The Return of Thrift: How the Coming Collapse of the Middle Class Welfare State Will Reawaken Values in Americaby Phillip Longman
While debate rages in Washington over dismantling welfare, few realize that the "welfare state" properly understood encompasses much more than aid to the poor. There is a vast and hidden "middle class welfare state" in this country, which provides comfort and security for tens of millions of Americans in the form of home mortgage deductions, Medicare, Social Security,… See more details below
While debate rages in Washington over dismantling welfare, few realize that the "welfare state" properly understood encompasses much more than aid to the poor. There is a vast and hidden "middle class welfare state" in this country, which provides comfort and security for tens of millions of Americans in the form of home mortgage deductions, Medicare, Social Security, veterans' benefits, and well-paid government and military jobs. But as Phil Longman demonstrates, it is precisely this huge entitlement infrastructure that is the source of our most serious long-term economic problems. As the Baby Boom generation ages, public and private pension systems will be taxed to their limits, government spending will spiral out of control, and health care will be priced as a luxury good. The implications for the average American can be expressed by one shocking and easily grasped fact: To make up for Social Security and Medicare benefits that will never materialize, the typical 35-year-old today earning $35,000 should be saving over $550 each month, equal to 20% of his income - or should look forward to a sharp drop in his living standards after retirement. In The Return of Thrift, prize-winning journalist Phillip Longman exposes the outrageous growth of middle class giveaways, and how it has coincided with a dramatic decline of American values - simple yet important ideals like thrift, family, work, and citizenship. As conservatives have argued, not only do entitlements bankrupt the government, they remove the incentives for family and individual responsibility. The culture of entitlement bred by this subsidized economy has taken on a life of its own, to the point where many Americans feel free to rail against "welfare mothers" and foreign aid, while enjoying their own substantial perks and turning a blind eye to the coming fiscal catastrophe. Political pundits endlessly debate whether the economy or "values" is the most salient issue to voters; the 1996 election is large
At the outset, Longman (Born to Pay, 1987) stresses that the poor get only a small fraction of the trillion the US government disburses each year in transfer payments. He shows that most such monies flow to comparatively affluent individuals through Social Security, Medicaid, civil service or military pension, and allied benefit programs for veterans of the armed forces. The toll is appreciably greater, the author notes, when allowance is made for subsidies (e.g., to farmers) and corporate and personal loopholes in the Internal Revenue Code, such as those permitting home buyers to deduct the cost of mortgage interest on their returns. Following an informative rundown on how entitlements become fixtures of the middle-class lifestyle, Longman calculates the present and future price of these programs in some detail. Along his unrelenting way, he also concludes that America can't afford to keep making such outlays. Only a handful of agencies have funded their pension liabilities, the author points out; most (including the Social Security system) are engaged in Ponzi schemes that depend on the US Treasury to pay retirees from current revenues. With the gravy train nearing the end of the line, he predicts the spendthrift US populace will adjust in ways that could work to the advantage of the country, for example, by becoming more self-reliant and strengthening family ties. To lessen the aging's claims on the young as well as to encourage higher savings rates in the meantime. Longman proposes some modest reforms. Cases in point include calibrated givebacks, limits on special-interest tax deductions, and means tests.
An evenhanded inquiry into the wealth of a nation, whose findings the American electorate ignores at its economic peril.
- Free Press
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- Product dimensions:
- 6.39(w) x 9.60(h) x 0.91(d)
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