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November 20, 2012

'Takers' are dominating U.S. politics

The Daily Star

---- — ‘Takers’ are dominating U.S. politics

Why did Obama win the election so handily? It’s not the economy. It’s the free lunch, stupid. 

In the four years of Obama’s presidency, federal transfer payments have increased by 34 percent. Transfer payments are payments the government makes to individuals for which no goods or services are expected in return, i.e., the government takes money from those who work for it and gives it to those who don’t. As a consequence, more than 60 percent of Americans now receive more in government benefits than they pay in taxes. Why would they vote for a candidate or a party that stands for lower taxes and smaller government? 

Then there are the non-payers: the 48-50 percent of Americans who pay no federal income tax. Yes, the non-payers do pay payroll taxes, but those taxes contribute to just two federal programs: Social Security and Medicare, and the contributors to those programs receive something back in retirement benefits and healthcare. Payroll taxes do not support the federal government. For instance, they do not contribute anything to national defense.

According to the Congressional Budget Office, the lowest 40 percent of wage earners in America, the bulk of the non-income taxpayers, pay on average about 2½ percent of their income in all federal taxes, including payroll taxes. The lowest 20 percent of earners, much of whose income comes from transfer payments from other Americans, paid only 0.3 percent in federal taxes, including payroll taxes. Are these groups going to vote for lower taxes and smaller government? Unlikely.

Are there makers and takers in America? Yes, there are and the takers now dominate American politics. I suspect they will for years to come. Soon we’ll have too many people in the cart and not enough pulling. Based on the election results, it appears that a majority of Americans now believe there is a free lunch. 

Robert J. Poulson Jr.