Statistics are odd things. They can grab one’s attention; they can utterly fascinate, or they can make one’s eyes glaze over.
Election seasons are a great time for such examples – candidates, parties, and commentators all use statistics to make their points, but all too often, the important issues are lost in the shuffle of challenges or defenses to the statistics.
The modern welfare state presents such a problem. Consider the “rise of the Obamaphone” in recent years, as a three-decade-old policy of providing the most indigent with a subsidized landline has been translated by the current administration as a commitment to provide 12.5 million voters with the latest cellphones. Honestly, shouldn’t the recipients be offended that their party hopes their votes can be bought with a free phone?
First, the statistics: there were about 7.1 million federally-subsidized cellphones in 2008, and that number nearly doubled to 12.5 million during the Obama presidency. Politicians are sure that these statistics will affect the November elections, especially with the news that about a million of them are in Ohio, the battleground of all battlegrounds.
There are similar statistics worth considering. Over 46 million people currently receive taxpayer-funded food stamps. In a nation of 300 million, that’s a sixth of the population! Officially published unemployment rates are consistently over 8%, but are really north of 15% when one counts the part-timers, the underemployed, and the forcibly retired. Many cities and states are far higher, with urban areas, ethnic groups and age groups suffering an unemployment rate over a horrifying 33%. Unemployment insurance and all these other forms of government coverage are bankrupting local, state, and federal governments and businesses from coast to coast.
The national cost of spending
Yes, it’s certainly true that these statistics are terrifying. The government should not be spending so much on these programs. As the old saying goes, government cannot put any coin in your right pocket that it has not already taken out of your left.
The more we spend on any program, the more we must take from the public. Nothing is free from the government; Washington and our state capitals must either raise the money today in taxes, or borrow today to raise more taxes later, or monetize it by printing more money and devaluing the currency for everyone. All these methods make every product and service cost more, usually much more, than it appears.
For example, if our free phone is only ten dollars per month – the government pays the cellphone provider $120 per year for each allegedly indigent person to have one of these phones – then it actually costs much more than that, for two reasons:
- One is that the government doesn’t have $120 in surplus to pay today, so it will really cost three, four, or five times that, when we finally finish paying off our national debt in two or three generations (if ever) and actually finish paying off that bill, with interest.
- The other is that the phone actually costs the provider more than the provider’s agreement with the government, so part of the cost – the part in addition to the $10 per phone federal subsidy – is actually paid by other private cellphone subscribers. If a product ought to be $15/month, and they can only get $10 from the government (through the fee on our bills, or other sources), then they must split the other five dollars in cost across their non-government customers.
All Americans therefore pay several times, in several ways, for our neighbors’ “free” phones. Our taxes go up today, our children’s taxes will go up tomorrow, and our own phone bills go up as well, both today and tomorrow, for as long as these double-subsidized programs remain in place. It isn’t even “robbing Peter to pay Paul,” because Paul too, who gets the benefit today, sees his own other taxes or employment prospects suffer as a result. So it’s “robbing both long-term to pay one short-term.”
What do we get for it? A segment of the society gets something from the government. At a crippling cost of half to three quarters of government spending, an ever-growing segment of our society receives entitlements of all sorts, from phones to food, from housing to college. And not only is there no end in sight, there’s no end to the rate of growth, in sight, either.
As the entitlements grow, the taxes climb, the spending climbs, and government crowds out the private sector. We can say that quite literally; the nation is blanketed with towns in which businesses closed down and government offices moved in. We’ve all seen neighborhoods in which whole city blocks have flipped from business district to government district, as the loss of one after another of yesterday’s employers has “necessitated” new welfare offices, unemployment offices, police precinct houses, and public-private partnership “charities”… all of which would be unneeded if the region was growth-oriented enough to keep the people employed.
People need to eat, people need to be educated; people need to be housed and clothed… and today, some people even think they “need” a phone. When the government offers to provide all these things, people forget the one need that takes care of them all without reliance on government: people need a job.
But the growth of government, and specifically, the growth of entitlement spending, has crowded out those very jobs. As entitlement statistics have climbed, so too have the unemployment statistics, and many forget which direction the causal relationship really goes.
Before voters who receive such things decide to base their votes on which candidate promises them the most, they should consider what this largesse actually does to them, personally. Because, in the end, all these statistics aren’t just a danger to our election season and a crippling cost to our economy; they’re also a danger to the recipients.
