The Corner

A Nation of Dependents? Breaking Down the Numbers

Since the topic of dependency has been in the news in the last 24 hours, I thought I would post this chart I made a few months ago showing that 49 percent of Americans live in a household that receives government benefits.

The data (from the third quarter of 2010) comes from the Census Bureau. The red bar represents the percentage of the population living in a household receiving benefits from one or more federal and state programs. The green bar represents the share of the population receiving benefits from at least one means-tested program (a program that targets low-income people with non-welfare income) for food, housing, or children’s aid, etc. The blue bars give a breakdown of the population living in households receiving benefits from various federal programs. (Note that the bars do not add up to 100 percent because it is common for people to receive benefits from more than one program.)

Not surprisingly, spending on entitlement programs is one of the main drivers of U.S. debt as such programs have the most recipients. Specifically, 16 percent of the population lived in a household receiving Social Security benefits, and 15 percent in a household receiving Medicare benefits. Medicaid benefits had the largest share of dependents, with 26 percent of the population living in a household receiving such benefits.#more#

About 35 percent of Americans in 2010 lived in households that received benefits from at least one means-tested transfer program. Out of these programs, more than 46 million — or 15 percent of all Americans — lived in households receiving food stamps, 2 percent received unemployment compensation, and 6 percent benefited from supplemental security income. The percent of the population living in a household receiving benefits for low-income families with children reached 8 percent, and those receiving temporary assistance for needy families reached 2 percent.

Means-tested welfare spending at both federal and state levels has grown faster than any other category of government spending. Robert Rector of the Heritage Foundation found that annual spending for means-tested programs increased by nearly 300 percent between 1989 and 2008. According to Rector, the growth in means-tested aid “greatly exceeded the growth in government spending on education (143 percent) and defense (126 percent)” during this same time period.

I should note that not everyone receiving benefits belong to the 47 percent of tax units not paying federal income tax, though many do. For instance, most people receiving Social Security are taxed on their benefits. However, it is true that a growing number of Americans do not pay the taxes that are supposed to fund these programs. According to the Tax Policy Center, 14 percent of Americans don’t pay either income or payroll taxes. That number has grown at the same time that the number of recipients has grown, a situation that is plainly unsustainable.

If the government wants to achieve any sort of financial balance, it needs to either cut the number of recipients or increase the number of people paying for social-welfare programs. Politically, that won’t be easy, but it’s the only possible way to get spending — and debt — under control.

Here is a piece I wrote for the Examiner a few months ago on this issue.

Also, here is a chart I made a few weeks ago about the growth in food stamps.

Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University.

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