The second pillar of conventional wisdom is that our expanding entitlement society can coexist with the American experiment as we have traditionally understood it. Despite many surveys showing that the public vaguely believes the government is too big and tries to do too much, the Gallup polling organization finds that a solid majority of Americans oppose cuts to government entitlements of virtually any kind, from Social Security and Medicare to farm subsidies to aid for the poor.
Why the antipathy to any cuts in spending? Not to put too fine a point on it: Millions of us have our hand in our neighbor’s pocket.
My colleague Nicholas Eberstadt has ignited a furor with his new book A Nation of Takers, in which he shows that Americans have created an entitlement state by systematically voting to share others’ money. Today, more than half of American households receive government-transfer benefits, and the Tax Foundation notes that nearly 70 percent of Americans now take more out of the tax system than they pay into it. Entitlements have doubled as a percentage of the federal budget since 1960, and at the same time the federal budget has exploded as a percentage of GDP. Today, two-thirds of our entire government is devoted to transferring money and services from earners to recipients. This expansion is completely bipartisan, and has occurred more under Republican presidents than under Democratic ones.
It’s not true that Americans are simply consuming what they have earned in their working years. According to scholars at the Urban Institute, the average two-earner couple retiring today will take three times as much out of the Medicare system as they paid into it, even after inflation and interest are accounted for. Meanwhile, the number of Americans receiving disability benefits has exploded from 455,000 in 1960 to 8.6 million today.
Living off of others is the exact opposite of what attracted most of our ancestors to America. Their goal was to make it on their own hard work and merits. Few would have objected to a safety net for the most disadvantaged citizens, but our current system, with its massive transfers, would have been noxious to most voters just a few decades ago.
In fact, it was none other than Franklin Delano Roosevelt — the man who introduced many of the entitlements that subsequently exploded — who said, “The lessons of history, confirmed by the evidence immediately before me, show conclusively that continued dependence upon relief induces a spiritual and moral disintegration fundamentally destructive to the national fiber. To dole out relief in this way is to administer a narcotic, a subtle destroyer of the human spirit.” Roosevelt obviously could not see the damage that entitlements, as expanded by later administrations, would ultimately inflict on his country. We can see, but have become willfully blind.
And if we want to see where all this leads, we can look at Greece and the other European social democracies in full economic and social decline. That is our future — unless we change course.
The third pillar of today’s conventional wisdom is that the government can and should pick the right course for the American economy to follow. Today, most Americans believe the president and Congress have the wisdom and responsibility to guide our economy via bailouts, Keynesian stimulus, and subsidies to the supposed industries of tomorrow. In 2009, Gallup found that a majority of Americans supported the passage of an $800 billion stimulus package (although three in four Americans later said that most of the money had been wasted).
Adding insult to injury, politicians use the public’s demand to “do something” as an excuse to pass out spoils to their politically connected cronies. Perhaps the most shameless case of this cronyism is that of public-sector unions. These organizations collect dues from their members and use them for political contributions to sympathetic politicians. The politicians, in turn, support collective-bargaining agreements that hand public-sector employees pay and benefits that are generous compared with those of their private-sector counterparts.
Effectively the same pattern can be seen in corporations that are favored by the government. From car companies to “too big to fail” banks to green-energy firms run by political operatives, billions of tax dollars each year accrue to those who collude with politicians rather than compete with each other.