September 3, 2002
AMERICA'S GROWING DEPENDENCY ON GOVERNMENT
The Honorable Jim DeMint
I often visit Hilton Head Island in my home state of South Carolina. One of my favorite things to do when I'm there is to get up early and go down to the South Beach Marina. I walk along the boardwalk in front of the quaint stores, look at the boats, and just hang around for a few minutes with a cup of coffee enjoying the morning.
One particular morning, I was at the marina looking down at the boats. Behind the boats is a small bay of water, and over to the side is a little beach along the inlet that leads to the open ocean. On this day, about a dozen kids were on the beach with an instructor and their windsurfing boards.
From my own experience taking a lesson on that same beach, I know that windsurfing is one of those sports that is much more difficult than it looks. As I saw the kids getting in the water for their lesson, I knew it would be entertaining, so I sat down in a big wooden rocking chair on the boardwalk and prepared to watch.
The kids got on their boards and paddled out to the middle of the water behind their instructor. I couldn't hear exactly what he was saying, but I could tell from his hand motions that he wanted them to pull up their sails, sail about 50 yards to a buoy, and then come back to the beach.
The wind was swirling, and I knew what was about to happen. All of the students got up on their boards and began tugging on the ropes attached to their sails lying in the water. As they were fighting to pull their sails up, a few began to drift toward a marsh, others toward the boats at the dock, and two were being pulled by the tide down the inlet on the way to the open water. The instructor was waving his hands and shouting instructions with little effect.
One girl finally pulled her sail out of the water only to have it knock her off the other side of her board. But she quickly got back up, steadied her sail, and started moving slowly toward the buoy. This inspired a couple of the guys near her to believe that this must be doable after all, and they soon got their sails up and began sailing slowly in the general direction of the buoy.
So now there were three or four of the kids inching toward the goal of the buoy, but most of them were still in the middle fighting with their sails and drifting in all directions. As I watched the two who were being pulled out by the tide disappear around the corner past the beach, I noticed there were two kids on the beach with their boards who had never even gotten in the water.
Eventually the instructor told them all to make their way back to the beach. As they came in, some were sailing, some were laying on their boards paddling, some were in the water swimming with their boards in tow, and the two who had been pulled out by the tide had to be picked up by a pontoon boat.
When they all got back on the beach, something very surprising happened. In spite of their limited windsurfing success, the kids were all animated, giving each other high fives and jumping around like they had just won the lottery and bragging about what they had done. They were pointing to where they had been. Even the two who had been picked up by the pontoon boat were talking about how they had succeeded over the killer tide. They were all acting as if something magical had happened to them. And you know, I think it really had.
As the celebration continued on the beach, I looked at the pontoon boat parked right next to them. I thought about how easy it would have been just to put all those kids in that boat, drive them around the buoy, and then bring them safely back to the beach. Then they wouldn't have had to go through any of the strain and struggle.
But the whole purpose of showing up on the beach was the individual battle they each went through by themselves. And ironically, it was their individual struggles that created the sense of unity and team spirit among the whole group. I could see the magic results of individualism and the benefits of their personal participation to both the individuals and the group.
As you visualize the experience of the kids with their windsurfing boards, try to overlay this scene onto our American society. There are a number of analogies from this story, when you consider America's quest for social and economic equality, that are instructive to today's political debates and to future policy development. Just as with these kids, there are Americans who are left behind on the beach and never get started; there are those who are in the middle trying, but failing and being dragged down by the tide; then there are the masses in the middle who are out there fighting and having varying degrees of success; and finally, there are the few who are super-successful, achieving the ultimate goal.
Looking at this scene from a political perspective may help explain where we are with today's political debates.
You would expect the left to look at that scene and say that it just isn't fair. It's not equal. Everyone does not have the same opportunity to succeed because some of the kids lack the necessary capabilities to achieve the goal. Some are disadvantaged and effectively disabled by their past. To paraphrase the words of former Supreme Court Justice Thurgood Marshall, it is not equal because everyone is not getting the same thing, at the same place, at the same time.
From the perspective of the left, the ideal would be to get everyone in the same boat and to make sure everyone achieves the same goal. The problem is that we've discovered over several generations of Americans that this perspective really destroys the fabric of who we are: our love for freedom and individualism. We've also discovered that encouraging sameness and dependency instead of individualism and independence diminishes the will and the capability of people to succeed in a free society.
