Freeloader Nation? Myths of Government Dependency

Sixteen years ago, when Bill Clinton signed a harsh welfare reform law, one upside seemed to be that U.S. society could move past the endless, polarizing debate about welfare dependency.

Shopper at Pike Place Market, Seattle. Flickr/Lisa NorwoodAnd for a while this seemed to be case. Yet in the past few years, the conservative critique that safety net programs foster dependency has come back with a vengeance. The Great Recession has led to falling levels of labor force participation and soaring social spending, particularly for food stamps and unemployment benefits. Never mind the economic causes of these trends; the United States, the right argues, has been drifting toward a country where a dwindling band of "makers" support a growing army of "takers," with the most successful and hardest working people of all -- wealthy job creators -- paying much of the tab to subsidize a nation of freeloaders. In February, the Heritage Foundation ominously announced "an alarming trend under the Obama Administration of a level of dependence on our government that has never been seen before."

Now, in just the past two weeks, the right's Freeloader Nation critique has moved to the center of Mitt Romney's campaign. Last week, Romney began running ads alleging -- falsely, as we reported -- that President Obama was gutting welfare work requirements. And in selecting Paul Ryan as his running mate, Romney has chosen one of Congress's most vociferous critics of the safety net.

While Ryan has positioned himself mainly as a deficit hawk, his budget documents are replete with charges that social programs foster government dependency. In The Path to Prosperity, his
FY 2013 budget, Ryan posits a choice between more even "greater dependency" that would flow from Obama's policies versus his proposals to foster "upward mobility" and "empowerment."

You don't need to dig very deep into Ryan's past to find the origins of his worldview. Ryan became a hardcore libertarian in his early 20s, and has described the big influence of Ayn Rand and Milton Friedman over his thinking. According to Rand, nearly any form of government aid to the needy was too much.

In any case, now that dependency is once more near the center of U.S. politics, it's important to look closely at how big this problem is. Are we a Freeloader Nation?

The Heritage Foundation frames the problem this way:

When John F. Kennedy was President, just over a quarter of federal spending went to fund programs paying for some 21.7 million Americans to be dependent on Uncle Sam. But as high as that spending and dependence on the federal government was then, it has exploded today, with one in five Americans — more than 67.3 million — depending on Washington for assistance.

Meanwhile, Heritage says, "nearly half of all Americans don't pay income taxes." Sounds pretty bad, right?

Well, not really. Pretty much all the right's claims about dependency turn out to be inflated, misleading, or just plain wrong.

Start with the big picture: Only a tiny sliver of overall government assistance -- less than 10 percent -- goes to non-working adults in their prime years, and much of that is in the form of emergency assistance to people who have lost their jobs through no fault of their own. While Romney wrote in an op-ed last year that "Government dependency can only foster passivity and sloth," there are few signs of a growing army of layabouts subsisting on the dole.

On the contrary, as reported by the Center for Budget and Policy Priorities early this year:

more than 90 percent of the benefit dollars that entitlement and other mandatory programs spend go to assist people who are elderly, seriously disabled, or members of working households — not to able-bodied, working-age Americans who choose not to work. This figure has changed little in the past few years.

This makes sense. As we all know, the biggest social spending these days is on seniors and that has been going up as more people retire and healthcare costs increase. In its 2012 Index of Dependence on Government, Heritage lumps in seniors getting Medicare and students receiving Pell Grants. But it doesn't make much sense to call such people "dependent" in the typical sense of the word.

Seniors receiving Medicare and Social Security are receiving benefits from programs that they paid into during their entire working lives. In any case, no one expects old people or the disabled to work, and so it's hard to say these folks are part of some Freeloader Nation. Meanwhile, students receiving Pell Grants are making investments in their human capital -- meaning that they are less likely to be dependent later, whether on government or family.

And with TANF rolls down and work requirements in place, old fashion welfare dependency is largely a problem of the past. So basically it's unemployed people getting UI and food stamps that the right is really talking about. Yet if you just look at trends in these programs, which show soaring participation rates after the economy turned down, it's clear that the supposed "dependency" here is structurally driven and temporary (assuming growth returns). That's the whole idea of the safety net: People can "depend" on it in hard times.

Are there some malingerers and shirkers in the system? Of course, and we should always be looking to reduce that. But these folks are not the source of some national crisis.