The Ever Expanding Dependent Class.

For many years I have been puzzled.  Why would anyone vote for a candidate who promises to raise taxes?  However, in 2009 my eyes were opened and I began to understand the reason.  2009 was the year I decided to prepare taxes for additional income.  I then realized that the tax system in our country was no longer a system designed to raise revenue for the government but had become a system of wealth transference.  I legally prepared taxes for people who paid absolutely no tax and yet received refunds of thousands of dollars.  I have continued to prepare taxes each year since then and have seen the refunds grow larger each year.  There is no doubt in my mind that our nation has a growing and expanding dependent class and as the economy continues to sputter, the situation will most likely get worse. 

Refundable tax credits, like those I mentioned above are just one ingredient in the problem and each year the IRS raises the income threshold one must remain below in order to qualify for the credits so each year more and more people qualify for the credits and the amounts of the credits grow larger.  As long-term unemployment becomes a larger problem, we are beginning to see people, facing loss of their unemployment benefits, turn to other entitlement programs such as disability and food stamps simply to survive.  According to the Journal of Economic Perspectives, 4.1 percent of non-elderly adults were on Social Security Disability Insurance (SSDI) up from just 2.2 percent in 1985 (1).  Since the beginning of the current recession, the problem has gotten worse, especially in the last few months with many exhausting their unemployment benefits.  More than 1.6 million people have signed up for SSDI since the recession with 8.7 million now drawing SSDI compared to 7.1 million prior to the recession (2). 

The good news, I guess, is that people now drawing SSDI are no longer counted in the workforce.  The labor participation rate has declined dramatically from 66 percent to 63.8 percent or 5.4 fewer people.  This is why the unemployment rate is stuck at 8.2 percent.  If the pre-recession labor participation rate were used, the unemployment rate would soar to 11.3 percent (2).  However, it shows us that the problem is much worse than we thought. 

In addition, food stamp participation has grown by 70 percent since 2007 as yet another sign the economy is not doing as well as we have been told (3).  One would think the government would see this as a problem and make an effort to reduce the number of people having to rely on food stamps.  However, this is not the case for the Department of Agriculture has come under fire for running advertisements on Spanish networks soliciting more food stamp enrollees (4).

The ramifications of these problems are enormous.  The long-term unemployed not only face loss of their unemployment benefits, but also face the stigma that their extended period of unemployment has caused them to lose valuable skills (5), making it even more difficult for them to find employment in their field.  Of course, big government politicians view this as an opportunity to create a larger dependent class who will vote for them on the promise of more entitlements.  Now, they do not say this publically but express their concern over the plight of the long-term unemployed.  They create the straw man of big business and the rich who have millions of dollars parked in offshore accounts while they are struggling to make ends meet.  They promise to raise taxes on these evil rich so they will be forced to bring the cash back into our country to pay their taxes.  These politicians then promise to redistribute this cash to the chronically unemployed in the form of increased benefits.  This is not the answer. 

What the chronically unemployed need is jobs and not a handout.  Increasing taxes on the rich will only insure fewer jobs and more people moving into the dependent class.  This insanity must stop and you the voter have the power to effect the needed change.  We must begin by insuring Obama has to pack up and move back to Chicago by electing Mitt Romney as the 45^th President of The United States.  We then must give Romney a House and Senate he can work with.  This will make it possible for us to enact real economic stimulus that puts capital back in the hands of the free market through tax cuts and regulatory relief.  This will create business expansion and the creation of real jobs that will move people from the entitlement class into the producer class.

Political avengers, we have much work to do between now and November.  This election is most likely our last chance to begin dismantling the growing dependent class before we become like Greece and are unable to reverse the trend and face national bankruptcy.  We can and must win this fight.

1. David H. Autor, Mark G. Duggan. The Growth in the Social Security. economics.mit.edu. [Online] Journal of Economic Perspectives, 2006. [Cited: July 18, 2012.] http://economics.mit.edu/files/6345.

2. Gongloff, Mark. Rise In Disability Rolls Helps Explain An Unemployment Mystery. huffingtonpost.com. [Online] Huff Post Business, May 8, 2012. [Cited: July 18, 2012.] http://www.huffingtonpost.com/2012/05/03/social-security-disability_n_1474621.html.

3. Shemffield, Rachael. Food Stamp Participation the Highest Ever…and Growing. blog.heritage.org. [Online] The Heritage Foundation, April 232, 2012. [Cited: July 2012, 2012.] http://blog.heritage.org/2012/04/23/food-stamp-participation-the-highest-ever-and-growing/.

4. Corp., Fox News. Government under fire for 'novela' ad campaign promoting food stamp enrollment. foxnews.com. [Online] Fox News Corp., July 13, 2012. [Cited: July 18, 2012.] http://www.foxnews.com/politics/2012/07/13/government-under-fire-for-novela-ad-campaign-promoting-food-stamp-enrollment/.

5. Pine, Art. Joblessness: Becoming a Long-Term Problem? kilpinger.com. [Online] Kiplinger, June 27, 2012. [Cited: July 18, 2012.] http://www.kiplinger.com/columns/practical-economics/archives/long-term-joblessness-unemployment.html.