On the right, some conservatives might look at the whole situation and say, "What's the problem? Why change anything? Just let them struggle on their own." While not all conservatives agree with this characterization, it is undeniable that this is the prevailing perception of conservatives in America at large. Unfortunately, many believe that conservatives don't care about inequities, that we don't recognize that there are disadvantaged and disabled people, and that we do not believe the government should be involved with helping to equip those who do not have the capabilities to succeed.
I believe conservatives have allowed this perception to persist unchallenged for so long that, without knowing it, we have had to surrender our basic principles in order to get and stay elected. In my four years in Congress, it has become clear to me that very few conservatives are fighting for policies that promote individualism and independence. We have basically given up and agreed to put all Americans in the same boat; but to save face, we sometimes muster up the courage to insist that it must be a cheap boat.
The fact is, we have now forced such large blocs of Americans into the boat of dependency that it has become politically risky to even suggest that people would be better off sailing their own ship. The American people cannot be faulted for abandoning freedom. Misguided policies have subtly forced Americans into a position where few have the will or ability to live independently from government.
Consider several major areas of government dependency:
Almost every parent in America is dependent on the government to educate their children. The government, not the parent, decides where children go to school and what they learn. And it's not that Americans aren't paying a lot individually for education; they are paying more than any other nation. But instead of offering parents the many choices necessary to meet the wide variety of needs of our children, the government crowds all children into the same boat. Incredibly, even as the undeniable evidence of the failure of our public schools becomes more and more apparent, talk of more choice for parents has actually become a political liability for most politicians.
Very few Americans control their own health care. Their employer owns their health insurance while they are working, and after they retire, when they need health care the most, they all receive their health insurance from the federal government. It is obvious to all who have the courage to face the facts that, with the number of retirees soon to double, the current health care system is unsustainable. Many employers are also on record as saying they can no longer afford to continue to pay for the constantly rising cost of health insurance for their employees. In spite of these problems, many conservative politicians seem to be afraid to talk about more consumer-directed health care, and more individualized options for health insurance. There is great fear that if we allow any to get out of the boat, the boat will capsize.
Every American is dependent to some degree on the government for their income when they retire. For a large majority of retired Americans, Social Security is their primary source of income. Without thoughtful changes, the current Social Security system will remain unfunded and unsustainable. And even though the government is taking enough from every paycheck to make even the poorest American wealthy in retirement, most conservative politicians are afraid to talk about the advantages of saving Social Security contributions by workers in personal accounts to give them real wealth and security in retirement.
And these are just a few of the larger government programs that make Americans more helpless and dependent on the government. There are dozens of additional programs, from welfare to farm subsidies, that are rendering more and more Americans incapable of living free and independent lives. Conservatives, those who love freedom and individualism, need a strategy that promotes independence, a strategy that begins to reverse this trend that is destroying the very fabric of America.
But to succeed, conservatives must also recognize that most Americans are already too dependent on government to be won by promises of smaller government and less taxes. It is security more than freedom that Americans crave, and too many are convinced that security comes from a larger and more intrusive government. We must convince Americans that we can make them even more secure by making them more free and independent. We must also convince Americans that we cannot help people by making them more dependent on the government. Dependency destroys people and it will surely destroy our country if we don't reverse the current trend.
As part of developing new political strategies, we as conservatives must recognize that whether as a parent or a pastor, a politician or an employer, our goal must be to develop people's ability to live freely and to empower them to live independent lives.
A good illustration of what I'm talking about is the South Carolina School for the Deaf and Blind. This is a truly amazing place to visit. Folks there have incredible disabilities: Some can't see and some can't hear, and some can do neither.
But the whole idea of the school is to maximize the independence of every individual. It is undeniable that all the students start at a different place and they finish at a different place. But even though the ultimate goal for each student is different, the overall goal for the school is the equalizing factor: maximize the capacity of each student to live freely and independently. One testimony to the success of this goal is that a graduate of the school works in my office and is one of our best caseworkers.
If this institutional goal is adopted by our government, it will
create a fundamentally different way to address the inequities we
face in our society. This approach will not be a novel idea for
anyone who has worked with people with disabilities. If you visit
any rehab center in the country, you will hear the same thing: You
must never let someone who is disabled get comfortable with
dependence, but instead, help them in every way you can to reach
the highest level of independence that is
Now if we use these ideas to develop a new political philosophy, some might characterize the approach as liberal and the outcome as conservative. I believe this is true, because if we redirect government resources to help Americans reach their maximum level of independence, we will create more demand for freedom and independence. As newly emancipated citizens, these individuals will eventually demand less government involvement in their lives.
