A Nation of Takers

Nicholas EberstadtHenry Wendt Chair In Political Economy

American Enterprise Instituteeberstadt@aei.org

June 20, 2012

19601962

19641966

19681970

19721974

19761978

19801982

19841986

19881990

19921994

19961998

20002002

20042006

20082010

0

0.5

1

1.5

2

2.5

The Rise And Rise Of EntitlementsTotal Government Transfers to Individuals, 1960-

2010 (in current dollars)

Trill

ions

of c

urre

nt d

olla

rs

Source: Transfers- US Bureau of Economic Analysis, http://www.bea.gov/regional/spi/drill.cfm?selTable=SA35&selLineCode=20&selYears=2010,2009,2008,2007,2006,2005,2004,2003,2002,2001,2000,1999,1998,1997,1996,1995,1994,1993,1992,1991,1990,1989,1988,1987,1986,1985,1984,1983,1982,1981,1980&rformat=Display. Accessed February 1, 2012

Source: Transfers- US Bureau of Economic Analysis, http://www.bea.gov/regional/spi/drill.cfm?selTable=SA35&selLineCode=20&selYears=2010,2009,2008,2007,2006,2005,2004,2003,2002,2001,2000,1999,1998,1997,1996,1995,1994,1993,1992,1991,1990,1989,1988,1987,1986,1985,1984,1983,1982,1981,1980&rformat=Display. Accessed February 1, 2012

19601962

19641966

19681970

19721974

19761978

19801982

19841986

19881990

19921994

19961998

20002002

20042006

20082010

0

0.5

1

1.5

2

2.5

Still Exponential After All These YearsTotal Government Transfers to Individuals, 1960-2010,

(Adjusted for Inflation)

Trill

ions

of 2

010

US d

olla

rs

Source: Transfers- US Bureau of Economic Analysis, http://www.bea.gov/regional/spi/drill.cfm?selTable=SA35&selLineCode=20&selYears=2010,2009,2008,2007,2006,2005,2004,2003,2002,2001,2000,1999,1998,1997,1996,1995,1994,1993,1992,1991,1990,1989,1988,1987,1986,1985,1984,1983,1982,1981,1980&rformat=Display. Accessed February 1, 2012CPI- US Department of Labor, Bureau of Labor Statistics, consumer price index. Available at ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt. Accessed February 1, 2012.Population- US Census International Data Base, http://www.census.gov/population/international/data/idb/informationGateway.php, Accessed February 1, 2012.

19701972

19741976

19781980

19821984

19861988

19901992

19941996

19982000

20022004

20062008

20100

1000

2000

3000

4000

5000

6000

7000

8000

Two And A Half Times Faster Than Per Capita IncomeReal Per Capita Government Transfers to Individuals , 1980-

2010(Constant 2010 Dollars)

2010

Dol

lars

19601962

19641966

19681970

19721974

19761978

19801982

19841986

19881990

19921994

19961998

20002002

20042006

20082010

0

500

1000

1500

2000

2500

Composition of Total Government Transfer Payments, 1960-2010(current dollars)

Income maintenance benefits Medicare MedicaidSocial Security Unemployment insurance compensation Other

Billi

ons o

f Dol

lars

, una

djus

ted

Source: Bureau of Economic Analysis, available at http://www.bea.gov/regional/spi/drill.cfm?selTable=SA35&selLineCode=20&selYears=2010,2009,2008,2007,2006,2005,2004,2003,2002,2001,2000,1999,1998,1997,1996,1995,1994,1993,1992,1991,1990,1989,1988,1987,1986,1985,1984,1983,1982,1981,1980&rformat=Display

19601962

19641966

19681970

19721974

19761978

19801982

19841986

19881990

19921994

19961998

20002002

20042006

20082010

0

500

1000

1500

2000

2500

Government Transfer Payments, 1960-2010(adjusted by CPI)

Income maintenance benefits Medicare MedicaidSocial Security Unemployment insurance compensation Other

