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America’s stunning entitlements explosion

AEI scholar Nick Eberstadt’s latest book, A Nation of Takers, provides a sobering analysis of the entitlements explosion and its effect on the American economy and culture.

It’s a reminder that without significant, Reagan-style growth and/or massive spending cuts, our entitlement system threatens to sink the American economy.

1. Although Social Security already existed, the Great Society launched the ever-expanding modern American welfare state:

Note: Derived from data on official transfers and changes in consumer price index. Source: US Bureau of Economic Analysis

2. The rate of entitlement growth per capita has been nearly twice as fast as per capita income growth for the last fifty years

Note: Derived by author on the basis of data on official transfers, price changes, and population change. Sources: US Bureau of Economic AnalysisUS Dept. of LaborUS Census International Data Base

3. In the 1960s, the federal government spent $2 on governing for each $1 it spent on entitlement transfers. Today that ratio has completely flipped:

Sources: Derived from: Federal government entitlement transfers: Bureau of Economic AnalysisFederal Budget Outlays: White House Fiscal Year 2012 Historical Tables

4. It took only two generations for transfers to displace everything else the federal government does.

Sources: Government Entitlement Transfers: Bureau of Economic AnalysisFederal Government Consumption

5. Here’s where the money goes:

Sources: Bureau of Economic AnalysisUS Department of Labor, Bureau of Labor Statistics, consumer price index

6. In 1969, government benefits accounted for 7.8% of Americans’ personal income.

Source: The New York Times, February 11, 2012, The Geography of Government Benefits

7. In 2009, government benefits accounted for nearly 18% of Americans’ income. And the regions which relied most on benefits in 1969 have become even more dependent.

Source: The New York Times, February 11, 2012, The Geography of Government Benefits

8. Nearly 50% of the U.S. population lives in a household that receives some government benefits.

Source: Sara Murray. “Nearly Half of U.S. Lives in Household Receiving Government Benefit,” Wall Street Journal

9. 31% of US households are receiving means-tested public benefits.

Source: Unpublished U.S. Census Bureau data run commissioned by the Wall Street Journal, provided to the author by Sara Murray, January 16, 2012

11. As the Welfare State has expanded, Americans are working less.

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