America Is a Welfare State

Let me find a story in the stack here on the budget. This is going to shock you. It may not because so many of these things, so many of these stories have come down the pike in recent years. It’s basically a story on just how much of the budget is actually left over after it all goes out. Ah, yes! It’s a Bob Samuelson column in the Washington Post who I quote feverishly, regularly. He’s on a roll lately. He says, (paraphrased) “When are we going to finally admit in the United States that we are a welfare state?” We hide behind such terms as, oh, “entitlements,” Medicare, Medicaid, Social Security, all of these nice-sounding terms, when in effect what we have — social insurance, entitlements — is a welfare state. You take the whole federal budget, and after payments to people and defense and debt interest, one-seventh of the budget is what’s left. One-seventh of the budget is discretionary!
Well, you say defense is discretionary, too, because it comes up for debate every year, but six-sevenths of the budget is already allocated. The budget is $2.9 trillion! Yes, we’re skirting the edges here of $3 trillion. He says, “Spend a moment studying the adjacent table.” I don’t have the adjacent table here in the web version of the column I printed out, but he says, “It illuminates why another of our annual budget battles … seems so fruitless and (yes) repetitious. Every year we hear complaints about accounting gimmicks and unrealistic assumptions. There’s a ferocious crossfire of charges and countercharges. Hardly anything ever gets resolved. Budgets almost always remain in deficit (41 out of 47 years since 1960),” and something that I don’t think he says here is that every year, despite spending gobs and oodles more — $2.9 trillion! — we hear about “Draconian cuts.” We hear about hardships on certain groups of people. “The table shows the rise of the American welfare state. In 1956, defense dominated the budget; the Cold War buildup was in full swing. The welfare state, which is what ‘payments to individuals’ signifies, was modest. Now everything is reversed. Despite the war in Iraq, defense spending is only a fifth of the budget; so-called entitlement payments to individuals are almost 60 percent — and rising. In fiscal 2006, the federal government spent almost $2.7 trillion. Social Security ($544 billion), Medicare ($374 billion) and Medicaid ($181 billion) dominated.
“There was $199 billion more for payments to the poor, including the earned-income tax credit and food stamps. Almost no one wants to slash these programs. They have huge constituencies; they’re popular. Paradoxically, their invulnerability and size also protect much of the rest of the budget. Look again at the table. After payments to individuals, defense spending and interest on the debt (which must be paid), only about a seventh of the budget remains. Many of these remaining programs are widely supported. Does anyone really want to end the National Institutes of Health at $28 billion? Or how about the $41 billion we spend to support federal courts, prosecutors and police (the FBI, DEA, Border Patrol),” and so forth? “It might help if Americans called welfare programs … by their proper name, rather than by the soothing (and misleading) labels of ‘entitlements’ and ‘social insurance.’ That way, we might ask ourselves who deserves welfare and why.”
Excellent points. He’s been writing about this for a long time. So when I hear these guys whine and moan about the amount of money we’re spending in Iraq and so forth and they keep demanding we spend never ending sums down the black hole of social welfare programs that have not ended poverty and never will, it burns me up. I just have to tell you — your tax rates are going to start climbing. Mine can’t get any higher unless they raise ’em, which they’re going to do, by the way.

BREAK TRANSCRIPT
RUSH: Barbara in Fayetteville, North Carolina, I’m glad you called. Welcome to the program.
CALLER: Thank you very much. It’s a pleasure to speak to you. I’m a little bit nervous because you’re the smartest man I’ve ever talked to in my entire life, and I’m 70 years old, and I’m taking issue with your Social Security remark about us being a welfare state. I worked two jobs my whole life. Social Security and Medicare has beaten my checks up something fierce — and believe me, I’ll die before I get all my money back. And not only that, if the government would have never touched Social Security, let it sit there and draw all the interest and place it in a place where it was safe, and let us draw interest, we wouldn’t have a problem with Social Security or Medicaid today. Now, if you can show me where I’m wrong, I’m welcome to listen.
RUSH: Well, look, I agree with the latter part of what you said, but the Democrats are not going to allow you — or any other recipient of any welfare payment to control it — because then you don’t need them. If the private sector allows your, quote, unquote, “payment” or series of payments to add up to more money than it would if it were just handed out by the government, then they’re really going to look bad. They’ll never allow that to happen. The president tried the whole notion of redoing and reforming Social Security. They sold it wrong because there’s a word in there called “security,” and people don’t want to mess with the word. When they hear “privatization,” it was easy for the issue to be demagogued and for the Democrats to say, “Your money is going to Wall Street fat cats and look at what happened, like the stock market crashed in 1913! The stock market crashed in 1986. You can lose everything you’ve got.” Of course when that’s all you’ve got you’re not going to take the risk, so we’ll have to come back to it another day.