My perspective comes not so much from my political experience, but from my career in marketing research and strategy development. I believe we can expand the market for freedom in America, but we must first understand why the market is currently declining.
The underlying problem is that, every day in America, more people are receiving benefits from government and fewer are paying the taxes that fund these benefits. As someone once said, "any government that robs Peter to pay Paul, will always have the support of Paul." Unfortunately, there are now more Pauls than Peters in America. Voters are increasingly electing the politicians who promise the most from government because, with our increasingly progressive tax code, new government benefits are virtually free for the majority of Americans.
This situation presents Americans with the most critical and difficult issue of all: our democracy cannot continue if we do not reverse this trend. Democracy depends on the tension between voters and government. When taxes and benefits are evenly distributed, the size and the cost of government will be limited by the voters who don't want to pay for more government through their taxes. But this whole idea has been invalidated by our current progressive tax code that gives more and more people access to personal benefits such as income, health care, and education directly from government, all the while exempting nearly half of the voters from paying for the benefits that they are receiving.
More than two years ago, I told Ed Feulner, the President of the Heritage Foundation, that his organization is a tremendous resource to conservatives in Congress and to people all over the country. But unfortunately, because of the growth in dependency on government, the market for the information and ideas created by Heritage is shrinking in America. The simple fact is, dependent voters don't vote for conservatives. Dr. Feulner responded with a strong commitment to change this trend. The Heritage Foundation has now developed an index to measure dependency and quantify the growth in government dependency. I believe that this Index of Dependency, which is really a measure of the decline of personal freedom, may be the foundation of a new era of conservativism in America.
I hope this index will be used to guide the development of policies that promote independence rather than dependence. In the very near future, we will use this Index of Dependency to create new policies, better ideas for welfare reform, Social Security that builds wealth and independence in retirement, individually owned health savings and health insurance plans, and more choices in education. These are essential policy changes, not just for political reasons, but to restore the very fabric of America.
Some of you may remember seeing the movie The Shawshank Redemption. It told the story of prison life in the 1940s, and it focused on two men and their emotional journey through their years of incarceration.
One of the prisoners named Red, who was a ringleader and one of the more seasoned prisoners, explains what happens to all of us when we live without freedom for too long. He said, "At first, these walls, you hate them. Then they make you crazy. After a while, you get used to them, don't notice them anymore. Then comes the day that you realize you need them."
In America, we can't see the walls of dependency, but they're just as real as the walls in a prison. Misguided government policies are actually training Americans to prefer dependence rather than independence, slavery instead of freedom.
Today, I am hopeful that we will begin the process of reversing this trend, because as we recognize, measure, and quantify government dependency, we will have a tool to transform government programs from those that trap people in dependency to those that develop the capabilities of Americans to live free. By using the new Heritage Index of Dependency to evaluate and create policy, we will once again see the wonder of individualism and independence emerge in the hearts of Americans from sea to shining sea, just like the magic I saw that morning on a little beach on Hilton Head Island.
The Honorable Jim DeMint, a Republican, represents the 4th District of South Carolina in the U.S. House of Representatives.
MUTUAL AID VERSUS DEPENDENCY
David T. Beito
Reflecting on why I chose to become an historian of social welfare history, I realized that the issue of dependency, and the multiple meanings of dependency, has been at the core of my research agenda. A set of apparent paradoxes has always fascinated me.
The first of these was the simultaneous existence of high poverty rates and low rates of dependency on governmental aid or organized charity throughout most of American history. Poverty rates at the turn of the last century, for example, would be considered catastrophic if we faced them today. Upwards of 40 percent of Americans fell under what could be called today a poverty line. Today, by contrast, the official poverty rate is only about 10 percent of the total population.
In addition, high percentages of the poor at the time were illiterate, knew no English, and worked menial occupations. Blacks in poverty, who were then just beginning to migrate to Northern cities, spoke English but suffered from the added problem of intense racism. Yet, though many Americans were poor, very few depended on any form of governmental aid or organized private charity.
