The Tipping Point
Is America nearing the fiscal tipping point?
Michael Franc provides an answer to the ominous question: “Is America reaching the tipping point?”
More and more Americans now share the unpleasant feeling that our nation (indeed, the entire Western world) has edged up to some sort of fiscal precipice.
Among the factors in play:
- Last year, 47 percent of all American households paid no income taxes. (It was only 32.6 percent in 2007.) Soon a majority of Americans may see government spending as a free lunch — a fount of more and more benefits that costs them nothing.
- The government’s role in our health sector is growing so fast that before long, government programs will account for a majority of all heath-care spending. By 2012, nearly three of every four American children could be eligible for government-run health care. Can we really “bend the health-care cost curve” down when so much health care is “free”?
- USA Today recently identified “a major shift in the source of personal income from private wages to government programs.” As a share of personal income, paychecks from private business are now at an all-time low, while government-provided benefits have never been so high.
- Unions now represent more government employees than private-sector workers. It’s no accident that public-sector unions have injected themselves forcefully into virtually every recent state and federal battle over taxes and spending. Their interests are higher taxes and bigger government.
Why it matters:
It really adds up. Preliminary research for the Heritage Foundation’s next Index of Dependence on Government indicates that dependency increased more in 2009 than at any time since the Jimmy Carter era. The largest spike in dependency came in the areas of health and welfare.
As dependency soared, economic freedom waned. Last year, the United States fell from the ranks of “economically free” nations, according to Heritage’s Index of Economic Freedom. Today we are the Land of the “Mostly” Free. The prime reason for our historically poor showing: our internationally high levels of debt, spending, and taxation.
Franc’s prescription:
Malaise won’t cut it. Only swift, wise fiscal action will do.
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