Do you believe everything the government tells you? - The Daily Reckoning
The Daily Reckoning by Bill Bonner
On This Day - 10 February 2012
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Delray Beach, Florida

We used to like traveling. Now, it's a drag.

"No, we don't want to go through your new x-ray machine," we told the TSA guard.

"What's the matter? It's safe..." she replied.

"How do you know that?"

"The government said it was safe."

"Do you believe everything the government tells you?"

"Heh...heh... Okay..." then, turning to no one in particular... "REFUSAL on 11. Male."

We were out quickly...but the poor old woman behind us had to get up out of her wheelchair...hobble through the x-ray machine...and then they still wanted to feel her up on the other side.

You can't be too safe, right?

This has been going on for 10 years. But it is still shocking. No one seriously believes that 85-year-old crippled Lutherans are going to cause mayhem on commercial airliners. But no one seems willing to say so.

You can't even ask the question. Because it leads to other questions. Who, actually, is a threat? Probably no one. So, why are we herded... inspected...and pawed...as if the survival of the nation depended on it?

For the money and aggravation, all this security has probably done little to make air-travel any safer. But it's done wonders at turning the American population into whipped dogs. They bark on command. When they begin the round-ups, interrogations and deportations...Americans will be ready to get in line...

You'll see part of the reason why, below...

Recent news brought reports of more new jobs. We suspect that most of the good news was merely misinterpretation of the data. Many people have been looking for work for so long, the feds have stopped counting them. Besides, they routinely adjust jobs upward in winter, to make up for bad weather. So when there isn't any bad weather in January, the job numbers go up automatically.

But there's another problem.

"Most of the new jobs being created," complains Robert Reich, "are in the lower-wage sectors of the economy - hospital orderlies and nursing aides, secretaries and temporary workers, retail and restaurant. Meanwhile, millions of Americans remain working only because they've agreed to cuts in wages and benefits. Others are settling for jobs that pay less than the jobs they've lost. Entry-level manufacturing jobs are paying half what entry-level manufacturing jobs paid six years ago."

He continues, in the Christian Science Monitor:

Other people are falling out of the middle class because they've lost their jobs, and many have also lost their homes. Almost one in three families with a mortgage is now underwater, holding their breath against imminent foreclosure.

The percent of Americans in poverty is its highest in two decades, and more of us are impoverished than at any time in the last fifty years. A recent analysis of federal data by the New York Times showed the number of children receiving subsidized lunches rose to 21 million in the last school year, up from 18 million in 2006-2007. Nearly a dozen states experienced increases of 25 percent or more. Under federal rules, children from families with incomes up to 130 percent of the poverty line, $29,055 for a family of four, are eligible.

Too bad; Reich misunderstands everything. He thinks Republicans are to blame for wanting to reduce government handouts. Reich believes he can replace real middle-class earnings with a cushier safety net...as if there was no difference between a person who earns a living...and one who begs one....

...and as if the middle class wouldn't have to pay for it.

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*** On the subject of handouts, the Republicans are on slightly more solid ground than Reich and the democrats. They say they will cut them back. At least, those that don't go to the voters.

For example, Mitt Romney says he doesn't care about the poor; he cares about the middle class. Why? The middle class votes; the poor don't.

Trouble is, there are more and more people who are slipping from the middle class ...to the poor side of town.

Investment Business Daily is on the story:

The American public's dependence on the federal government shot up 23% in just two years under President Obama, with 67 million now relying on some federal program, according to a newly released study by the Heritage Foundation.

The conservative think tank's annual Index of Dependence on Government tracks money spent on housing, health, welfare, education subsidies and other federal programs that were "traditionally provided to needy people by local organizations and families."

The two-year increase under Obama is the biggest two-year jump since Jimmy Carter was president, the data show.

The rise was driven mainly by increases in housing subsidies, an expansion in Medicaid and changes to the welfare system, along with a sharp rise in food stamps, the study found.

"You can't get around the fact that policy decisions made over the past two years, on top of those made over the past several decades, are having a large effect on the pace of growth of the index," said William Beach, who authored the Heritage study.

Government dependence has climbed steadily since 1962, when the index stood at 19. By 1980, the index had risen to 100. It stood at 294 in 2010, the last year for which the data are available. D.C.-based Heritage has produced the index for nine years.

The report also found that spending on "dependence programs" accounts for more than 70% of the federal budget. That, too, is up dramatically. In 1990, for example, the figure stood at 48.5%, and in 1962 just over a quarter of federal spending went to dependence programs.

At the same time, fewer Americans pay income taxes, the report notes. Almost half (49.5%) didn't pay income taxes in 2009, the latest year for which the researchers have data. Back in the late 1960s, only 12% of Americans escaped the income tax burden.

Other findings:

The number of people dependent on the federal government shot up 7.5% in the past two years.

In 2010, for the first time ever, average spending on dependence programs per recipient exceeded the country's per-capita disposable income.

Our quick-witted Dear Readers are probably already gasping for air. The zombies now are getting more money than wage earners. And millions of those wage earners are zombies themselves, on the government payroll...or the payroll of some industry - health, education, military - that depends on federal spending.

That leaves honest working people in a minority. And everybody gets a vote.

How do you think the zombies will vote? To cut back on spending on education? On healthcare? On foreign wars or new weapons? On welfare? On foodstamps? On unemployment comp?

No, dear reader, there are some ailments that can't be cured...and some problems democracy cannot solve.

Bill Bonner is the President & Founder of Agora Inc, an international publisher of financial and special interest books and newsletters.

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