Although we do not yet have an "index of dependency" for this period, a few statistics allow us to draw some general conclusions. We know, for example, that the combined impact of tax-funded welfare and private top-down organized charity was Lilliputian by modern standards. Governmental aid at this time mainly entailed indoor relief including orphanages, hospitals, homes for the aged, alms-houses for the poor, asylums for the insane, and schools for the deaf and blind. According to a U.S. Census study in 1905, a total of 4,207 public and private philanthropic institutions were operating in the United States and their combined population (excluding prisoners) was 1 out every 150 Americans. Although almshouses dispensed most of direct governmental poor relief, they housed a minuscule percentage of the population, especially when compared to the caseloads of the modern welfare state. In 1880, 1 out every 750 Americans was in an almshouse. Despite growing urbanization and the arrival of the new immigrants, this ratio actually declined to only 1 out of 920 Americans in 1900.
A second and related paradox has driven my research agenda. Although Americans at the turn of the last century received low levels of aid, and had high levels of poverty, they enjoyed impressive rates of upward mobility. For example, many Eastern European immigrant groups were more likely than the native born to own their own homes by the 1910s and 1920s. Even when governmental aid and organized charity was available, the poor generally avoided it. Writers at the time often noted the existence of a stigma associated with pauperism and dependence on private or public charity.
The co-existence of high rates of poverty and high rates of mobility with low rates of dependence contradicts the conventional wisdom of policy analysts and politicians (many of them conservative ones). Most politicians believe that it is impossible to solve the problem of poverty without governmental aid whether in the form of a hand-out or a hand-up. Yet, Americans at the turn of the 20th century had neither. How were they able not only to survive but move into the middle class?
One part of the explanation was that the poor benefited from an environment that fostered economic freedom. There were no minimum wage laws, indeed few labor laws of any kind, to impede their employment opportunities. Building and zoning codes were minimal, allowing a wide array of housing options. Hence, the poor had maximum flexibility to develop survival and advancement strategies in the employment and housing market.
The fact that few Americans depended on governmental welfare or charities, of course, does not mean that they shunned all social welfare. They were able to turn to numerous mutual aid and self-help arrangements which, for the most part, rested on principles of reciprocity. Because today's recipient could be tomorrow's donor and vice versa, obtaining help from these sources did not carry the same stigma as top-down private or public aid. The most prevalent method of reciprocal relief was informal giving by individuals. At its most basic level, it found expression in countless, and unrecorded, acts of kindness from neighbors, fellow employees, relatives, and friends. For obvious reasons, it is difficult to estimate the dollar amounts involved. This research challenge explains in part why informal giving still has not received great attention from historians.
In this regard, Edward T. Devine, a prominent national leader in the social-work profession, used an article in the Survey in 1913 to remind his colleagues that millions of poor people both survived and progressed without recourse to organized charities and governmental aid. According to Devine, the self-help and informal neighborly arrangements created by the poor themselves dwarfed the efforts of formal social welfare agencies:
We who are in engaged in relief work...are apt to get very distorted impressions about the importance, in the social economy, of the funds which we are distributing or of the social schemes which we are promoting...[I]f there were no resources in times of exceptional distress except the provision which people would voluntarily make on their own account and the informal neighborly help which people would give to one another...most of the misfortunes would still be provided for, and that very probably, the death rate, the sickness rate, the orphan rate, and the rate of physical and nervous exhaustion might be very little, if any higher, than at the present time.
Fraternal societies were especially visible carriers of reciprocal relief. Their ranks included such well-known groups as the Elks, the Odd Fellows, and the Sons of Italy. At the turn of the last century, millions of Americans belonged to as many as 10,000 thousand such organizations in over 100,000 local lodges. At least one-third of all men were members, and among blacks and many immigrants groups, the proportions were even higher. By contrast, fewer than 10 percent of workers belonged to unions during this period.
Resting on a principle of cooperative insurance, fraternal societies provided a wide gamut of social welfare services, including hospitals, homes for the elderly, life insurance, unemployment benefits, and orphanages.
In the conclusion of From Mutual Aid to the Welfare State, I noted that fraternal societies arose from necessity. By this, I meant that the lack of a welfare state led Americans to pool their resources and form non-governmental alternatives. There was also a psychological component to this necessity, however. Even when they had access to aid from government and organized charity, most of the poor rejected it as badge of shame and dishonor. While I am skeptical of many policy proposals put forward in recent years, I would say this. If history gives us
any guide, it is that these two conditions, a popular aversion against dependence on outsiders and sheer financial necessity, are crucial to fostering an environment where mutual aid and self-help can thrive.
David T. Beito is associate professor of history at the University of Alabama in Tuscaloosa and is the author of From Mutual Aid to the Welfare State: Fraternal Societies and Social Services, 1890-1967 (University of North Carolina Press).
