Americans depend on the government for nearly one out of every six dollars of their income, and that will likely rise as recession-related spending, new government programs and entitlements are enacted.
In contrast to the pre-Depression laissez-faire attitudes, government programs such as Social Security, unemployment insurance, food stamps and health care now account for about 16 percent of the personal income of Americans, USA Today reported, citing Bureau of Economic Analysis data.
That is the largest percentage since record keeping began in 1929 and would total more than $2 trillion in spending on government benefits. That would amount to $17,000 per household. Benefits are rising at an annual rate of 19 percent.
Pushing up the spending are programs such as the Medicare prescription plan enacted during the Bush administration. Social Security spending is also on the rise as baby boomers reach retirement age. Some workers are choosing to retire early with a 10 percent to 15 percent increase in early retirements.
Unemployment insurance spending is increasing with the states and federal governments extending their jobless benefits. The federal stimulus package provided for extensions, too.
The stimulus also helped boost food stamp spending by raising benefits while the number of recipients went up by 5.2 million to a record 33.2 million people in March.
Dean Baker, an economist for the Center for Economic and Policy Research, said the increase in social spending is "relatively modest given the severity of the downturn."
Government benefit programs will continue to rise. But Americans must weigh the financial costs of the safety net against the social disruptions and worsening hardships without it.