We’ve Crossed The Tipping Point; Most Americans Now Receive Government Benefits

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Following the money government spends isn't easy in Hawaii, according to a new report - Photo: Emily Metcalf
Photo: Emily Metcalf

By Merrill Matthews – Obamacare has pushed us over the entitlements tipping point.  In 2011 some 49.2 percent of U.S. households received benefits from one or more government programs—about 151 million out of an estimated 306.8 million Americans—according to U.S. Census Bureau data released last October.

Currently, around 6 million to 7 million Americans who have signed up for Obamacare are receiving taxpayer-provided subsidies (though the administration’s numbers cannot be trusted, it’s all we have to work with).  There are another 3 million who have signed up for Medicaid.


That means some 10 million Americans—or a total of about 161 million—are now getting government subsidies (though the final number might be somewhat lower since some may have been receiving benefits already).

Thus, perhaps 52 percent of U.S. households—more than half—now receive benefits from the government, thanks to President Obama.  And Mr. Entitlement is just getting started.  If Obamacare is not repealed millions more will join the swelling rolls of those dependent on government handouts.

Conservatives have long dreaded the day when the U.S. crossed the halfway mark because of all the implications for individual and fiscal responsibility. As Benjamin Franklin reportedly said, “When the people find that they can vote themselves money, that will herald the end of the republic.”  They learned that from the 2008 election and turned out in big numbers again in 2012.

It’s not that all of those Americans are “takers,” as former Republican presidential candidate Mitt Romney suggested.  Some 42 million are seniors receiving Social Security and Medicare.  They aren’t getting something for free; they faithfully paid into the system for decades with the expectation that they would be getting it back at retirement. And they deserve every penny they get—or may not get if Social Security or Medicare has to cut benefits.

But attitudes can change once people are on the receiving end of benefits, even if they are owed those benefits.  Seniors who support limited government and fiscal responsibility—in short, the exact opposite of Obama’s policies—become very protective of their benefits.  And that makes change difficult.

The bigger issue is the public at large.  Conservatives worked so hard to repeal Obamacare over the past few years because once the taxpayer-provided subsidies started to flow, millions would embrace the entitlement and repeal would be very tough.  Especially when the media start running stories about people losing their coverage because of heartless Republicans changing the law—although forcing millions to lose their coverage because of Obamacare didn’t stop liberals.

They knew if they were able to ride out the Obamacare rollout storm, the law would likely be here to stay.  Franklin D. Roosevelt captured this mentality when he observed: “We put those payroll contributions there so as to give contributors a legal, moral and political right to collect their pensions.… With those taxes in there, no damn politician can ever scrap my social security program.”

And no politicians have; indeed, they have only grown the program over the years.

The country has crossed the entitlement tipping point.  The only hope is to try to transition some of these programs, primarily Social Security but also Medicare, into personal retirement accounts.  They would, over time, be better funded, actually belong to the worker or retiree, and, perhaps most importantly, they would take millions of Americans off the government benefits roll.

Merrill Matthews is a resident scholar at the Institute for Policy Innovation in Dallas, Texas.  Follow at https://twitter.com/MerrillMatthews