Billi

ons o

f 201

0 US

Dol

lars

Source: Bureau of Economic Analysis, available at http://www.bea.gov/regional/spi/drill.cfm?selTable=SA35&selLineCode=20&selYears=2010,2009,2008,2007,2006,2005,2004,2003,2002,2001,2000,1999,1998,1997,1996,1995,1994,1993,1992,1991,1990,1989,1988,1987,1986,1985,1984,1983,1982,1981,1980&rformat=Display

Source: The New York Times, February 11, 2012, The Geography of Government Benefits, http://www.nytimes.com/interactive/2012/02/12/us/entitlement-map.html?ref=us

1969

2009

Source: The New York Times, February 11, 2012, The Geography of Government Benefits, http://www.nytimes.com/interactive/2012/02/12/us/entitlement-map.html?ref=us

Source: Sara Murray. “Nearly Half of U.S. Lives in Household Receiving Government Benefit,” Wall Street Journal, 5 October, 2011.

Source: Ke Bin Wu. “Receipt of Entitlement and Other Safety-net Program Benefits Among Families in 2011,” AARP Public Policy Institute, April 2007.

Source: Family Poverty Rate: US Census Bureau Historical Poverty Tables- Families, http://www.census.gov/hhes/www/poverty/data/historical/families.html, Accessed January 17, 2012.Household percents: US Census Bureau Statistical Abstract, 1980-2012, http://www.census.gov/compendia/statab/, Accessed January 27, 2012, and Sara Murray, “Nearly Half of U.S. Lives in Household Receiving Government Benefit,” Wall Street Journal, 5 October 2011, http://blogs.wsj.com/economics/2011/10/05/nearly-half-of-households-receive-some-government-benefit/Unemployment: US Bureau of Labor Statistics, http://www.bls.gov/, Accessed January 30, 2012

Households Receiving Public Benefits vs. Unemployment Rate

20092008

20072006

20052004

20032002

20012000

19991998

19971996

19951994

19931992

19911990

19891988

19871986

19851984

19831982

19811980

197913

15

17

19

21

23

25

27

29

31

33

Percent of Households

Perc

ent o

f Hou

seho

lds

Percentage of U.S. Households Receiving Means Tested Public Benefits , 1979-2009

Persons Living in Households Receiving Selected Noncash Benefits: 2009, by age and ethnicity

Source: 2012 Statistical Abstract, Table 543, http://www.census.gov/compendia/statab/cats/social_insurance_human_services.html Accessed February 1, 2012.

Under 18 years

18 to 24 years

25 to 34 years

35 to 44 years

45 to 54 years

55 to 59 years

60 to 64 years

65 years and over

0

10

20

30

40

50

60

Hispanic Black alone Asian alone White Alone, Non-Hispanic

0

10

20

30

40

50

60

Source: Family Poverty Rate: US Census Bureau Historical Poverty Tables- Families, http://www.census.gov/hhes/www/poverty/data/historical/families.html, Accessed January 17, 2012.Household percents: US Census Bureau Statistical Abstract, 1980-2012, http://www.census.gov/compendia/statab/, Accessed January 27, 2012, and Sara Murray, “Nearly Half of U.S. Lives in Household Receiving Government Benefit,” Wall Street Journal, 5 October 2011, http://blogs.wsj.com/economics/2011/10/05/nearly-half-of-households-receive-some-government-benefit/Unemployment: US Bureau of Labor Statistics, http://www.bls.gov/, Accessed January 30, 2012

Households Receiving Public Benefits vs. Unemployment Rate

20092008

20072006

20052004

20032002

20012000

19991998

19971996

19951994

19931992

19911990

19891988

19871986

19851984

19831982

19811980

197913

15

17

19

21

23

25

27

29

31

33

4

6

8

10

12

14

16

18

20

Perc

ent o

f Hou

seho

lds

Unem

ploy

men

t Rat

eDisconnect:

