https://mises.org/wire/more-half-america-gets-more-welfare-it-pays-taxes
Interesting article. I have not had a chance to look at it in depth, but how is our current system sustainable? I don't see this as a party issue since this has been growing while both parties have been in power...
Here is an excerpt: (note it is from the Mises Institute out of Austria)
The political implications of this are considerable. As Ludwig von Mises once noted, once we get to the point that a majority of the voting population receives more in benefits than it pays in taxes, then voters will demand more and more wealth be transferred to them through government programs. It will then become politically necessary to extract larger and larger amounts of wealth from a minority in order to subsidize the majority.
Market economics will become less and less popular because the voters will have realized they can — in the words of James Bovard — "vote for a living" instead of work for a living.
These findings don't always apply at the level of the individual household, of course. In the middle quintile, especially, we'll find some households that are indeed worse off after taxes and transfers than before. This will especially be the case for households that do not yet receive old-age benefits such as Medicare and Social Security. Those households are currently being taxed to pay for current recipients of SS and Medicare. Later, however, those households will begin to receive those benefits. And, over a lifetime, they're likely to receive more in benefits than what they "paid in."2 This notion of "paying in," however, is pure fiction, and there is no "trust fund" for old-age benefits, and all benefits received at any given time are funded via taxation of current wage earners.
As far as politics goes, this latter fact is very important because voters receiving old-age benefits know that any significant cut in government spending and government taxation is likely to necessitate a decline in paid benefits. This is why neither major party ever seriously talks about cutting Medicare or Social Security, and why Donald Trump has even recently declared his own love for Medicare. It's simply a redistribution of income and wealth from current wage earners to current recipients, and for most elected officials, attempting to cut these benefits would be political suicide.
Interesting article. I have not had a chance to look at it in depth, but how is our current system sustainable? I don't see this as a party issue since this has been growing while both parties have been in power...
Here is an excerpt: (note it is from the Mises Institute out of Austria)
The political implications of this are considerable. As Ludwig von Mises once noted, once we get to the point that a majority of the voting population receives more in benefits than it pays in taxes, then voters will demand more and more wealth be transferred to them through government programs. It will then become politically necessary to extract larger and larger amounts of wealth from a minority in order to subsidize the majority.
Market economics will become less and less popular because the voters will have realized they can — in the words of James Bovard — "vote for a living" instead of work for a living.
These findings don't always apply at the level of the individual household, of course. In the middle quintile, especially, we'll find some households that are indeed worse off after taxes and transfers than before. This will especially be the case for households that do not yet receive old-age benefits such as Medicare and Social Security. Those households are currently being taxed to pay for current recipients of SS and Medicare. Later, however, those households will begin to receive those benefits. And, over a lifetime, they're likely to receive more in benefits than what they "paid in."2 This notion of "paying in," however, is pure fiction, and there is no "trust fund" for old-age benefits, and all benefits received at any given time are funded via taxation of current wage earners.
As far as politics goes, this latter fact is very important because voters receiving old-age benefits know that any significant cut in government spending and government taxation is likely to necessitate a decline in paid benefits. This is why neither major party ever seriously talks about cutting Medicare or Social Security, and why Donald Trump has even recently declared his own love for Medicare. It's simply a redistribution of income and wealth from current wage earners to current recipients, and for most elected officials, attempting to cut these benefits would be political suicide.