WHY WE MUST WEAN OURSELVES OF GOVERNMENT DEPENDENCY
Peter N. Kirsanow
Dependency upon government is perhaps most pronounced in black America. For insight into the destruction growing dependency can wreak, one need not research the malaise in Europe or the dislocation in former communist countries, but rather look no further than our own inner cities.
This is an enormous topic. Why must we wean ourselves of government dependency? There are a multitude of reasons, but in these extemporaneous remarks I will limit myself to three.
The first is a big picture reason. Government dependency is the antithesis of liberty. Consequently, it is the antithesis of America itself. The Founders did not sign the Declaration of Dependence. Since liberty is one of the three macro-rights set forth in the Declaration of Independence, the expansion of the welfare state may rightly be considered a civil rights issue.
Liberty is fundamentally a right of self-determination. But a people dependent upon government are vassals of the state, who have forfeited control over their lives to government.
For example, there are nearly 100 major federal government programs that foster dependency: TANF, Section 8, SSI, SSD, Medicare, Medicaid, LEAP, Head Start, JTPA, School Lunch, Section 533, School Breakfast, Food Stamps, Supplemental Food Program, to name just a few.
Those who get government housing forfeit their right to choose where, how, and with whom they live. Those who get food stamps forfeit choices on where and for what to shop. Those who depend on government education give up the ability to choose how their kids are taught. Dependency is degrading, demeaning, and dehumanizing. It is not an exaggeration to say that it is modern serfdom and it does violence to the notion of an America with liberty and justice for all.
The second reason is its inefficacy; it creates and/or exacerbates myriad pathologies in the dependency class while perpetuating the problems it is designed to address. As Michael Tanner and Robert Rector (from whom many of the statistics used in my remarks come) have noted, in the 20 years before the Great Society's War on Poverty, the poverty rate for blacks declined from 75 percent to 30 percent. But after the Great Society, and $6 trillion in government spending, the rates plateaued and many blacks have remained in poverty for years.
We spend 400 times more per year on social welfare programs than during the New Deal. Yet since the Great Society poverty rates for black children compared to white children have actually gotten worse. Eighty percent of black children spend at least one year on welfare. Blacks are four times more likely than whites to remain in poverty for seven years or more.
And not only do government programs perpetuate these pathologies, but in a circular way they perpetuate themselves. Single motherhood is the primary predictor of poverty status. Single mothers are the cohort most likely to access government welfare benefits. As June O'Neill has shown, a 50 percent increase in welfare results in a 43 percent increase in out-of-wedlock births; which in turn results in even more widespread welfare dependency (by welfare, I don't simply mean TANF, etc. or Medicaid, but the full panoply of dependency programs).
Third, as de Tocqueville, James Madison, and just now Representative DeMint have noted, when citizens figure out that they can vote themselves benefits paid for by others, they will do so with unbridled gusto. This problem is fed in part by our radically progressive tax code, in which the top 25 percent of taxpayers pay 80 percent of all taxes and the bottom 50 percent pay only 4 percent. This doesn't include the millions who pay no taxes whatsoever. And those who pay little or no tax are the ones most likely to access dependency programs. This will continue interminably because in America, Atlas rarely shrugs.
Government has a clear and important role in protecting those who cannot care for themselves. But government has expanded far beyond that role. Indeed, we have succeeded in dividing America into a provider class and a dependent class. (Actually, three classes. The third, a hybrid of provider and dependent is growing most prodigiously). Although this is primarily a class issue, to the extent the dependent class is disproportionately minority, it aggravates the racial divide. It goes without saying that the dependent class will vote almost monolithically for those who provide the goodies on the dependency plantation. We saw this with the advent of the New Deal and it solidified during the Great Society. And it is a plantation, with demoralizing restrictions and perverse incentives.
Ken Auletta showed in his work The Underclass that government dependency not only fosters an entitlement mentality but reduces self-sufficiency and erodes the work ethic for generations. As de Tocqueville said, "the species of oppression by which democratic nations are menaced is unlike anything which ever before existed in the world; it does not tyrannize but it compresses, enervates, extinguishes and stupefies a people until each nation is nothing more than a flock of timid animals of which the government is the shepherd."
So what can we do about this?
It is imperative that we prevent continued stratification of society between providers and dependents. Since it is contrary to human nature for people to stop voting for perceived free benefits for themselves, it is imperative to stop feeding the monster--that is, we must address tax policy. Since those accessing the benefits are paying little or nothing for them, our tax system must be revised so that these individuals more readily understand that they are paying something.
