Not a 'nation of takers,' Mr. President? Check the numbers

Reuters

President Obama waves to the crowd after delivering his inaugural speech during the presidential inauguration in Washington.

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Article Highlights

  • Obama used his inaugural address to tackle the question of moral hazard emanating from our burgeoning entitlement state.

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  • President Obama’s declaration that we are not a nation of takers is astonishing and bold – and not in a good way.

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  • According to Health and Human Services, more than 12 million working-age Americans are cashing gov. disability benefits.

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It is official: America is *not* a nation of takers.

How do we know? Because the president of the United States just said so.

President Obama used the occasion of his second inaugural address to take on the question of moral hazard emanating from our burgeoning entitlement state. In his estimate, there is no such risk — or at least none worth mentioning.
 
Here is the inaugural passage in question:

"We recognize that no matter how responsibly we live our lives, any one of us, at any time, may face a job loss, or a sudden illness, or a home swept away in a terrible storm. The commitments we make to each other — through Medicare, and Medicaid, and Social Security — these things do not sap our initiative; they strengthen us. They do not make us a nation of takers; they free us to take the risks that make this country great." [emphasis added]
 
With these words, the president 1) made it clear he is aware many Americans are troubled by the seemingly relentless expansion of government entitlement benefits, and) 2 also made it clear that he totally dismisses their concerns.
 
Obama's declaration is astonishing and bold — and not in a good way. This is an extremely peculiar — and, indeed, a peculiarly extreme — posture for a president of all the people to adopt.
 
Consider the following basic facts this assertion ignores:

— According to  the most recent Department of Health and Human Services figures, more than 12 million working-age Americans are cashing government disability benefits: a larger total than those cashing paychecks from the entire U.S. manufacturing sector;
 
— Over twice as many Americans are obtaining "means-tested" anti-poverty benefits from the government as are receiving old-age pension paymets from Social Security;
 
— Only about a tenth of the increase in Americans depending for benefits from government entitlement programs can be explained by the aging of the U.S. population per se;
 
— The Social Security and Medicare programs cannot cover their own outlay commitments from the contributions of the workers they "insure." According to the actuaries for those two government trust funds, the programs have promised their prospective beneficiaries tens of trillions of dollars of future benefits that they are not in a position to make good on through their expected funding streams.

We could go on, but you get the point.

No entitlement problem today? Really? Enormously powerful as the office he commands may be, the president is not invested with authority to make facts disappear.
 
That Obama chooses to behave as if it did suggests we may be in for even more trouble with our out-of-control entitlement system over the next four years than informed citizens, budget wonks, or financial markets currently realize.

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About the Author

 

Nicholas
Eberstadt
  • Nicholas Eberstadt, a political economist and a demographer by training, is also a senior adviser to the National Bureau of Asian Research, a member of the visiting committee at the Harvard School of Public Health, and a member of the Global Leadership Council at the World Economic Forum. He researches and writes extensively on economic development, foreign aid, global health, demographics, and poverty. He is the author of numerous monographs and articles on North and South Korea, East Asia, and countries of the former Soviet Union. His books range from The End of North Korea (AEI Press, 1999) to The Poverty of the Poverty Rate (AEI Press, 2008).

     

  • Phone: 202.862.5825
    Email: eberstadt@aei.org
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    Name: Alex Coblin
    Phone: 202.419.5215
    Email: alex.coblin@aei.org

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