OPINION:
The Economic Innovation Group recently issued a report, “The Great ’Transfer-mation,’” that makes a pretty conclusive case that a large and growing percentage of the population gets a significant portion of its income from government transfers. The report is unsparing in pointing the finger at the programs — primarily Social Security, Medicare and Medicaid — that are intended to and have created an entire class of citizens dependent on handouts from the federal government.
Not surprisingly, the report identifies the aging of our population — and our inability or unwillingness to adjust policies to reflect that aging — as the principal and fundamental reason for the growth of dependence on the government. It does not think the problem will fix itself: Between now and 2040, 6 million working-age people (hopefully) will join the economy; in those same years, we will add 20 million people over the age of 65.
None of this should be a surprise, given that the federal government — led by both parties — has consistently given workers incentive to exit the workforce, irrespective of their work capacity. In addition, both parties have turned Social Security from a modest program into a leviathan. When Social Security was created in 1935, Americans’ average life expectancy was 61 years. Now, almost a century of medical advancement later, the average life expectancy is almost 80 years.
Yet inexplicably, Social Security pays out at age 62.
Similarly, anyone even remotely familiar with Medicare understands that its recipients are almost entirely insensitive to cost because they pay little of the total cost of their care.
Is this really a problem? It absolutely is. We all know communities that are essentially zombies; they are not yet dead, but they are not thriving. Transfer payments from the federal government reduce the incentives for people to move to more productive and economically healthy areas or, alternatively, to improve the economic prospects of their own communities.
To borrow from the report: “The result [of this dependence on government hand-outs] is a reshaping of how communities derive their livelihood — and a fading importance of work and productive activity in generating local incomes.”
What is to be done? The irreducible imperative is more and faster economic growth. As part of that, we need to reduce taxes, reduce bureaucracy, improve education, reduce drug addiction, create an immigration system to improve the nation and most importantly, honor and encourage work.
In recent remarks, House Speaker Mike Johnson touched on this pervasive dependence problem. He said:
“During the Trump administration, we saw the greatest economy because government did less, not more. … Middle-class family income increased nearly by $6,000. Incomes rose in every single metro area in the United States. That’s the first time that had happened in three decades. In 2019, the median family income rose 6.8%, the largest single-year increase on record. Nearly 7 million people gained freedom from dependence on food stamps during the Trump years. … And [we had] record low [unemployment] rates for African American workers and Hispanic Americans and people without a high school diploma.”
The Louisiana Republican added that we produced more energy in the United States, reduced bureaucracy and let people keep more of what they earned.
“Unlike the Democrats’ proposal, we will ensure that our tax policy respects the dignity of work and it doesn’t pay people for staying out of the workforce.
“Today, as government agencies get bigger and Washington politicians peddle the lie that government can solve every problem, we’re actually at risk of creating a nation of people who actually depend on government for everything, at the risk of killing the American pioneering spirit,” he said.
The Economic Innovation Group is right; so is the speaker. In this world, you get what you honor and give incentive to, economically or otherwise. If you offer incentives to dependence, you will get that, and you will destroy society within a generation. If you honor and give incentive to discipline and hard work, you will get that and be rewarded with a thriving, healthy society.
• Michael McKenna is a contributing editor at The Washington Times.
Correction: A previous version of this column in one instance misstated the name of the Economic Innovation Group.
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