Now that may sound implausible. No way are we going to be able to increase taxes on the bottom 50 percent of taxpayers or the millions more who pay nothing at all. To raise taxes in such fashion is anathema to conservative politicians and political suicide for liberal politicians. But remember what Shakespeare wrote: "Our doubts are traitors and make us lose the good we'd oft might win by fearing to attempt."
So a modest proposal: Modify withholding. There is a reason why the tax bite has nearly quadrupled since World War II. Withholding of taxes from workers' paychecks is one of the most pernicious and deceitful wealth redistribution mechanisms ever devised.
For many people, psychologically, the money taken out of their paychecks was never theirs, so withholding is virtually painless. Raising and maintaining taxes at a high rate is much easier as a result. Those of you who have made the transition from withholding to quarterly tax payments know the pain and sometimes shock of having to write a check for taxes.
Most of those in the dependent class have never in their lives written a check to any level of government. Can you imagine what would happen if everyone was required to pay a portion of their taxes outright as opposed to through withholding? Think of the mental dominoes that would begin to fall: Why am I paying for this? Where is my check going? Why so much? Pretty soon, people would start questioning not just the amount but the need for the program it finances. And inevitably, taxes and maternalistic government would shrink. Not all withholding should be eliminated. Obviously, that would be politically untenable. But perhaps just a tiny or specific amount. For example, the payroll taxes directed toward Social Security.
Which leads nicely to my next point. We need to promote choice and privatization in at least three areas:
The last is perhaps most important because George Orwell was correct. Control of the individual and dependence on the state are joined at the hip.
It is usually the province of liberals to engage in hyperbole. But it is not hyperbolic to suggest that government dependency is mental and spiritual tyranny. In this respect, de Tocqueville may be less accurate than Jefferson, whose oath was "I have sworn upon the altar of God eternal hostility against every form of tyranny over the mind of man." Dependency on government is a form of tyranny. We should be eternally hostile to it.
Peter N. Kirsanow is a Commissioner on the U.S. Commission on Civil Rights.
AN OVERVIEW OF THE INDEX OF DEPENDENCY
William W. Beach
Are we more or less dependent today than 30 years ago on government, specifically on the government in Washington? Has the reliance on the income and social support programs of the federal government been a steadily increasing aspect of American life, or do the very different policy philosophies of administrations over that period make some portions of these past three decades times of rapid growth in dependency and others less so?
Put another way, how much have the social programs of the federal government grown in areas where they might crowd out similar programs and efforts by local governments, community groups, and family networks? Has the civil society, in other words, yielded ground significantly to the public sector?
Though aspects of the same process (mutual and reciprocal aid provided by community networks yielding to aid provided by federal programs), these questions address a number of difficult social, cultural, and economic problems that continue to challenge social scientists. Our own work (described below) elucidates and clarifies aspects of the process, but it does not pretend to penetrate the underlying causes for this gradual but significant substitution.
The purpose of the Index of Dependency is twofold. First, the Index attempts to reflect the pace at which federal government services and programs are growing in areas where private or community-based services and programs exist that address the same or nearly the same needs. Second, the Index is designed to permit straightforward forecasting of its trend over the next 20 years, thus giving policy analysts the ability to estimate the degree to which changed public policy will affect the level and drift of Index values.
To accomplish both these goals, analysts in the Center for Data Analysis of The Heritage Foundation constructed the Index in two parts: 1) a rich historical database that is employed to study the relationship between policy changes and other economic and social indicators and 2) a set of equations that analysts can use to forecast future values of the Index through the year 2020.
Theoretical Motivation of the Index
The Index stands on data drawn from a carefully selected set of federally funded programs. Programs were selected in terms of their propensity to duplicate or substitute for support given by families, local organizations, and communities to people in need. Every community can point to initiatives and projects designed to assist people without adequate shelter, food, income, education, or employment. In times past, local entities provided more instances of assistance than they do today. Consequently, these local organizations played a larger role in the lives of needy people
Over the course of the 20th century, government came to provide more and more of the services that previously had been provided by self-help and mutual aid organizations. Adequate housing certainly is one of the most elemental necessities, and mutual aid, religious, and educational organizations long had provided limited housing assistance. After World War II, the federal and state governments began providing the bulk of low-cost housing. Today, nearly all housing assistance comes from government.
