T he dangers of the entitlement society
By David Watson
The French political thinker and historian, Alexis de Tocqueville, was best known for his book “Democracy in America.” After traveling across the country for two years, in 1835 Tocqueville wrote of America and its emerging democratic order. Tocqueville wrote of his travels through America at a time when the market revolution, Western expansion and Jacksonian democracy were radically transforming the fabric of American life. Of his many observations the following quote from his writing is a prediction that we are beginning to see come true today, as an entitlement mentality increasingly grips this nation.
Tocqueville observed, “A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship. The average age of the world’s greatest civilizations has been 200 years.”
So here we are, 177 years later and the words of the Frenchman are ringing true. We have nearly spent ourselves into oblivion, and there is no appetite for reining in the bloated federal government’s budget. As we view the financial chaos around the world in countries like Greece and Spain, we see where overspending can lead.
Last May, Governor Romney was giving a speech at a fundraiser in California, when he made an observation about the number of people in America who don’t pay any federal income tax. This group he went on to say, which according to the non-partisan Tax Policy Center is now at 47 percent of Americans, are probably voting for Obama no matter what the candidates’ positions might be on the other critical issues of the day. Romney reasoned that these voters, like those in Alexis de Tocqueville’s example, are not likely to vote against self-interest by supporting a fiscal conservative who might not extend the benefits they have come to enjoy.
While Romney’s reasoning is sound, his math is not exactly on all fours. While it is true that there are 47 percent of Americans who are not paying a net figure in income tax, not all members of this group are on the government dole while having never contributed to society.
In fact, (again according to the Tax Policy Center), of the 47 percent, nearly 61 percent of that group (28.3 percent of the population) pays some form of payroll taxes, such as Social Security, Medicare and even some income tax. However, these taxpayers have enough deductions and tax credits that their federal income tax liability is zero. Included in this group are taxpayers who participate in the Earned Income Credit (EIC), designed to redistribute the wealth by helping low-income filers receive money back from the federal government, usually returning more to them than they paid into the system. Many eligible taxpayers for the EIC are single parents and were eligible to receive a maximum of $5,666 for tax year 2011 with the credit. While polling would suggest that a large majority of this group supports Obama and the liberal agenda of wealth redistribution, Governor Romney is incorrect to assume that all members of this group are so inclined.
The balance of the 47 percent, about 10.3 percent of the population, are retirees who receive a retirement benefit but at such low levels that the tax code exempts them from paying income tax on that income. Again, according to polling, Governor Romney would be wrong to assume that this is a monolithic voting block for Obama. He would be equally wrong to assume that the 53 percent is of a like mind and will support the policies of financial restraint Romney and the Republicans are promoting. Many in that group support the redistribution policies of the President and will be voting for him.
While Romney’s comments may not have been politically correct and were offensive to many Americans who fall in the 47 percent, they’re not entirely detached from reality. A growing number of Americans do rely on government entitlements, and their determination to protect those benefits, despite the overall effect on the country, is a political reality.
Over the past half-century, the growth of entitlement payments has accelerated. U.S. government transfers to individuals in 1960 totaled about $24 billion in current dollars, according to a report from the Bureau of Economic Analysis. Fifty years later, in 2010 that total was almost 100 times as large. Entitlement transfers to individuals have grown 727 percent over the past half-century, even after adjusting for inflation and population growth. In 2010, government at all levels oversaw a transfer of over $2.2 trillion in money.
Many of these dollars represent a return of money paid into the government during those individuals’ working lives. But many of the dollars paid out far exceed any contribution paid into the system. In 1960, entitlement payments accounted for well under a third of the federal government’s total outlays. But in the last 50 years, entitlements as a percentage of total federal spending have skyrocketed. They accounted for nearly two-thirds of all federal spending, with all other responsibilities of the federal government making up barely one-third.
America’s ever-expanding desire for entitlement benefits has placed the country on a financially untenable trajectory. What Governor Romney should have said is that unless we want to make a prophet out of Tocqueville, something has to change. As long as our federal budget generates uncontrollable levels of expenditures and public debt, our nation is on an unsustainable fiscal path. That goes for the 47 percent and the 53 percent.