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Gov’t Handouts Now Exceed Tax Income

From the Fiscal Times:

Budget Deficit: Government Handouts Top Tax Income

By JAMES C. COOPER, The Fiscal Times April 19, 2011

* Households received $2.3 trillion in government income support in 2010.
* Government cash accounts for 79 percent of household income growth since 2007.
* Since 2007, household tax payments have fallen by $312 billion.

For the first time since the Great Depression, households are receiving more income from the government than they are paying the government in taxes… The only other time government income support exceeded taxes paid was from 1931 to 1936. That trend reversed in 1936, after a recovery was underway, and the economy fell back into a second leg of recession during 1937 and 1938…

Government transfers of income to households started to overtake personal taxes at the start of 2008, and the gap has been widening. In 2010, households received $2.3 trillion in income support from unemployment benefits, Social Security, disability insurance, Medicare, Medicaid, veterans’ benefits, education assistance and other cash transfers of government funds to individuals. Also last year, households paid $2.2 trillion in income, payroll, and other taxes. The difference was $125 billion, equivalent to 1 percentage point of overall personal income

Since the onset of the recession, government direct payments have increased by $579 billion, accounting for 79 percent of the growth in overall personal income. As job growth has picked up, that contribution has diminished, but during 2010, government cash still accounted for 28 percent of the increase in income

Typically, the gap between transfers and taxes runs the other way – and by a wide margin. “In normal times the household sector gives about 8 percentage points more of its income in taxes than it receives in direct transfers,” says J.P. Morgan economist Michael Feroli

In a nutshell, US households are now getting more in cash handouts from the government than they are paying in taxes for the first time since the ‘Great Depression.’

On top of this, Fox Business News is also reporting that:

[A]n estimated 59% of the 308.7 million Americans in this country get at least one federal benefit, according to the Census Bureau, based on 2009 data. An estimated 46.5 million get Social Security; 42.6 million get Medicare; 42.4 million get Medicaid; 36.1 million get food stamps; 12.4 million get housing subsidies; and 3.2 million get Veterans’ benefits.

And the handouts from the government have been growing. Government cash handouts account for a whopping 79% of household growth since 2007, even as household tax payments–for things like the income and payroll tax, among other taxes–have fallen by $312 billion

This is a staggering analysis. We are not in a ‘Great Depression.’ We are not even supposed to be in a ‘Great Recession.’

In reality, we are in the middle of a ‘Great Redistribution.’ And it is all due to the Democrats wanting to buy votes for themselves using taxpayers’ money.

(For the record, the Fiscal Times was founded by the investment banker, Peter G. Peterson. It’s staffed by, among other people, a former Editor-in-Chief for Reader’s Digest; a former editor and budget reporter for the Washington Post; a former managing editor at Business Week; a former tax columnist for the Wall Street Journal; and the Editor in Chief of CBS Money Watch.)

This article was posted by Steve on Thursday, April 21st, 2011. Comments are currently closed.

4 Responses to “Gov’t Handouts Now Exceed Tax Income”

  1. Rusty Shackleford says:

    …”and right now everybody’s so pinched that business is bad for everybody and I think when you spread the wealth around, it’s good for everybody.”

    BHO Oct 14, 2008

  2. GetBackJack says:

    GD’it, when do I get me some gummint handouts? I hear about all this free money throwed around like leaves in the wind and I ain’t never seen a nickel of it! I WANT ME SOME FREE GUMMINT MONEY, D’it.

  3. Right of the People says:

    We’ve reached the Utopian socialist tipping point as a society where the few are supporting the many. Most of Europe reached this awhile ago and they just now are finding out it is not sustainable. We’d better hope and pray we can find a strong enough candidate to take this clown out in ’12 and hopefully take the Senate back too.

  4. NoNeoCommies says:

    If it ever gets bad enough, we should all become Democrats.
    Then they would have no scapegoats.
    They would proceed to tear their “coalition” apart after a lot of internal finger pointing.


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