New Report Shows America Edging Closer to Welfare State

Every family budgets. In one form or another they sit around a table, figure out how much they earn, decide how much they can spend, and hopefully save a little bit for the future. Under the Obama administration those budgets have gotten a lot tighter, at least if you work in the private sector. Nevertheless, families understand that each side of the ledger must be equal. We can’t spend more than we have. That is a principle the current group in Washington is having a hard time understanding.

A new report by the USA Today finds that,

“Paychecks from private business shrank to their smallest share of personal income in U.S. history during the first quarter of this year, a USA Today analysis of government data finds.

At the same time, government-provided benefits – from Social Security, unemployment insurance, food stamps and other programs – rose to a record high during the first three months of 2010.”

This is unsustainable. As British Prime Minister Margaret Thatcher quipped, “The problem with socialism is that you run out of other people’s money.”  That aptly describes our nation’s finances. Unfortunately, running out of money doesn’t seem to be a problem for a nation content to borrow from future generations.

Nevertheless, the imbalance of our taxing and spending must be addressed. As paychecks shrink, so too does the government’s ability to tax. Those tax receipts are used to fund the government’s programs. Dwindling paychecks should lead to dwindling programs. Somehow, that axiom has not come true…yet. As we are seeing in Europe, nations are being forced to make drastic choices to get their financial houses back in order. From eliminating entitlements, to slashing pensions, to increasing taxes, they are doing whatever they can to avoid Greece’s fate. Oddly, we don’t seem to be following their lead.

Such hubris will have drastic consequences for our future. The government’s inability to afford ever-more-expensive welfare programs on the backs of a shrinking private sector will create enormous deficits on top of the $107 trillion entitlement crisis we are already facing. Racking up such enormous debt and deficits is not without consequences. In fact, it creates a downward spiral in which government debt impacts private sector growth which in turn creates more debt. The CBO admitted as much in its Long Term Budget Outlook:

Large budget deficits would reduce national saving, leading to more borrowing from abroad and less domestic investment, which in turn would depress economic growth in the United States. Over time, accumulating debt would cause substantial harm to the economy.

Admitting that we have a debt and entitlement problem is half the battle. Unfortunately, the Left is not even willing to take that first step. The USA Today reports that Paul Van de Water, an economist at the liberal Center on Budget and Policy says, “It’s the system working as it should.” He argues that the shift in income shows that the federal government’s stimulus efforts have been effective.

Say what? Government benefits as a percentage of income are at an all-time high while private sector wages are at an all time low. If that is the system working then we definitely need a new system. Less take home pay means families are struggling to balance their budgets, much less spend enough to get the economy growing again. At least families are attempting to balance. The federal government has apparently decided to toss their ledger out the window and spend money like there is no tomorrow.

There is a tomorrow. We are that tomorrow. If we continue to allow the government to spend  beyond their means then we will be spending our future desperately trying to claw back our way out of a deficit hole. Cleaning up this administration’s fiscal mess is not what I had in mind with my time, money or talents. Our generation deserves better. We deserve a government that spends within its means.

by Brandon Greife, Political Director of the College Republican National Committee

read more at www.collegerepublicans.org