As US tax rates drop, government's reach grows

Study: 1 in 2 Americans now receives income from government programs.

By Mark Trumbull | Staff writer of The Christian Science Monitor

from the April 16, 2007 edition

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Maybe the era of big government isn't over, after all.

As Americans finish their annual tax-filing flurry to meet a Tuesday deadline, it is true that tax rates are lower than they were a few years ago. But according to a different yardstick, the federal government's reach is expanding.

Slightly over half of all Americans – 52.6 percent – now receive significant income from government programs, according to an analysis by Gary Shilling, an economist in Springfield, N.J. That's up from 49.4 percent in 2000 and far above the 28.3 percent of Americans in 1950. If the trend continues, the percentage could rise within ten years to pass 55 percent, where it stood in 1980 on the eve of President's Reagan's move to scale back the size of government.

That two-decade shrink-the-government trend now appears over, if for no other reason than demographics. The aging baby-boomer generation is poised to receive big payments from Social Security and government healthcare programs.

"New Deal programs persist," despite the Reagan revolution and its aftermath, says James Galbraith, an economist at the University of Texas in Austin. "They persist because they are largely successful and highly popular."

Mr. Shilling's analysis found that about 1 in 5 Americans hold a government job or a job reliant on federal spending. A similar number receive Social Security or a government pension. About 19 million others get food stamps, 2 million get subsidized housing, and 5 million get education grants. For all these categories, Mr. Shilling counted dependents as well as the direct recipients of government income.

Many Americans, in surveys, say they don't like the way their tax money is spent. And a majority now says, in a reversal from a year ago, that their federal income taxes are too high, according to an April Gallup poll.

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