the pieces into place. Whether you are a conservative or a liberal,
I hope you will leave this lecture with a whole new perspective on
the problems that face America and what we need to do about them
before it is too late.
Before coming to Congress, I worked as a
marketing consultant, and over my 25 years helping the private
sector succeed, if there is one thing that I learned it is this: An
organization's problems were almost always symptoms of a larger
problem--difficulties often overlooked by employees and management.
My challenge as an outsider was to look past the symptoms, shake
things up, and find the root causes of problems; and almost without
exception, the problems came from the organization's failure to
remember its first principles--its original mission and vision, the
very essence of what made it successful in the first place.
is exactly what I've found here in Washington. Year after year, I'm
afraid, Congress debates the mere symptoms while the larger, mostly
ignored problems linger and fester in the soul of our body
blame does not rest solely on the left. It is true for
conservatives in Congress as well. We think the problems are high
taxes, too much spending, too much growth of government, too many
government programs, too much government interference and control
over individuals, families, and businesses. But these are just
symptoms of more serious problems, which are all related to a loss
of the American memory. As a result, in the words of Thomas Sowell,
we've replaced what has worked with what sounds good, and we've
forgotten what really makes America work and our liberty
Are We Really the Land of the Free?
one will argue that America is synonymous with freedom. The right
and the left agree that our freedom is unique--a successful
experiment unmatched in the world's history. We share a belief that
freedom is what makes America strong and successful, peaceful and
prosperous, compassionate and competitive.
Defining this freedom is a difficult task.
The authors of American liberty had little time to pen a strict
definition; they were too busy living it out. But for our
discussion today, I want you to consider this definition:
when individuals , endowed with
unalienable rights and protected by
the rule of law, have the ability to make their own choices in pursuit of a life that they value .
There are several key words that I would
like you to consider.
- First, that freedom is based on
individual ownership, self-governance, and
- Second, the inherent rights
of man that are unchanging and irrevocable;
- Third, the ability for the
individual's capabilities to act independently and responsibly, as
well as an external support structure that fosters an individual's
- Fourth, the right for individuals
to make choices and pursue their own happiness; and
- Finally, value, an idea that
F. A. Hayek understood well when he wrote, "A society that does not
recognize that each individual has values of his own which he is
entitled to follow can have no respect for the dignity of the
individual and cannot really know freedom."
Individuals assigning value and
determining their own destiny is what makes people free, and it is
this exercise that strengthens the good citizen. I venture to say
that most Americans believe that if government gives people
adequate income, food, and shelter, then we've done a good thing.
But people are not pets, and by making these decisions for
people, we strip freedom from people.
tyranny of good intentions disables citizens' self-determination
and undermines their values, especially personal responsibility.
Ultimately, it devalues their inherent worth as created in God's
image. We risk, as Ronald Reagan warned, "treating them as helpless
children to be forever dependent." Our guiding principles should be
to help people by building their capabilities so that they exercise
their rights to choose a life that they value.
Four Pillars of a Free Republic
principles of economic freedom, social responsibility, spiritual
faith, and limited government are the foundations of the American
success story. The details may be debatable, but I trust we all
agree on what I consider to be the four pillars of freedom.
These four pillars guided America's
founding and led to the peace, prosperity, and liberty we enjoy
today. Individuals determining for themselves how to value their
choices in each of these areas was a principle written into the
hearts of the American people. But much like the ancient people of
Israel wandering through the desert in search of the Promised Land,
we have struggled to retain the memory of our first principles,
distancing ourselves from America's core beliefs. This American
amnesia has caused great heartache and struggle as we try to make
sense of the problems (or symptoms) now facing our citizens.
Allow me to briefly refresh our memories
on the price and the value of freedom.
Individual decision-making about price and
value is what holds all of our freedom in balance. In all four of
these areas, when people believe that price equals value, then they
are ready to exchange something they have or can do for something
that they want. This exchange is what drives our republican
government, our free market system, our civil society, and our
In a free economy,
individuals exchange valuable goods and services for
market-determined prices. Sensible consumers buy when they believe
the value is equal or better than the price.
When computers were first
introduced, they were bought by large institutions like
governments. They were as large as this room, expensive,
complicated, and controlled by a few people. But when
free-enterprise competition spurred innovation, computers became
faster, smaller, and affordable. Computer manufacturers competing
for millions of consumers keep the prices low, the value high, and
the choices plentiful. Individuals decide if the value is equal to
the price, and this constant tension between the buyer and the
competing sellers keeps our economic system productive and in
control. From Dell Computers to Del Monte foods, our freedom turns
the wheels of the market, producing more affordable, quality, and
But when external controls
are injected into the free market system, problems develop. When
the tax code made it easier for businesses than individuals to buy
health insurance, we created a third-party system that reduced
choices, increased costs, and ushered in government dependency. It
virtually eliminated the price-value tension that keeps quality
high and costs low.
Compounding the problem,
Congress and its good intentions created a Medicare system that
forces every retired American into government-run health care. The
price is almost invisible to the buyer and fixed for the seller.
Access is regulated, the delivery of health services is controlled
by insurance companies and the bureaucrats, and individual choices
are few and far between. We may still have the best health care,
but we also have the most expensive health care system in the
Like P. J. O'Rourke said,
if you think health care is expensive now, just wait until it is
free. Smothered by government costs and paperwork, the pulse of
freedom in our health care system is fading; and even today
Congress is planning more government intervention to protect
patients, since we've created a system that doesn't allow
individuals to protect themselves in the first place.
Compare this to what has
happened in a small segment of the health care industry: laser eye
surgery. This procedure is paid for by individuals because it is
not covered by insurance. Individuals make the price-value
decisions. The technology has exploded forward; the costs have
declined rapidly; the service now allows people to walk out seeing
better within a few minutes.
The problem with distorting
individual decision-making about the price is evident not only in
health care, but with education, energy, and many government
services that replace the dynamic of freedom. When the price is too
low, the demand and the costs go up as the quality and the choices
go down. The entrance of third-party control has broken down the
delicate balance between the value of a service and the citizen's
willingness to pay its price.
Similar to the economic
freedom pillar, Americans also believe that the price of success
and opportunity is hard work and personal responsibility. Recently,
I attended a ceremony congratulating new American citizens. Their
eyes gleamed with hope and promise. They believe that hard work and
personal responsibility are the recipe for a free and successful
life--and rightly so. When this price, as measured by the
individual, is equal to the perceived value of freedom and
opportunity, people work and take on increasing personal and social
Before welfare reform,
entire communities were ravaged by government policies that
attempted to give individuals freedom and opportunity without
asking them to pay the price. Not surprisingly, the demand for
these benefits went up and the value of hard work and
responsibility went down. Welfare encouraged an entitlement
attitude. The government made millions of Americans "freedom
disabled" because they lost the ability to attach a real value to
disabilities has a dramatic impact on the spiritual strength of our
nation as well.
While I don't want to get
involved in a theological debate, we are much indebted to the
historic spiritual dimension of America's freedom. America has
generally advocated morality and sacrifice as the "price"--or
payment--for being a good, compassionate, and worthy servant to
one's neighbor. These beliefs fuel a commitment to charity and
volunteerism, as well as a strong work ethic. Just as our
government has institutional checks, individuals attaching stigma
or favor to certain behaviors keeps our society in check.
Government and the media,
however, have done much to discontinue the religious habits of old,
as well as to replace faith-based community efforts of compassion
and charity with ineffective government programs. As a result, the
growth of dependency has decreased the citizen's desire to live an
upright and responsible life. People who act in a socially
destructive fashion--promiscuous sex, drug addictions, crime,
etc.--generally feel no personal shame because there is no
corporate rebuke. They often enjoy the same privilege of acceptance
as those who live moral, decent, and responsible lives in the home,
workplace, and community.
Sadly, destructive behavior
often receives the winks and nods of government and media elites.
With the death of outrage, people are given a free pass on the work
and sacrifice traditionally necessary to achieve social
When government begins to
tamper with individual decision-making about the price and value in
our economy, as well as our social or spiritual lives, freedom
declines. But what are the factors that encourage government to
expand outside its traditional limits and interfere with a free
It is the same root cause
that diminishes freedom in the private sector: When the price of
government declines, the demand for government increases. In other
words, if you offer something for nothing, people will want a lot
of it. And as a consequence, the government expands into the
private sector and crowds out our freedom. This leads me to define
what I believe to be the coming crisis in America.
