September 22, 2012

ROBERT SAMUELSON: Romney’s Chance To Challenge The Welfare State:

The fact that roughly half of Americans receive some government payment to which they feel morally entitled is a big part of our budget paralysis. It’s an inconvenient fact, but it’s still a fact.

Dealing with it ought to define the next president’s mission. Somehow, he must question the status quo without insulting the roughly 150 million Americans who receive federal benefits. Who deserves support and why? How much and under what conditions? Unless we ask these questions and find grounds for trimming some benefits, the budget impasse will continue and risk dangerous outcomes: a future financial crisis; crushing tax increases; or draconian cuts in programs (defense, research, highways) that aren’t payments to individuals.

This is arithmetic, as Bill Clinton might say. In 2011, payments to individuals were 65 percent of federal spending, up from 26 percent in 1960. America has created a welfare state, whether Americans admit it or not.

Actually, the share of people who receive federal benefits exceeds Romney’s 47 percent. Based on its Survey of Income and Program Participation (SIPP), the Census Bureau estimates that in mid-2011 — the latest available figures — the number of people with benefits came to 149.8 million, or 49 percent of the population. But this figure is too low, because SIPP doesn’t include several major programs (farm subsidies and college loans and grants). With these, the total probably exceeds 50 percent.

This will end when the federal government’s finances break down beyond the ability of the current Fed/Treasury jiggery-pokery to conceal it. Something that can’t go on forever, won’t. It’s important not only to try to bring things under control before a collapse, but also to explain what’s going on so that if the collapse happens anyway — say because Obama gets reelected — people understand what’s happening and why. Romney/Ryan can lay down markers there, too.

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