The 2010 Index of Dependence on Government: Dramatic Spike in Dependence Projected

Abstract: Year after year, The Heritage Foundation’s Index of Dependence on Government documents the ever-growing number of federal aid programs and the ever-growing number of Americans who rely on government subsidies for their existence. The number of Americans who now pay no taxes has passed 35 percent. The International Monetary Fund predicts financial devastation for the U.S. by 2015 unless drastic cuts are made in the deficit immediately, and Congress has lost control of the national budget. An impending tipping point for the structure of American government and civil society is tangible. Following are preliminary estimates for the upcoming 2010 Index of Dependence on Government that all Americans should heed.

The Heritage Foundation has published the Index of Dependence on Government for eight consecutive years. For each of these eight years, the Index has signaled troubling and rapid increases in the growth of dependence-creating federal programs; and for each of these eight years, Heritage has warned of the threat that rapid growth in government dependence poses for the United States’ republican form of government, as well as for the broader civil society.

Preliminary estimates for the 2010 Index dramatically underscore the concerns of years past. According to preliminary estimates by The Heritage Foundation’s Center for Data Analysis (CDA):

1. Americans’ dependence on government grew by 13.6 percent in 2009.

2. The Index’s dependence variables that grew the most over that past year are:

  • Health and Welfare at 22 percent,
  • Rural and Agricultural Services at 20 percent, and
  • Housing at 15 percent.[1]

3. The increase over 2009 means that the Index has grown by 49 percent since 2001.

4. Americans’ dependence on the government was 14 times greater in 2009 than it was in 1962.

The increase in the Index of Dependence on Government during 2009 is the greatest single-year percentage change since 1976. It covers data through the end of 2009, which was a momentous year across a wide horizon of public policies. Even seasoned Washington insiders, however, might be surprised to learn just how noteworthy that year was.

Index of Dependence on Government, 1962-2009

Not only did the federal government effectively take over half of the U.S. economy and expand public-sector debt by more than all previous governments combined, but it also oversaw the largest single-year expansion in total government debt in U.S. history. Much of that growth in new debt can be traced to dependence-creating government programs.

U.S. spending and debt have now become of concern to the International Monetary Fund (IMF). On May 14 of this year, the IMF ranked the U.S. second among the countries that must reduce their structural deficit (caused in part by spending on dependence-creating government programs) or risk financial calamity. The IMF predicts that U.S. public-sector debt will equal 100 percent of gross domestic product (GDP) by 2015 unless immediate action is taken to cut the deficits by an amount equal to 12 percent of GDP. Even woeful Greece needs to cut its deficits only by 9 percent of its national output.

The federal government’s budget is not quite as fiscally sick as California’s, but it may not be long before President Barack Obama calls for cuts in pensions, salaries, welfare programs, and infrastructure spending as Governor Arnold Schwarzenegger is already doing in the Golden State.

How are debt and dependence on government connected? What can Americans do to avoid the embarrassments of California and Greece? In order to answer these questions, one must focus on dependence-creating government programs.

To be clear: Every person will be dependent on others many times during his or her life, and there is nothing wrong with that. People spend most of their childhoods utterly dependent on their parents, and many people will rely on caregivers during their last years. Dependence on family, neighbors, fellow members of community groups, and—yes—local government is the normal, everyday stuff of life.

via The 2010 Index of Dependence on Government: Dramatic Spike in Dependence Projected | The Heritage Foundation.

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