Government dependency is as high as it has ever been. Nearly half the people pay no income tax, and of those, most depend on government. Those people are at serious moral hazard, as Alexis de Tocqueville warned against.

The Heritage Foundation Government Dependency Index

The Heritage Foundation has measured government dependency since 1980. They have set an index of the degree to which American citizens and lawful residents depend on government, with 1980 as their “base year.” In 1962, that index stood at 19. Today it stands at 294.

This abstract of the 2012 government dependency report tells a stark story:

• One in five American residents depends totally on government for all the essentials of life.
• The government dependency index rose 8.1 percent from 2011 to 2012. (In fact it rose 23 percent since Barack Obama took office.)
• The average American resident now dependent (to any degree) on government now earns more than the average independent earner.
• Almost half of all Americans pay no Federal income tax.

The full report breaks down government dependency among 23 subject areas. They include housing health care, “welfare,” and retirement.

The Heritage Foundation worries equally about the level of the country’s debt. (Nor are they the only ones: even Ben Bernanke, current head of the Federal Reserve, now admits that the federal government cannot keep accumulating debt forever, and risks collapse if it does not stop.)

Government dependency sets a dangerous trend

Alexis de Tocqueville. Painting: Théodore Chassériau (1819–1856)

When more people depend on the government than support it, a republic enters a death spiral. Alexis de Tocqueville (Democracy in America) warned of this outcome:

A democratic government is the only one in which those who vote for a tax can escape the obligation to pay it.

Which is exactly what has happened. Moreover even Warren Buffet famously escaped his own “rule” recently. And:

The American Republic will endure until the day Congress discovers that it can bribe the public with the public’s money.

CNAV agrees. But that applies equally to the man now holding office as President.

The moral hazard of the public is clear. The Heritage Foundation report does not yet say that more people are dependent on government than not. But that day might come. When government dependency exceeds “independence of government” in terms of numbers of voters, the dependents will vote for ever-more bribes for their votes. The independents will then face two choices:

1. Stay and keep paying.
2. Go on strike, as Ayn Rand famously suggested.

In fact, whether the productive residents of American society go on strike or not, total collapse is inevitable. The producers will be at moral hazard, as long as they produce. Why produce when you can join the “taking” class? And if the government will not admit you to that class, then why stay resident?

Greece reached the tipping point last year, and so did Italy. Other countries in Europe will do the same. America is moving toward the same end.

How to stop the slide

The Heritage Foundation has a plan to stop the government dependency slide. The details of that particular plan are less important than its goals: to stop accumulating debt and start to pay it down. Today the government’s debt is 70 percent of America’s gross domestic product. The Heritage Foundation says that they can bring that down to 30 percent by 2037 and eventually pay it off. Such a plan must be drastic, of course: it means curtailing government dependency wherever one can. To reach this goal, the Foundation recommends restricting the government to those functions that the Constitution gives to the federal government. For instance:

• Reserve highway building and education to the States. Hence, no Federal highway funds, and no federal tax on motor fuel. (Reformers might need to revoke Congress’ power to build “post offices and post roads.”)
• Put air traffic control into private hands. Actually, it means putting it back into private hands. Aviation Radio, Incorporated (ARINC) once handled air traffic control as well as radio traffic between pilots and their ground-based management.
• Get the government out of media. (They might make an exception for C-SPAN, but even that might not be a “needful building” within the meaning of Article I, Section 8, Clause 17.)
• Sell its vast tracts of land, airwave rights, and abandoned (hence no longer “needful”) buildings.

The most important change is a flat-tax system, by which nearly everyone would pay something, and see that something come out of his pay. It would make everyone stand to benefit from a smaller government.

To make this reform last, CNAV would recommend amending the Constitution to:

• Limit the terms of office of Senators and Representatives in Congress.
• Forbid Congress to enroll its members in any kind of “defined-benefit pension.”

In that manner, Members of Congress would no longer be able to escape paying a tax that they vote to impose. All would have to pay the tax eventually.

Either America follows this or a similar plan, or America destroys itself, as Greece is now doing. It has no other choices.

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