The demand by voters for
more federal benefits is overwhelming and growing. Despite our best
efforts, conservative lawmakers are like children on the beach
trying to hold back the tide with sand castles. Unless we reduce
dependency quickly and develop a tax code that makes the cost of
government more visible, Americans will demand more and more from
government, to the point where freedom will be no stronger than a
flickering flame on a shrinking wick.
You see, our founders
created a system where taxes are the price for government benefits
and services. The American system of government is built on the
premise that the voters will restrain the growth and expansion of
government because of the personal cost to themselves in taxes.
There must be this tension that balances the price and the value of
government. But today, a near majority of voters pay little or no
income taxes while they receive an increasing number of benefits
from the government.
The extreme progressiveness
of our tax code has reduced, and in some cases eliminated, the
price of government for a growing majority of voters. At the same
time, the number of voters who are dependent on the government for
their income, their health care, and other government services has
grown dramatically. As the price for government in terms of taxes
has declined, the demand for federal benefits and services has
increased. It's like handing someone a menu, telling them its
covered, and then letting them order whatever they want. How could
In my hometown of
Greenville, South Carolina, the new school superintendent has
called for a referendum to raise property taxes to pay for "better
education." This would add about $60 a year to the taxes on a
$100,000 house. Everyone wants better schools, but citizens are up
in arms about the increase in taxes. Why? Because just about
everyone pays property taxes on their homes or cars. They feel
the cost of the increase.
The head of the local taxpayers association is attacking the
increase; yet in a recent meeting, he asked me privately why I
wasn't working to get more money from the federal government for
school construction. In his mind, there is no conflict because
federal money is free money to most voters.
Let's look at who's paying the costs of
the federal government:
Fifty percent of Americans now pay less
than 4 percent of the total individual income taxes, while the top
5 percent pay nearly 55 percent of individual income taxes. We now
have a majority of voters that have very little incentive to
restrain the growth of government. The price is low, so the demand
for government services is high. We also have a small minority of
voters who pay a high price for government with much less demand
for services, yet they have a decreasing amount of political power
to stop the growth of government.
the same time, the folks who are paying the least for government
are receiving the most benefits: Americans who receive nearly
half of federal government benefits pay only 1 percent of the
taxes. Many of these beneficiaries are poor, but an increasing
number are middle-class retirees who are dependent on the
government for their income and health care through Social Security
America's aging population, along with an
increasing number of federal programs and subsidies, has resulted
in a large and growing number of Americans who are dependent on the
federal government for their income, their health care, housing,
the education of their children, and other important benefits.
Government Dependency: Measuring the Past
and Forecasting the Future
Heritage Foundation and I are launching an ambitious project to
create a tool that can measure and forecast dependency. We
recognize that dependency is destructive to individual freedom and
if it continues to increase, deadly to democracy. An Index of
Government Dependency could give us a better idea of how much
government is replacing individual decision-making and
private-sector activity with government programs and control.
the first time, we will be able to say not only that dependency
exists, but just how corrosive it is to the foundations of a free
Based on preliminary projections, the
index will show steady growth in dependency from the time of John
F. Kennedy's election and dramatic increases under the Great
Society programs of Lyndon Johnson. We can expect the final index
to show us what happened under the limited government policies of
the Reagan years and the entitlement reforms of the Republican
Congress. And it will show us that dependency will continue to
increase unless we give individuals more independence--especially
in programs like Social Security and Medicare.
This dependence on government, along with the low cost to the
beneficiaries, has dramatically increased the demand for
government. This raises an important political question for
conservatives in Congress. The dilemma is clear. If we fight to
reduce government dependency by scaling back programs while making
the tax code fairer and more visible, we are likely to lose
elections because, as modern elections have shown us, candidates
are engaging in an "I'll match you and raise you" and "Anything you
promise I will promise more" political strategy. Asking dependent
voters to vote for a candidate that promises to cut government
spending makes as much sense as a valuable employee asking her
employer for a pay cut.
is what's happening. The loss of the price-value tension between
the taxpayers and the government has created a large demand for
more government. As government has expanded into the other spheres
of freedom, the value of freedom in all areas of our lives has been
reduced. More people expect government to pay the price and
establish the values. This expectation has created a competing
vision of America that replaces the principles of freedom with a
reliance on government.
