The High Cost of “Free”

Why does a large portion of the population choose not to work when there are many jobs available? The answer is simple. If you can receive 2-3 times as much money from unemployment, disability, and/or welfare benefits (subsidized housing, food stamps, free cellphones, etc.) as you can from a temporary or part-time job, and live a life of leisure, why work? In 2011, the U.S. government spent over $800 billion[1] on this “welfare,” exceeding expenditures on Social Security or Medicare.

In the Denver arena where Mr. Obama gave his DNC 2008 acceptance speech, a woman in the audience became overwhelmed by the speech and said that she no longer needed to worry if she could make her car or mortgage payments because he would take care of it for her. In Cleveland, a woman claimed that she was going to vote for President Obama again because he gave her a free cellphone (along with a litany of other entitlement giveaways). Before you growl, you should know that the free cellphone program was instated by President Bush in 2008 through the FCC’s Universal Service Fund. Fees for these “free” cellphones are paid by all telecommunications service providers out of the revenue received from their paying customers. Despite the political rhetoric over the past half century, entitlements were actually highest during Republican administrations. The political allure of free is bi-partisan.

The political allure of free is so strong that an alarming number of people choose to become wards of the entitlement/welfare state rather than captain their own destiny. Economist Nicholas Eberstadt of the American Enterprise Institute believes that Americans have become a nation of takers, threatening the self-reliance that has long characterized our national psyche. Eberstadt (2012, p. 4) presents data showing that entitlement payments to Americans, since 1960, have risen annually by 9.5 percent. He argues that over the past 50 years the ever-increasing array of transfer payments to Americans have risen 727 percent. In 2010 such payments alone totalled $2.3 trillion with Social Security (for old age and disability) accounting for 31 percent, Medicare 24 percent, Medicaid 18 percent, Income Maintenance 12 percent, other giveaways (free cell-phones, support for a broken education system, housing, the arts, etc.) 8 percent, and Unemployment Insurance 6 percent (Eberstadt 2012, C1-2). This has resulted in 49 percent of American households receiving one or more government transfer benefits (Eberstadt 2013); this amounts to 18 percent of all personal income and a burden of $7,400 for every American. CONTINUE READING