Households receiving means tested public benefits (%) vs. Unemployment Rate, 1979-2009

19791980

19811982

19831984

19851986

19871988

19891990

19911992

19931994

19951996

19971998

19992000

20012002

20032004

20052006

20072008

200910

15

20

25

30

8.0

9.0

10.0

11.0

12.0

13.0

14.0

15.0

16.0

17.0

18.0

Percent of Households Receiving Means-Tested Noncash Benefits

Percent of Households Receiving Selected Sources of Noncash Benefits and Cash Transfer Payments

Percent of Persons Living in Households Receiving Selected Noncash Benefits

Family Poverty Rate

Source: Family Poverty Rate: US Census Bureau Historical Poverty Tables- Families, http://www.census.gov/hhes/www/poverty/data/historical/families.html, Accessed January 17, 2012.Household percents: US Census Bureau Statistical Abstract, 1980-2012, http://www.census.gov/compendia/statab/, Accessed January 27, 2012, and Sara Murray, “Nearly Half of U.S. Lives in Household Receiving Government Benefit,” Wall Street Journal, 5 October 2011, http://blogs.wsj.com/economics/2011/10/05/nearly-half-of-households-receive-some-government-benefit/

Disconnect, Part IIPercent of household receiving selected public benefits vs. Family Poverty Rate

19481950

19521954

19561958

19601962

19641966

19681970

19721974

19761978

19801982

19841986

19881990

19921994

19961998

20002002

20042006

20082010

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

US Labor Force Participation Rate 1948-2011, by Gender

Male 20+Female 20+Total 20+

Source: The Bureau of Labor Statistics, http://data.bls.gov/pdq/SurveyOutputServlet, accessed June 15, 2012.

Source: The Bureau of Labor Statistics, http://data.bls.gov/pdq/SurveyOutputServlet, accessed February 27, 2012.

19481950

19521954

19561958

19601962

19641966

19681970

19721974

19761978

19801982

19841986

19881990

19921994

19961998

20002002

20042006

20082010

60.0

65.0

70.0

75.0

80.0

85.0

90.0

95.0

Where Did All The Men Go?Labor Force Participation Rate vs. Employment to

Population Ratio, Males 20+,1948-2011

Employment to Population Ratio Labor Force Participation Rate

1948-2008: 12.9 per-centage point drop

Gap in 2010: 6.5 percentage points

Unemployment

Source: The Bureau of Labor Statistics, http://data.bls.gov/pdq/SurveyOutputServlet, accessed February 27, 2012.International Labor Office: http://laborsta.ilo.org/STP/guest , Accessed on February 27, 2012

19761977

19781979

19801981

19821983

19841985

19861987

19881989

19901991

19921993

19941995

19961997

19981999

20002001

20022003

20042005

20062007

20080

20

40

60

80

100

120

Greece

USA

Those Hard-Working Greeks…Labor Force Participation Rate for Males 35-39: USA vs. Greece, 1976-2011

Source: The Bureau of Labor Statistics, http://data.bls.gov/pdq/querytool.jsp?survey=ln, Accessed on February 27, 2012 .Hispanic Language: http://www.census.gov/hhes/socdemo/language/Education: http://www.census.gov/hhes/socdemo/education/data/cps/2011/tables.html

19731974

19751976

19771978

19791980

19811982

19831984

19851986

19871988

19891990

19911992

19931994

19951996

19971998

19992000

20012002

20032004

20052006

20072008

20092010

201160.0

65.0

70.0

75.0

80.0

85.0

Education and Language Can’t Explain This Male Labor Force Participation Rates by Ethnicity:

1973-2011

African American Hispanic

47.1% of Spanish speakers in USA over 5 years of age 2006-08 speak English “Less Than Very Well”

Percent of men 25 and older without a high school degree in 2011:

African American: 16.2Hispanic: 36.4

Source: Bureau of Economic Analysis, available at http://www.bea.gov/regional/spi/drill.cfm?selTable=SA35&selLineCode=20&selYears=2010,2009,2008,2007,2006,2005,2004,2003,2002,2001,2000,1999,1998,1997,1996,1995,1994,1993,1992,1991,1990,1989,1988,1987,1986,1985,1984,1983,1982,1981,1980&rformat=DisplayWhite House Office of Management and Budget, available at http://www.whitehouse.gov/omb/budget/Historicals, Table 15.6.

