Welfare State: Handouts Make Up One-Third of U.S. Wages

35% of paychecks come from government handouts. If you figure how many people have run out of unemployment and haven't gone back to work, we are looking at about 50% of the population being either unemployed or on some sort of welfare. So the other 50% of us are paying all the bills for the entire Country, except for the huge deficit. I guess it would be 50% of us and China, are paying the bills. And obama and the democrats keep on spending.

Be sure to read the part below about the ratio to get things back in line. Either wages have to rise by $2.3 TRILLION dollars or welfare benefits need to decrease by $500 billion dollars. Umm, I don't know about you, but I doubt I get a raise at all this year. Those of us that are working are damn proud to get what we get. It would seem to be to our advantage for people to get back to work and reduce the welfare roll...

By: John Melloy - CNBC

Government payouts—including Social Security, Medicare and unemployment insurance—make up more than a third of total wages and salaries of the U.S. population, a record figure that will only increase if action isn’t taken before the majority of Baby Boomers enter retirement.

Even as the economy has recovered, social welfare benefits make up 35 percent of wages and salaries this year, up from 21 percent in 2000 and 10 percent in 1960, according to TrimTabs Investment Research using Bureau of Economic Analysis data.

“The U.S. economy has become alarmingly dependent on government stimulus,” said Madeline Schnapp, director of Macroeconomic Research at TrimTabs, in a note to clients. “Consumption supported by wages and salaries is a much stronger foundation for economic growth than consumption based on social welfare benefits.”

The economist gives the country two stark choices. In order to get welfare back to its pre-recession ratio of 26 percent of pay, “either wages and salaries would have to increase $2.3 trillion, or 35 percent, to $8.8 trillion, or social welfare benefits would have to decline $500 billion, or 23 percent, to $1.7 trillion,” she said.

Last month, the Republican-led House of Representatives passed a $61 billion federal spending cut, but Senate Democratic leaders and the White House made it clear that had no chance of becoming law. Short-term resolutions passed have averted a government shutdown that could have occurred this month, as Vice President Biden leads negotiations with Republican leaders on some sort of long-term compromise.

Go read the rest at the link above...

Entitlement Evolution Poses Threat to America's Finances

This is some scary stuff. To think that entitlement programs could consume the entire budget of our Country is bad news. No politician wants to touch this. You kind of can't blame them. But every year they refuse to address these issues and it just becomes more dire.

Republicans hint around about privatizing social security and then the democrats use it against them. At some point major changes will have to be made, and if we wait until that point arrives it will be very ugly for a long time.

We are fortunant that many companies are offering 401k solutions. It's also pretty sad that even though social security eats up massive amounts of the budget, old people can't even live on it. All it takes is a couple of expensive prescriptions and these people are eating cat food. It's sad, very sad. Our elderly deserve better than that. If the social security issue had been addressed 30 years ago we wouldn't have this problem now.

I have been paying into social security for about 32 years and I will never see a dime from it. I am planning for my own future. I don't ever want to have to rely on this government for anything...

By Jim Angle - FoxNews

The debate in Congress this week over spending is a sideshow in the battle against debt and deficits because entitlement programs such as Social Security and Medicare are threatening to destroy the nation's fiscal security.

The problem is a familiar one -- the government made far more promises than it can pay for.

"Social Security and Medicare deficits together equal around 75 trillion dollars," said Andrew Biggs of the American Enterprise Institute. "But that figure is in today's dollars, meaning you had the money today in the bank earning interest. If we delay fixing these programs then the costs only get larger."

And with some 75 million baby boomers about to retire, and far fewer young people paying taxes, that will mean a massive transfer of wealth.

"So much of what the government is doing is to take money from younger people and give it to older people," Biggs said.

It was the creation of Social Security in 1935 that opened a new era of what are called entitlement programs.

These are "programs that are basically on autopilot," said Maya MacGuineas, president of the Committee for a Responsible Federal Budget. "You don’t actually decide each year how much money you'll spend on them. You just pay out what's demanded by the rules that you've set up."

And that payout is growing exponentially.

Back in 1935, when Social Security was created, promises to those over 65 years old were easy to make "because many people didn't even survive to retirement age," Biggs said."Those that did live to age 65 didn't live for long after that."

In fact, at the time, the average life expectancy for men was only 60 years and for women, about 64. Now, it is 75 for men and 80 for women. That’s one reason entitlements are getting more and more expensive.

But benefits have also expanded.

In 1939, before Social Security was even fully operating, new benefits were added for surviving spouses and children. In 1956, disability benefits were added.

Then, in 1965, President Lyndon Johnson and Congress created Medicare and Medicaid to help the elderly and poor.

"Medicare took care of the elderly, Medicaid was originally designed to take care of the poor," said Michael Tanner of the Cato Institute. "Although an increasing portion of Medicaid now covers the elderly in nursing homes."

And as they age, entitlements themselves tend to expand and take on a life of their own.

"At the time [of creation], I don’t think anybody ever anticipated the kind of monstrosity the entitlement would turn into," MacGuineas said.

But the programs kept expanding, inflation protections were added and now, entitlements are poised to overwhelm the entire federal budget.

"Today, Social Security, Medicare and Medicaid make up about half the budget," Biggs said. "Going into the future they could conceivably swallow up the entire budget."

"By the end of the decade," Tanner said, "we'll be at the point where the entitlement programs plus interest on the debt will consume the entire amount of federal revenue that we bring in. You'll have to raise taxes just to keep the government functioning."

The coming financial crisis over entitlements is so dire that Andrew Biggs said "the joke among entitlement analysts is that the government will eventually turn into a pension plan with an army."

In other words, by the time we pay for Social Security, Medicare, and Medicaid, there will only be enough federal revenues left over to cover the military, but no other functions of government.

That's what entitlement policies have come to.

And though we can't even pay for promises already made, the new health care law created yet another entitlement, one for the disabled, which most analysts believe will also run short of money, early in its history.

Various panels and commissions have been warning about unsustainable entitlement programs for a good three decades. But politicians, says one analyst, always seem to be more worried about the next election than the next generation.