The angry crowds demonstrating against Obamacare have taken the administration and its supporters by surprise. Pundits are chasing explanations for this uprising like beagles running down a rabbit. Like a crazed pack of hounds, many have become muddled and missed the obvious.
I believe the outrage over the proposed healthcare plan reflects a newly emerging and profound rift between our country's Takers and Givers. The United States is nearing, or has reached, a tipping point, where there are more people receiving assistance from the government than there are contributing to it. In normal times, Givers outnumber Takers, and are prosperous enough to cheerfully shoulder the burden for their fellow countrymen. These are not, however, normal times.
Economic hardship has made Americans anxious. They are alarmed about rising deficits, shrinking retirement funds, and the prospect of continuing high unemployment. Moreover, they are terrified that no matter how well they do, their future will not be protected against confiscatory tax rates and a widening, costly, social umbrella. Simply put, Givers are up in arms.
Economist Gary Shilling published a piece in 2007 which claimed that 52.6% of Americans receive "significant income from government programs", up from 49.4% in 2000 and 28.3% in 1950. Included are 19 million on food stamps, 57 million receiving Social Security payments, more than 4 million who collect payments or healthcare from the Veterans' Administration, those living in subsidized housing and those employed directly or indirectly by the government. Though he hasn't updated the report, Mr. Shilling would not find the percentage dropping, since many states are reporting rising welfare rolls amid widening unemployment. And that's the figure even before the government started bailing out banks and autos.
Meanwhile, the number of Americans paying no taxes has soared in recent years. According to the Tax Foundation, about one-third of those who file income tax returns pay no taxes, up from a low of 18% in the early 1980s; another 20 million or so Americans do not file returns at all. Higher taxes, drained from the Givers, are the life blood for Takers. At the same time, greater largesse from the government pleases Takers and may increasingly infuriate the Givers. A survey by the Tax Foundation found that 56% of Americans think their federal taxes are already too high. Also, the two thirds of American workers that pay taxes consider that everyone should be required to do so.
This shift has been lurking in the wings for decades as the Baby Boomers approached retirement, but the proposition that one group of Americans should necessarily provide medical care for another has thrust the issue to center stage. A similar outcry greeted the recognition in 1980 that 55% of Americans were receiving handouts from the government - a finding that ushered in the Reagan revolution.
Despite the connotations, please note that there is nothing essentially Good about being a Giver, and nothing Bad about being a Taker. Many people receiving food stamps or subsidized housing, or on Medicaid or unemployment compensation, are doing so despite their best efforts and through no fault of their own. Moreover, our system assumes that at some point most people will move from being a Giver to being a Taker when they retire and begin to collect Social Security.
Still, the support of that large and growing group of people that receives more from the government than they pay in increasingly burdens our population of Givers. The Givers see the demands from the Takers spiraling upward just as their income, for the most part, is sagging.
They see, for example, the bulge of Boomers moving into retirement and onto Social Security and Medicare -- a frightening prospect. The Social Security Board of Trustees recently reported that the only way to bring Social Security into balance would be to immediately hike the payroll tax to 16% from 12.4%-14.4% or to cut benefits by 13%; in the case of Medicare, the payroll tax would have to jump from 2.9% to 6% - a 134% increase, or benefits would have to drop by 53%. To repeat, Medicare benefits would have to fall by more than half to balance the books going forward.
The burden on the younger generation is going to grow; the projections of future debts and deficits are frightening. Forces driving the economy will not help. We continue to transition away from manufacturing, and though many jobs created in the past decade in software design and financial engineering, for instance, were not foreseen ten years ago, many worry about our ability to put people to work. Moreover, we have been happily spending tomorrow's paychecks. Consumers ran through much of their wealth by drawing down the equity in their homes. That was a one-off; now they need to de-leverage- a process already underway. At the same time, we are painfully indebted to the Chinese for low-priced consumer goods which have helped keep a lid on inflation, but which have built a formidable trade imbalance. To continue to attract the billions we need to balance the books, the U.S. will have to protect the dollar from further erosion, jeopardizing our ability to export. Another "jobless recovery" not only bodes ill for the ability of the Givers to keep giving. It also bodes ill for their good humor. Like the maiden aunt who finds her savings depleted and whose plan for the future includes one boiled egg per day instead of two, the United States is coming to terms with a diminished future.
I do not for a minute sell short the open-handed impulses of most Americans. Our country is statistically the most generous on earth. But, let's face it, we're also the richest country on earth, and we've been able both as a country, and individually, to afford our generosity. Times have changed. Just as a person entering retirement may become less philanthropic as he plans for living on a reduced, income, Americans are contemplating their economic future, and are suddenly not so optimistic. If we are anxious about the nation's future prosperity, and I believe many are, we may not be quite so thrilled to step in and help out our neighbor.
This is the reality that Obama, convinced of the moral rightness of helping out those who cannot afford health insurance, has failed to grasp. Americans are indeed compassionate towards those who do not have health insurance. They are, however, first and foremost concerned about their own welfare. Who can blame them?