This shift from local, community-based, mutual-aid assistance to government altered the relationship between the person in need and the service provider. In the past, the person in need depended for help on people and organizations in his or her community. The community knew the person's needs and tailored assistance to meet those needs within the budgetary constraints of the community. Today, housing and other needs are met by government workers who frequently have no tie to the community where the needy person lives or know nothing about his or her needs beyond what they learn in the periodic reports of social workers.
In both cases, a dependent relationship exists. The former, however, is a dependent relationship with the civil society and with that society's expectations of the person's future civil viability, or the ability to participate in the aid of another person. The latter is a dependent relationship with a political system. The former is based on mutual and reciprocal aid, and the return to civil viability is essential to the provision of future aid, which, in turn, is essential to the life of civil society itself. The latter is based on unilateral aid in which the return to civil viability is not essential. Indeed, success in the latter, political system frequently is measured by the growth of the aid program.
Beyond housing, aid providers have traditionally been focused on a handful of needs. Obviously, one's health is a matter of nearly equal importance to shelter, and early mutual aid societies frequently provided low-cost health care for their members. Health care assistance for the indigent who were not members of these societies provided through churches and social clubs also typifies the pre-World War II health care landscape.
Virtually that entire health care infrastructure is gone and replaced by publicly provided health care coverage, largely Medicaid and Medicare. Analysts doubtless are correct in noting that Medicaid and Medicare do a better job meeting the health care needs of indigent and elderly Americans than the earlier, largely community-based systems. However, little notice has been paid to the consequences of the shifting relationship between the person receiving health care assistance and those paying for it. Today, the dependence on government for indigent and elderly health care is nearly complete. The protection against policy change provided the government health care system's patients is so strong that virtually no change other than increases in coverage are permitted. In short, the measure of success is growth of the program.
Next to housing and health care, income assistance during a person's working life and during retirement clearly addresses elementary needs. Again, local, community-based charity nearly always included an income component or near-income substitutes, like free food. This element of mutual and reciprocal aid continues to have local prominence, but, as with its housing and health care counterparts, government's role has become dominating since World War II. Today, Social Security provides nearly all of the income in indigent and near-indigent households. The federal government's Temporary Assistance to Needy Families and other supplemental income insurance programs (both federal and state) address the income needs of low-income workers. Unemployment insurance payments provide nearly all of the income to temporarily unemployed workers that once was provided by unions, friendly societies, and local charities. Indeed, income assistance is quickly becoming a government program with little if any connection to the local civil society.
Components of the Index
The Index consists of five broad categories of programs:
Federal programs and state activities supported by federal appropriations were selected to fit in each category. To be included in the initial data set, each program had to meet the standards set up by the definition of dependency: that a reasonable argument could be made that publicly provided goods or services could crowd out or constrain private or local government alternatives and that the immediate beneficiary had to be an individual. This standard ruled out any expenditure by the states on programs that would otherwise meet the definition of dependency. The exception exists when the state is directly funded through the federal government and acting as an intermediary.
Elementary and secondary education is the principal state-based program excluded under this stipulation. Post-secondary education is the only part of all government-provided education included in the Index.
Also excluded are military and federal employees. A national defense is a primary function of the government and thus does not promote dependency in the sense used in this research.
Indexes are intended to provide insight for their users into some complex phenomena that either need not be followed in all of their detail or are so complicated that simplification through arbitrary but reasonable rules is required for obtaining anything other than a rudimentary understanding. Thus, the famous Consumer Price Index of the U.S. Department of Labor Bureau of Labor Statistics is a series based on an arbitrarily selected "basket of goods" that the Bureau surveys periodically for price changes. The components of this "basket" are given weights to reflect their relative importance to overall price change, which results, for example, in energy prices being more important than clothing prices. Multiplying the weight times the price produces a weighted price for each element of the CPI , and summing up all of the weighted prices produces, roughly, the CPI score.
The Index of Dependency generally works the same way. The raw (or unweighted) value for each program (or that year's spending on that program) is multiplied times a weight. Summing up these weighted values produces the Index value for that year.
The Index uses the following weights:
The weights, which sum to 100 percent, are "centered" on the year 1980. That means that the weighted values for the Index components will sum to 100 for 1980, thus giving the Index a reference year from which all other Index values will be evaluated.
The year 1980 was chosen because of its apparent significance in the history of American political philosophy. Many students of American politics believe that historians will view 1980 as a watershed year in U.S. history. It may mark the beginning of decline in left-of-center public policy and the emergence of right-of-center challenges to policies based on the belief that social systems fail without the guiding hand of government.
