NCPA - National Center for Policy Analysis


June 5, 2009

The recession is driving the safety net of government benefits to a historic high, as 1 of every 6 dollars of Americans' income is now coming in the form of a federal or state check or voucher, says USA Today.

So what's driving the $209 billion increase in benefit costs from a year ago: Social Security, food stamps and unemployment insurance, says USA Today.  These three benefits account for nearly 16.2 percent of personal income in the first quarter of 2009; that's the highest percentage since the government began compiling records in 1929:

  • The bad economy has prompted a 10-15 percent jump in early retirements, and a 5.8 percent increase took effect January 1; bottom line: Social Security has accrued $55 billion in new costs.
  • Enrollment in food stamp programs hit a record 33.2 million people in March, up 5.2 million from last year; the stimulus law boosted the size of the benefit.
  • Nearly one-fourth of the extra spending covers jobless benefits, a program started in the Depression; the stimulus law, passed in February, increased benefits.

In all, government spending on benefits will top $2 trillion in 2009 -- an average of $17,000 provided to each U.S. household, yet, the recession caused about half of the increase, and even though this current increase in social spending is still relatively modest given the severity of the downturn, the benefits' explosion will eventually lead to an economic crisis, reports USA Today.

Source: Dennis Cauchon, "Benefit spending soars to new high," USA Today, June 3, 2009.

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