The personal cost of spending
When an unemployed person receives a little momentary help – an excused postponement of utility bills, for example – this makes sense, and watching the continued growth of the debt, even while payments are suspended, can be a wonderful inspiration to keep the jobseeker focused on the goal of finding or creating a new (and hopefully better) job.
When the unemployed person – or even an employed but not wealthy person – receives direct assistance, however, it warps the system. Not only does it add to the burden of government, raising his own and everyone else’s taxes, but in addition, it warps the individual’s own situation.
These programs come with rules, as they should. But if you get some benefits for keeping your salary under $20K, it may cost much more than the difference to be worth it to get a salary over $20K. And if you get benefits for keeping your salary under $50K, then it costs even more to be worthwhile to work for that next raise too. There are benefits in this country for people making $100,000 per year! Not the same ones, necessarily, but the government writes a LOT of checks, each with different qualification thresholds, each one quickly becoming a financial “necessity,” each one becoming harder and harder to give up… each one an additional obstacle, discouraging the recipient from advancing.
Our country is now at the point that the vast majority of us factor government benefits into our life decisions. We choose what city to live in, based on whether the taxpayer-funded public schools are good or bad. We sometimes even choose our very state, based on the quality of its subsidized colleges. There might be a better job with better opportunities in another state, but we choose this one for the taxpayer-funded college system. After spending ten or twenty years paying taxes to fund Champaign-Urbana, or Madison, or William and Mary, one would feel such a loss in moving to another state with poorer state colleges (in one’s own opinion, anyway – others may disagree).
Retirees might enjoy working, and want to return full time – and their employers may want them back! – but the fear of diminished Social Security benefits puts a ceiling on their willingness to work. The company suffers as a result, missing out on the knowledge of the most experienced workers they know.
But worst of all is the effect of entitlement benefits on the poor and the working poor themselves. The more our government hands out to the unworking, the more expensive an entry level role has to be, just to be worthwhile. Imagine trading $20,000 in tax-free benefits for $20,000 in taxed benefits. Or thirty for thirty. Or even forty for forty. The system heavily discourages the transitions from unemployment to work, or from a lesser job to a better one. It discourages advancement.
Hard-working people don’t lose their work ethic overnight, but after years, or after generations, there’s eventually no more work ethic to lose. People need to work for necessities, and strive for luxuries. When you’re working a forty hour week just to get by, you’re motivated to do better so that the forty hours can pay for luxuries as well. And then once you get a taste of some luxuries, you’re motivated to work harder still, to have a chance at more and more luxuries – the better home, the better computer, the better television, the better restaurants, the better entertainment.
This is the path to the American Dream, the honorable, responsible desire to focus your efforts on a career that will earn you the kind of life you desire.
Entitlements warp this focus. Some people work hard for housing; now we give it away free. Some people work hard for a cellphone; now we give that away free too. Some work hard – focusing their entire careers on being able to send their children to the best college. What happens to our work ethic if that too becomes taxpayer-funded, and therefore, “free”?
Someone still has to pay these bills. Someone has to pay for the phones, the housing, the food, the schools. Our nation needs growth – not stagnation, not the status quo, certainly not the current downward spiral – we need real growth to be able to pay these bills and enable the path to prosperity that we all desire.
If all you have is a room provided by your neighbors, groceries provided by your neighbors, a war zone of a public school provided by your neighbors, and a cellphone provided by your neighbors, then all you really have, all you really own, is your dependence.
The modern American Democrat emphasizes these programs, and many more, because they are counting on ever more Americans voting for the Democratic Party who robs them of opportunity… for the same Democratic Party that warps their priorities and locks their futures in a downward spiral.
The Democratic candidate for public office is counting on people voting against their own best interests; the candidate counts on their voting block voting to remain dependent, to remain limited. You’ve heard of the glass ceiling, so difficult to break through? Try being capped by the concrete ceiling of the welfare state, for now and forever. The modern American Democrat counts on his constituents embracing their dependence.
It is the job of the Republicans, the job of the conservatives, to remind them which party is really looking out for their best interests, long term: because the right knows that when all you have is dependence, then you have nothing at all.
Copyright 2012 John F. Di Leo
John F. Di Leo is a Chicago-based Customs broker and international trade compliance lecturer. A former chairman of the Milwaukee County Republican Party, he has been a recovering politician for over fifteen years now.
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