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January 21, 2015

Obama's SOTU Proposals Could Put More Than 57% Of The Public On The Federal Dole


Adding in President Obama’s costly new entitlement programs outlined in his State of the Union address could put a back-of-the-envelope estimate of about 180 million Americans on the government dole.

While most people believe getting Americans off the public dole is the sign of a successful economic policy, the president believes in getting even more people on it.

In 2011 some 49.2 percent of U.S. households received benefits from one or more government programs—about 151 million out of an estimated 306.8 million Americans—according to the U.S. Census Bureau.

With an estimated 6.8 million Americans getting subsidies for health insurance and another 3 million to 4 million new additions to the Medicaid (i.e., welfare) rolls, perhaps 162 million (out of a 2014 population of 318.9 million) are getting federal assistance. That puts it about 51 percent of the population—past the 50 percent tipping point. (Though an estimated 26 million were predicted to get coverage but didn’t, which would have put the figure at 177 million, or about 56 percent.)

But the president’s not done yet. Millions more Americans would begin receiving taxpayer-funded federal benefits under two of his SOTU proposals: (1) a $3,000 child care tax credit; and (2) free community college for anyone, apparently regardless of income or assets.

How many Americans would be added to the federal dole if Obama succeeds in getting these programs passed? The White House hasn’t revealed any details so we’ll have to make some assumptions and educated estimates.

Let’s start with the child care tax credit. There’s an estimated 11 million children younger than age five. And perhaps 13 million to 14 million if we go to age six.

We don’t know the president’s income parameters yet, but based on his other programs they will likely extend to the upper middle class. (Under Obamacare a family of four can make up to $95,000 and still get federal subsidies to help pay for health insurance.) However, many of them will already be getting some form of federal assistance, such as Medicaid, and adding them would be double counting. So 5 million to 8 million new additions to the federal dole would be a reasonable estimate.

Normally a tax credit isn’t a check to the recipient, it’s a reduction in what the family owes in federal income taxes. However, if Obama makes the tax credit “refundable,” meaning the government writes people a check for the difference between the amount of the benefit and their taxes, then it’s a new entitlement program and not just a tax cut.

Now, look at his “free” (meaning taxpayers rather than students pay for it) community college entitlement. There are 7.7 million people enrolled in community colleges. And that number would likely grow if there were no cost, so let’s call it 9 million or 10 million students getting government-financed higher education.

So putting the two programs together: perhaps 8 million children getting federal child care assistance and then perhaps 10 million community college students getting a government freebie, for a total of 18 million new government dependents. Add that to the 162 million mentioned earlier and about 57 percent of the population would be getting some type of federal assistance.

Of course, Obama proposed several other entitlements, such as one week’s paid sick leave, but he wants the government to force employers (which actually means co-workers in the form of lower wages or consumers in higher prices, or both) to pay for those freebies.

Barack Obama has made it clear he won’t stop until every American has education as good as inner-city public schools, health care as good as the VA, and retirement security as good as a Bernie Madoff investment plan. And since the president won’t stop, it’s up to Republicans (and maybe a few reasonable Democrats) to stop him.


  • TaxBytes-New

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