The Gravy Trainwreck

08/13/2012 12:31 pm ET | Updated Oct 13, 2012

I read a very interesting statistic recently. It said that according to data gathered from the U.S. Census' Survey of Income and Program Participation, almost 110 million citizens are now receiving some form of welfare benefits. Now, you may be saying, "well, of course, we are in a depression -- ahem -- recession." That may be true, but let's break the statistic down a bit further.

Now, it needs to be pointed out that this number does not include people who are only on Social Security, disability or otherwise. This number also does not include benefits from the Earned Income Tax credit, or from the subsidies from the proposed Obama health care law of 2014. Finally, this number does not include people who are only benefitting from Medicare. So, once you take these exceptions into account when realizing that the total population of the United States currently hovers around 300 million, you come to the conclusion that every third person you see on the street is receiving welfare in some form.

One in three people. Wow. If this doesn't shock you, it should. We are spending more money than ever before on welfare in this country. Some of you might say that's a loaded statement because when you consider the dollar amounts of money spent on welfare it will always increase because of inflation and other economic factors. Because the dollar itself holds a different value today than it did 100 years ago, from now on, let's use percentages to compare the amounts spent on welfare. Come on with me and take a trip back in time to see just how much we spent at some of the worst times in this country's history. Keep in mind these are all numbers that I've discovered myself in my own research. Also keep in mind that I'm using the same source of data for all the years compared. I'm not pulling numbers for one year from one source and another year from another source, etc. This should help to make the data a bit more reliable.

Before we begin, let me give you a brief history of welfare in this country. While welfare in a form that we'd all recognize started in this country during and in response to the Great Depression, welfare did exist somewhat before then. Throughout the 1800s, there were many attempts to reform how the government dealt with the poor. Many of these reforms tried to help the poor find work rather than simply handing them money. Social work consisting of teaching the poor morals and bestowing upon them a work ethic was even proposed in the late 1800s. The U.S. Congress did end up supporting some welfare programs for certain groups. There was Civil War Pension Program, passed in 1862, which provided aid to Civil War veterans and their families.

As I said, when the Great Depression hit and many families suffered, the government began a serious welfare program. At the height of the Great Depression (around 1933), almost one-quarter of the workforce was unemployed. These are numbers that are unheard of by today's standards. In order to help the millions of people who were out of work, Franklin D. Roosevelt signed the Social Security Act in 1935 as part of the "New Deal." The act established many programs that provided aid to different parts of the population. This act, amended in 1939, included Unemployment Compensation and AFDC, two programs that are still in effect today. As late as 1996, welfare programs were being created and changed to suit the times. Bill Clinton signed the Personal Responsibility and Work Opportunity Reconciliation Act, which gives the states lump sums to use for assistance of the poor as long as the states agree to encourage the poor to move from welfare to work. The program has generally been considered to be successful.

So, as you can see, welfare has been around for almost 100 years in its current form. So, let's compare some of the times in the last 100 years with today's welfare. By the published budget, federal welfare spending in fiscal year 2011 totaled $471 billion. The total spent overall was $38.33 billion. That means we spent approximately 12 percent of the U.S. budget on welfare programs in 2011. So let's compare.

Any talk of welfare numbers has to include the Great Depression -- the very event that welfare was created in its current form to help end. Well, let's take the year that many consider the height of that Great Depression. In 1933, the economy was at its worst and unemployment was at its highest with a rate of 24.9 percent. In 1933, the government spent $754 million on welfare programs. The total spent overall in 1933 was $12.62 million. That equates to 6 percent percent. In the height of the Great Depression, supposedly the country's greatest period of economic hardship, the total percent spent on welfare was half of what we spend today.

Okay, so maybe 1933 was a fluke. Let's take another year. In 1974, the U.S. was suffering from an economic downturn. Interest rates hit 11 percent, and people had memories of waiting on line for gas the year before. The unemployment rate was around 5 percent, and people were suffering. That year, the government spent $42.8 billion on welfare. The total spent overall was $453.2 billion. That equates to about 9 percent. More than the Great Depression, but still a far cry from the 12 percent we spend today.

Let's try one more period just to make sure. In 1958, America had an unemployment rate of 5.8 percent, but other countries in the world were hit much harder. This was the most significant economic downturn during the post-World War II boom. That year, the government spent $8 billion on welfare. The total spent overall was $134 billion. That equates to 5 percent. Close to the percentage of the Great Depression, but still not even close to the 12 percent we spend today.

Just to recap:

1958 - 5 percent

1933 - 6 percent

1974 - 9 percent

2011 - 12 percent

So, here we are folks, in 2012. Right now we spend twice as much on welfare, proportionally, than during the Great Depression. What will the future hold? Well, if the trend continues, the welfare handouts in the country will eventually reach a point where they are unsustainable. Many believe we have already reached that point, and it may be true. I think we really need to look at the percentage numbers and not the actual dollars spent. Of course, I understand there are concerns such as what is considered welfare spending and what is not, but no one can refute the overall trend. I think it is time to make the hard choices and force this country to take its medicine. Each and every one of us is going to have to make sacrifices in order to get this economy back on track, and it begins with stopping this "Gravy Trainwreck" before it careens off the rails.