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The Catch 22 of a Top Heavy Boat

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The Problem With Government Benefits
By R. Marc Nuttle
September 15, 2011

50% of the people in the United States receive a government check of some kind.  That is a direct transfer from one taxpayer to another. Subtract the cost of the government program making the transfer and you get the government’s “take” for administering and processing the transfer.

Here’s another important factor. About 50% of the U.S. adult population pays federal income tax.

What’s that mean?

Picture a sail boat with a small hull and too short and too light a keel.  At the mast, the sail fills with blowing wind, far heavier and larger in mass than the keel of the boat can handle. In calm waters, the boat stays uncomfortably upright. But in the slightest sea, the keel is too light to counteract the huge force pushing against the full sail and the boat turns upside down.

When we total up the number of Americans receiving local, state or federal aid — Medicare, social security, government pension or compensation — local employees, the military, welfare recipients, aid to children, Social Security, unemployment benefits, Medicaid, farm payments, and housing subsidies, roughly 50% of the American public is included.

And this doesn’t even include the employees of government contractors or those who receive tax credits or special tax preferences.

Meanwhile, the percentage of Americans paying federal income tax has fallen to only about 50% — and that number is continuing to shrink.

When more than 50% of the population receives a government check; but fewer than 50% actually pay income taxes, then the wind in the sail overpowers the too-small keel of the boat and the vessel (or in this case, the country) turns upside down.

And that’s the Catch 22 of government employment and compensation. Liberals want to increase government employment and entitlement, but fewer and fewer taxpayers are available to pay the bill.

Ultimately, as Margaret Thatcher was fond of saying, “the problem with socialism is that eventually you run out of other people’s money.”

So to pay for all that burgeoning government growth, the liberal happily borrows from our kids and grandkids who aren’t even born yet.

There’s another way the Catch 22 concept works against economic recovery. As callous as it may sound, overly generous benefits actually work against growth. Take unemployment benefits.

One national chain offers $10.50 per hour plus benefits to construction workers.  But workers find that by the time they factor in transportation costs, they make almost as much collecting unemployment –without the heavy lifting and all that noisy nail pounding. As a result, workers can’t be recruited, the project languishes and the economy doesn’t grow.

The Catch 22? Reduce the benefit or accept permanent unemployment. The very government program designed to bring relief, in fact, hurts the economy and prevents job creation.

But unemployment benefits are just one symptom of the bigger problem. Maintaining the status quo fits the classic Einstein definition of insanity — doing the same thing over and over expecting different results.

To achieve a new result and grow a more prosperous economy where jobs are plentiful and employers must compete for labor, we need a complete change.

Real renewal will only occur when government programs are restructured around the values of fairness and economic justice…when spending and budgeting are reformed with a real concern for the people paying the bills … and when our leaders promote their policy initiatives with honesty and integrity rather than a cynical attempt to buy off half the electorate with money extorted from the other half.

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