As to your notion that Social Security is not welfare, Barbara, I’d have to take issue with you. I think if you’re 70, you have long ago collected your contributions to Social Security, and in fact you are now — your Social Security checks are — being paid for with Social Security taxes by people who are working today who think their checks, their deductions are going into an account with their name on it. Of course, I don’t think too many people believe that anymore. But right now, it takes the taxes of three workers to pay the Social Security benefits of the average recipient, and that number is going to soon go to two. The burden for existing Social Security recipients is being spread over more and more people, actually, which is less take-home pay for them. That’s why Robert Samuelson in the Washington Post is calling this “welfare.” The program has become a welfare program now, because people who are working today are paying your benefits. You long ago collected everything you put in.
CALLER: I haven’t. I just started collecting last year, and I guarantee you I won’t be around to collect it all. What if I had taken all that money that they took from me and put it in a private account?
RUSH: Wait a second. What do you mean you just started collecting last year? I keep getting things from the Social Security Administration telling me what I’ll get if I start collecting at 59, if I start collecting at 65. What do you mean you just started collecting? You’re 70 and you just started collecting when you’re 69?
CALLER: I quit working, and I was making too much, and I didn’t want to interrupt that. I wanted to get as much Social Security. Well, you know what I get? $904. My mortgage on the house is $830.
RUSH: You are the exception. I’m here to tell you: you’re the exception. I can give you other examples. My grandfather — who lived to be 104 and worked until he was 102 — tried to send his Social Security checks back for 30 years, and the government would not take them.
CALLER: Well, you know what?
RUSH: You can’t do it. You cannot do it. They won’t take the money back.
CALLER: Say this. If I had put all that money into a savings account and just drawn 3% interest, I would have enough money to live on for the rest of my life.
RUSH: Right. On the beach somewhere!
CALLER: They wouldn’t be able to go into my private account and say, “Here, let me borrow this and put it over here,” where I don’t need it, but I’ll put it over there because I don’t want people to think that I’m spending too much of your tax dollars.
RUSH: Well, hold it a second. What you have to do here… A lot of people I know that get Social Security or Medicare or Medicaid don’t like it when they hear that they’re on welfare because you work, and you worked until you’re 69, and you paid money into the accounts. You had your taxes deducted and so forth. That’s the point that Mr. Samuelson is trying to make. Until you get over being concerned about what people are going to think about you and start realizing the reality of what is happening, when fully six-sevenths — well, let’s say five-and-a-half sevenths of the federal budget is being spent on people, what do we have? We have a welfare state, and we have a welfare state that is growing, and the liberals have spun it very well. “No, it’s not welfare! I work! Why, I paid into that. Why, I’m owed that. Why, I served my country all these years. I’ve paid my taxes. I’m owed my Medicaid. I’m owed my Medicare.” We have got this mentality, and it’s been around for a long time, that people think America owes them something because they’ve been good Americans. I don’t care how you slice it. I don’t care how you feel about yourself. You have to throw that out, and the reality is — if we’re going to fix the problem, you have to throw it out.
Now, if people don’t mind being in a welfare state, then we’re never going to fix it, and as long as people vote selfish interests — which they do — it’s going to be a very, very difficult thing to fix this, and what’s going to happen eventually — and I don’t know when — but the people who are being taxed to support all of this money being spent on other people are going to see their tax rates raised so high that they’re going to say, “Screw it!” It isn’t going to be worth working anymore. When 70% of their salary is taxed to pay benefits for other people, they’re going to say, “What’s the point of this?” No matter how hard they work, they’ll never be able to get ahead. That’s the collision that we’re headed to here at some point. There are different predictions on when, 2030, 2050, or what have you, but it’s clear that not only is there a welfare state, there’s a welfare state mentality throughout much of the country. Why do you think that the Democrats are so eager for illegal immigrants? The Democrats need victims, and as the economy does better fewer and fewer people actually need to be on some sort of federal dole, like they have to advertise food stamps every year. The Democrats need new victims.
So what better than a low-paid, undereducated workforce from a foreign country or two that has no hope of making out very well? Get ’em into the country, pay ’em substandard wages, and then get ’em on the dole. It’s called growing government. It’s called socialism. It’s called making sure that as many people need the government as possible, and it’s been remarkably successful since good old FDR started this whole ball rolling. When 5-1/2 sevenths of the US budget is spent on people, and all of those people think they are owed it and that they deserve it, and that it isn’t welfare? It’s been a pretty good trick. There’s a breaking point someplace, everybody agrees. It’s just they think nobody today who is alive will be alive when it happens, none of the policymakers, anyway. So they’ll be able to continue to have these little temporary fixes, but when their time is up and they have been called to the great below or the great above (some are going someplace, others are going others), they won’t be around to see the train wreck, and since they won’t be around, they don’t care about it. They live in the here and now.