19701972

19741976

19781980

19821984

19861988

19901992

19941996

19982000

20022004

20062008

2010

-500

0

500

1000

1500

2000Who Pays?

Cost of Medicare and Social Security vs. US Deficit

Deficit Medicaid and Social Security

Billi

ons o

f 201

0 US

Dol

lars

Source: The Human Mortality Database, http://www.mortality.org/cgi-bin/hmd/country.php?cntr=USA&level=1 , Accessed on February 27, 2012 .Social Security Administration, Office of Retirement and Disability Policy, Annual Statistical Report on the Social Security Disability Insurance Program, 2010, http://www.socialsecurity.gov/policy/docs/statcomps/di_asr/2010/ accessed February 27, 2012 .The Bureau of Labor Statistics, http://data.bls.gov/pdq/SurveyOutputServlet, accessed February 27, 2012.

0

2

4

6

8

10

12

0

1

2

3

4

5

6

What Is Wrong With This Picture?Odds of Dying Between Ages 18 and 65 vs. Percentage of Labor Force Ages 18-64 On

Federal Disability Benefits: USA, 1960-2010

Odd

s of d

ying

in w

orki

ng a

ges

Disa

bilit

y to

tota

l peo

ple

18-6

4 in

labo

r for

ce (p

erce

nt)

19701971

19721973

19741975

19761977

19781979

19801981

19821983

19841985

19861987

19881989

19901991

19921993

19941995

19961997

19981999

20002001

20022003

20042005

20062007

20082009

20100.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

Unaffordable?Defense Spending As a percent of GDP, 1970-2010

Defense Spending As a percent of GDP

Source: White House Office of Management and Budget, Historical Tables, Table 3.2- Outlays by Function and Subfunction. Available at http://www.whitehouse.gov/omb/budget/Historicals. Accessed 18 April 2012.

Crowded OutMilitary Spending vs. Government Transfers to Individuals:

1970-2010, Billions of Current Dollars

Source: Transfers- US Bureau of Economic Analysis, http://www.bea.gov/regional/spi/drill.cfm?selTable=SA35&selLineCode=20&selYears=2010,2009,2008,2007,2006,2005,2004,2003,2002,2001,2000,1999,1998,1997,1996,1995,1994,1993,1992,1991,1990,1989,1988,1987,1986,1985,1984,1983,1982,1981,1980&rformat=Display. Accessed February 1, 2012Military Spending- White House Office of Management and Budget, Historical Tables, Table 3.2- Outlays by Function and Subfunction. Available at http://www.whitehouse.gov/omb/budget/Historicals. Accessed 18 April 2012.

19701972

19741976

19781980

19821984

19861988

19901992

19941996

19982000

20022004

20062008

20100.00

500.00

1000.00

1500.00

2000.00

2500.00

Total Government Transfers Defense Spending

Note: Chart reflects 2004 numbers.Source: Robert Rector and Christine Kim. 2008. “How the Wealth is Spread: The Distribution of Government Benefits, Services and Taxes by Income Quintile in the United States,” Fall 2008 Conference of The Association for Public Policy Analysis and Management.

Benefits and Services Received per One Dollar in Taxes Paid

Note: Chart reflects 2004 numbers.Source: Robert Rector and Christine Kim. 2008. “How the Wealth is Spread: The Distribution of Government Benefits, Services and Taxes by Income Quintile in the United States,” Fall 2008 Conference of The Association for Public Policy Analysis and Management.