Our Index certainly reflects such a watershed. The drift of the scores clearly is upward over the entire period with the exception of two periods: the periods 1980 through 1988 (Index scores of 100 and 101) and 1994 through 2000 (Index scores of 125 and 123).
These two "plateaus" in the drift of the data suggest that policy change may have a significant influence on the growth rate of the Index. After all, the early 1980s saw some growth in domestic programs reduced to pay for increased defense spending (which responded to policy efforts to end the Cold War); and, the 1990s saw significant policy changes in welfare and public housing, all of which reduced the growth rate of the Index.
We also have calculated Index values by presidential tenure. For example, the Index stood at 80.6 in 1977 when James Earl Carter took office. It had risen to 100 by the end of his administration. The percentage change in the Index over that period is 24.1 percent.
It hardly surprises that the largest jump in the Index occurred during the administration of Lyndon Johnson. Not only did the Johnson years see the launch of Medicare and other health programs, but LBJ vastly expanded the federal government's role in providing and financing low-income housing. It is somewhat more surprising, however, that the Nixon/Ford years saw a jump of 122 percent in the Index (from 34.7 to 77.1). However, these years saw Republicans implement and fund substantial portions of Johnson's Great Society programs.
The two periods of more conservative public policy with respect to the components of the Index stand out clearly. The slowdown in spending increases during the Reagan years and welfare and housing reform after the 1994 elections produced two periods of slightly negative change in the Index. The return of budget surpluses during the last years of the Clinton Administration led to significant increases in spending for all of the components, particularly education and health care. Thus, the Index has resumed growing at roughly the average pace of the past 25 years.
Calculation of Covered Population
The Index reflects the growth of federal government programs that arguably crowd out or substitute for similar initiatives at lower levels of government or within the organizations of civil society. While Index values do not depend on the number of people who receive support through these programs, that number nevertheless sheds additional light on what the Index shows.
On the eve of the Great Society programs, some 18 million people received assistance through those programs. Today, 17 percent of the total U.S. population, or 49.7 million, receive some level of assistance through the programs covered by the Index.
Growth in income and non-financial support among program participants has accompanied the expansion of people receiving assistance. Inflation-adjusted per capita support (both financial and non-financial) stood at about $10,000 in 1966. By 2001, this support had grown to nearly $24,000.
Data in the Index and complementary estimates of program populations raise concerns about the ability of local governments and civil society organizations to provide aid and other assistance. They raise as well a traditional republican concern about the long-term viability of political institutions when a significant portion of the population becomes dependent on government for most or all of their income.1
A ratio of 1 out of 6 Americans (or 17 percent) may or may not be sufficiently high to trigger this concern. However, this percentage grows to 24.8 percent when the number of federal and state employees is added to the population of Americans receiving aid through Index programs. In 1962, the sum of these two categories (Index participants and government employees) stood at 26.9 million. The estimate had grown to 70.6 million by the end of 2001, or had increased by 162 percent since the early 1960s. This percentage growth is three times the growth rate in the U.S. population over this same period and twice the growth rate of the population aged 65 and above.
Public policies appear to matter in the growth of the Index of Dependency. Its rapid increase in the 1960s and 1970s marked a commitment by the federal government to solve local social and economic problems that had previously been the responsibility of local governments, civil society organizations, and families. The annual growth rate in the sum of government employees and the population covered by Index programs grew dramatically, even if one accounts for the military buildup of the Viet Nam War in the middle years of the 1960s.
The 1980s and 1990s generally witnessed much slower growth in the Index. Indeed, had the period 1989 through 1993 reflected the policies of the periods 1981 through 1988 and 1994 through 1999, the Index would have decreased in value. However, rather than fall, the Index in 2001 appears to have regained the growth rates it maintained in the Carter and senior Bush years.
While this reinvigorated Index appears to owe its newly found vitality mostly to the spending opportunities provided by budget surpluses rather than to dramatic reversals in conservative public policy, several key policy debates of the next few years (for example, welfare reform, federal support for higher education, and health care reform) will likely determine the Index's rate of change for the next decade, if not well beyond.
William W. Beach is the director of the Center for Data Analysis at The Heritage Foundation.
1. For histories of this republican concern, see Bernard Bailyn, The Ideological Origins of the American Revolution (Cambridge, Mass.: Harvard University Press, 1967) and Gordon S. Wood, The Creation of the American Republic, 1776-1787 (Chapel Hill, N.C.: University of North Carolina Press, 1969).