TrimTabs: Entitlements Now Comprise a Third of All US Wages

Wednesday, 09 Mar 2011 07:47 AM

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According to data from research firm TrimTabs, the amount of government payouts — including Social Security, Medicare and unemployment insurance and programs intended to improve the economic well-being of U.S. citizens — now constitute more than a third of total wages and salaries of the entire U.S population.

This record 35 percent figure — up from 21 percent in 2000 and 10 percent in 1960 — will only increase if action isn’t taken before the majority of baby boomers enter retirement, according to TrimTabs research based on data from the Bureau of Economic Analysis.

“The U.S. economy has become alarmingly dependent on government stimulus,” Marilyn Schnapp, director of TrimTabs macroeconomic research, told CNBC.

“Consumption supported by wages and salaries is a much stronger foundation for economic growth than consumption based on social welfare benefits.”

Schnapp says the U.S. has only two choices. “Either wages and salaries would have to increase $2.3 trillion, or 35 percent, to $8.8 trillion, or social welfare benefits would have to decline $500 billion, or 23 percent, to $1.7 trillion.”

The National Review’s Mona Charen points to a just-released study by the Department of Health and Human Services delivers harsh news about the Head Start program, which was intended to give poor kids a leg up in education.

The program, Charen says, “would have been worth the $166 billion taxpayers have spent on it since 1965 if a significant portion of Head Start alumni had actually improved their educational outcomes and escape poverty.”

Unfortunately, says Charen, “that did not happen.”

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