Obama, friend of the 1%, foe of the poor


There'll be checks for all of you, just calm down

There’ll be checks for all of you, just calm down

 Investors Business Daily: 

Buried deep in a section of President Obama’s budget, released this week, is an eye-opening fact: This year, 70% of all the money the federal government spends will be in the form of direct payments to individuals, an all-time high.

In effect, the government has become primarily a massive money-transfer machine, taking $2.6 trillion from some and handing it back out to others. These government transfers now account for 15% of GDP, another all-time high. In 1991, direct payments accounted for less than half the budget and 10% of GDP.

What’s more, the cost of these direct payments is exploding. Even after adjusting for inflation, they’ve shot up 29% under Obama.

ObamaCare, Medicare…

Where do these checks go? The biggest chunk, 38.6%, goes to pay health bills, either through Medicare, Medicaid or ObamaCare. A third goes out in the form of Social Security checks. Only 21% goes toward poverty programs — or “income security” as it’s labeled in the budget — and a mere 5% ends up in the hands of veterans.

Interestingly, despite Obama’s frequent pledges to reduce income inequality, the share of direct payments going toward “income security” has dropped from 25% in 2009 to 20% in 2014. (The average share from 1980 to 2008 was 25.4%.)

Obama’s Fiscal Year 2015 budget calls for this share to drop to just 17% by 2019, as his programs devote more and more federal tax money to middle-class entitlement programs such as ObamaCare.

Here’s another way to look at it: If all these federal direct payments went only to the poor, every person living in poverty today would receive an annual check worth $55,900.

The 1% Handouts

Instead, a surprisingly large amount of federal money is handed out to wealthy Americans through Social Security, Medicare, farm subsidies, unemployment benefits, conservation programs, disaster payments and other programs.

An IBD analysis found that the richest 1% of Americans, in fact, receive roughly $10 billion each year in federal checks.

Outgoing Sen. Tom Coburn, R-Okla., who exposed these vast payment programs available to the rich, said “this reverse Robin Hood-style of wealth distribution is an intentional effort to get all Americans bought into a system where everyone appears to benefit.”

The White House normally releases the Historical Tables section of the budget — where these direct payment numbers are detailed — along with the rest of the budget documents. But while Obama released the main parts of his 2015 budget last week, he delayed the release of this little-noticed section until this week.


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8 responses to “Obama, friend of the 1%, foe of the poor

  1. Cos Cobber

    I figure this is what is funding AJ.

  2. Rob Anrud

    And this is a bad thing? Should be more. Back to 1970s tax levels with corporations included. What you call redistribution is what I call pump-priming…with unions crushed, government is the last friend of the voter.

    For Wh

  3. Joey

    mmmmmm. I am perturbed that something you have paid into is called a “handout” when you receive it twenty years later. Social Security and Medicare are “direct payments” but should not be confused with medicaid and other welfare like programs. I am not saying that welfare is unwarranted but it is certainly a different type of tranfer program. This is what happens when you get an journalist trying to be a public policy analyst. All of the figures cited in this article are a result of long-term demographic changes and legislation that has been taken over decades. This has nothing to do with any policy initiative taken by Obama, Bush (I or II) or anyone other individual in the government.

    • Inagua

      >I am perturbed that something you have paid into is called a “handout”<

      What else should it be called when the average Medicare recipient receives three times what he put in? A 75% handout?

  4. Investors Business Daily has looked into what our federal government actually does, rather than what it claims to do. you might think it spends its money on public safety or education (a pittance), or regulating trade or the environment (puny), or defense (under 20% of the budget). You’d be wrong.

    Contrary to what the media reports, or even what the founding fathers intended, the US government is actually a massive young-to-old wealth transfer machine, thru social security, medicare, and other programs, which represent the majority of the budget.

    Who intended this? And it’s too bad the media won’t level with the young people about this.

    • Inagua

      Balzac – There is a little noticed provision in Obamacare which might be a harbinger of how this intergenerational wealth transfer will eventually be reined in. Obamacare requires that any Medicaid recipient who fails to make the co-payments (which is essentially all of them) will be subject to clawback and asset forfeiture, even after death. Once this principle is applied to Social Security and Medicare (by reclaiming any payouts in excess of contributions after death), there will be much less wealth transfer to the already wealthy. And the programs will move much closer to solvency.

      • Fox

        Since government forced me to take part in their retirement and medical annuity programs (Social Security and Medicare), I expect payments to be made as promised with an added return commensurate with prudent “investing”.

        If the government decides to steal from the affluent, fine, but I’ll respond to their criminal behavior not only by voting the responsible bastards out, but by making sure I’m not officially “affluent” any more so they have to keep paying.

        Better not to have got into the retirement and medical care business in the first place, but politicians aren’t the brightest lot around.

  5. Once

    Oh well. I guess we just have to print more money. And they said it doesn’t grow on trees.