Partly by design and partly by
circumstance, the American system grew up with the individual at
the center, with the individual deciding about price and value in
many different roles: as voter, taxpayer, citizen, seller, and
When individuals are making price-value decisions, freedom works.
But for many Americans, government is now seen as the hub or the
manager of America's economic, social, and spiritual activity:
Government or institutional control becomes a replacement for
individual decision-making about price and value.
There has always been a price for freedom, and it is this price
that gives freedom its value. America achieved such greatness
because it was the only country in the world that let the dynamic
of freedom work in all areas of the nation. Individual Americans
had the freedom to assess the value and pay the price in all areas
of their lives. This vision will still work if we let it, but few
seem to understand why government has gotten out of balance, or
even that we have a problem.
The crisis is creeping forward: Every day in America more people
become dependent on the government, demanding more services and
benefits, while every day in America there are fewer people paying
the price for these services. The political power is shifting from
those who pay taxes to those who receive the benefits. The number
of Americans who are dependent on Social Security and Medicare
alone will double in the next 30 years. These folks will not be
voting for less taxes and less government, and they won't be voting
Many politicians have already figured out that dependency means
more political power for them. Quite simply, a dependent voter is a
dependable vote. A dependent America will vote for the politicians
who promise the most from government and shift the cost to the
"rich." But in the end, there is nothing compassionate about this
massive disabling of Americans.
Turning the Corner: Stopping the Growth of Government
So what is the solution? First, we must admit that
we have a problem. Liberals must recognize that we can't help
people by making them dependent on the government, and
conservatives must recognize that fighting the symptoms will not
preserve our freedom. The Heritage Foundation's Index of Government
Dependency will be an invaluable tool in educating Members of
Congress, their staff, the public, and the media.
For my colleagues in Congress, I have a few recommendations:
We need to move from a government-owned Social Security system to
individually owned retirement accounts. Americans who are secure,
independent, and wealthy when they retire will want less from
government, less taxes, and more freedom.
The same will be true if we reform health insurance in America to
encourage individual ownership of health insurance policies.
Americans who have their own health insurance in retirement are
independent, and even if the government subsidizes the cost of
premiums for the poor, the level of dependency is much less than
the total dependency we now have under the current Medicare
On the other side of the problem, we must have a new tax code that
allows all voters to see and feel the cost of government. Using the
tax code to help low-income workers only disconnects them from the
responsibilities of freedom. It would be far better to increase
spending for programs that remove barriers, and enhance the
capabilities and opportunities for the poor, instead of trapping
them in dependency and insulating them from the cost of the
government they vote for. Friends, you came here today to hear
about a coming crisis in America: The threat is subtle and
creeping, discreet and easy to overlook. Unlike a foreign threat or
internal discord, it is a crisis that, unless we sound the warning,
will surface when it is too late to turn back.
Some of you may still be skeptical, but I have never seen a problem
more definitive with results more destructive than the picture I
have tried to fit together for you. It is that serious.
The divisions do not follow traditional Republican or Democrat
lines. Liberals and conservatives who are truly interested in
individual liberty, civil society, and sustaining the vision of our
American experiment and its people should agree that we cannot
allow this trend to continue.
Let's debate about how much the government should spend to remove
barriers to freedom and to build the human capabilities necessary
for our people to live free. But we shouldn't have to debate
whether or not well-intentioned government programs should force
people into a life of dependency. And we shouldn't have to debate
the danger of sending voters to the polls who don't have any stake
in the cost of government.
Our generation was given unprecedented freedom, opportunity, and
prosperity. Few of us had to pay a high price for the freedom we
enjoy, and perhaps because of that, we don't value it as we should.
I think, for this reason, we are in danger of letting freedom slip
away right in front of our eyes.
This sacred trust we call freedom, that was given to us by a
generation that did pay a high price for it, must now be defended
again not with bullets and bombs, but with vision and vigilance.
Dependent Americans can easily be frightened and manipulated, and
there seem to be few leaders who have the courage to tell them the
The secret to freedom is courage. It is my hope that what you've
heard today is a truth that few will have the courage to
The Honorable Jim DeMint, a Republican, represents the Fourth
District of South Carolina in the U.S. House of