We've done a few posts recently looking at who does and doesn't pay taxes to the federal government. But what about Mitt Romney's point on government dependency? How many Americans are actually receiving aid from the federal government? And who are these people?
Below are a few facts — and charts — to consider. Mitt Romney is correct that about half of all Americans now live in a household that receives some sort of federal government benefit. And that number has risen during the Obama years. On the other hand, a large chunk of this money goes toward the elderly and disabled. And most entitlement benefits flow to the middle class—which, judging by polls, tends to split evenly between Obama and Romney.
1) In 2011, about 49 percent of the population lived in a household where at least one member received a direct benefit from the federal government. A big chunk of these households are retirees. And about 27 percent households benefited from a means-tested poverty program. A quick breakdown:
--Last year, about 29 percent of households received Medicare benefits and 31.6 percent received Social Security. (Obviously there's a lot of overlap between those two, since those programs mainly benefit retirees.)--Meanwhile, about 32 million households, or 27.1 percent, benefited from at least one means-tested poverty program. The biggest benefits here were Medicaid (19.5 percent), food stamps (12.7 percent) and subsidized lunches (11.2 percent). Again, there's some overlap.--Smaller benefits include public housing (5 percent of households), unemployment (4 percent), and veterans' compensation (2.6 percent). Only 7 percent of households receive some sort of direct cash assistance, such as the TANF welfare program.
2) The number of households receiving government benefits has steadily risen over time, particularly after the financial crisis. The recent increase can partly be chalked up the recession, which threw a lot of people out of work, and partly due to President Obama's stimulus programs, which expanded (among other things) unemployment insurance and Medicaid:
3) Three-quarters of entitlement benefits written into law in the United States go toward the elderly or disabled. That's according to the Center on Budget and Policy Priorities. And a big chunk of the rest goes to working households. Only about 9 percent of all entitlement benefits go toward non-elderly, non-disabled households without jobs (and much of that involves health care and unemployment insurance):
CBPP notes that this ratio doesn't change if you include low-income discretionary programs (such as rental assistance or the Women, Infants and Children program) that have to be renewed each year.
4) The bulk of entitlement program spending goes toward the middle class. Again, here's CBPP:
By "entitlements," CBPP is including Social Security, Medicare, Medicaid, children's health insurance, food stamps, school lunch programs, welfare, unemployment insurance, the Child Tax Credit and the Earned Income Tax Credit. It does not include a few discretionary programs (like rental assistance or low-income energy subsidies) which are aimed more directly at the poor. Those programs, however, are a lot smaller in comparison.
5) In 2010, according to one analysis, 60 percent of Americans were receiving more in government benefits than they paid in taxes. That's according to this analysis from the conservative Tax Foundation.
That year, the report notes, the bottom 10 percent of the population received about $10.44 in benefits for every $1 they paid in taxes. Those in the middle received, on average, $1.15 in benefits for every $1 they paid in taxes. And those in the top 10 percent received about 43 cents in benefits for every $1 they paid in taxes.
6) However, many Americans who receive government benefits in one year go on to pay more taxes in subsequent years. One limitation of the Tax Foundation study is that it doesn't track people over time.
For instance, about half of all Americans with children took advantage of the Earned Income Tax Credit (EITC) at least once between 1989 and 2006, according to recent research. But most people stayed on for two years or less. And many of those EITC recipients ended up paying more in taxes later on, as they moved up the income ladder:
7) If you expand the definition of "government benefit" to include tax expenditures, many more Americans benefit. There's a long-standing debate about whether to count tax breaks like the mortgage-interest deduction for homeowners or the employer health deduction as a government "benefit." Some economists say that these tax expenditures are no different from actual spending. Others contend that these deductions merely allow people to keep more of their own money.
Yet these tax expenditures added up to about $1.2 trillion in 2011. And they tend to flow disproportionately toward wealthier households: