Monday, February 13, 2012
Who Relies on the Safety Net: Must Read for All Gridlockers
Jackson was the first to post on the fascinating article in the New York Times yesterday, but I am writing separately to recommend that everyone in the class take a close look at it. The core message of the piece is that Americans are becoming increasingly dependent on the federal government's safety net and that this dependence is expanding more and more from the truly poor to the middle class. The counterfactual is that the areas of greatest dependence on federal benefits tend to be geographical regions where opposition to government spending and increased taxes tends to be the strongest. Here are some other important findings:
** The share of benefits flowing to the bottom 20% of US incomes has decreased since 1979 from 54% to 36%;
** The amount of safety net spending by federal and state goverments for every tax dollar they bring in has increased from 37 percent to 66 percent in just a decade.
** Only 22 percent of respondents to a recent poll corretly identified Medicare as the fastest growing benefits program. The greatest number of respondents pointed to programs for the poor.
** A majority of Americans (55%) believe they will pay more in taxes than they will get back in benefits (which is wildly inaccurate for the vast majority of Americans).
Some of the commentary on the piece is worth looking at. Paul Krugman has a graph analyzing the states in rank order of their ratio of payment of taxes to amount of benefits. Nine of the 12 lowest states (more in benefits than in tax payments) voted for McCain in 2008.