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History of the Idea of Welfare State and the Growth of the Welfare State. Russell S. Sobel, Ph.D. Where We Stand Today. Federal Spending appx . $3.7 trillion Govt. grown by almost 10% of GDP in last decade Over 60% of federal spending is transfers. Where We Stand Today.
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History of the Idea of Welfare State and the Growth of the Welfare State Russell S. Sobel, Ph.D.
Where We Stand Today • Federal Spending appx. $3.7 trillion • Govt. grown by almost 10% of GDP in last decade • Over 60% of federal spending is transfers
Where We Stand Today Transfer payments now 1/5 of National Income
Where We Stand Today • As recently as 1960 defense was ½ the budget
Are We At A Tipping Point? • Individuals benefitting from government now exceed those paying for government Share of families deriving income from government
Are We At A Tipping Point? • Now about 50/50 with Tax vs. No Tax
Searching for the Origins of the Welfare State – A Trip Back in Time • I will focus on what the economics literature has argued and found on this issue…..
Did the Income Tax Cause It? But is the adoption of the income tax a SYMPTOM or a CAUSE???
Did Union Veterans Start It? First “selective” transfer as CSA Veterans Didn’t Qualify
Did the Supreme Court Cause It? • Anderson & Hill trace the birth of the transfer society back to the 1877 Munn v. Illinois case that allowed the Illinois legislature to regulation grain elevator rates. • Others argue 20th century ‘court packing’, war on drugs/terror, and other changes through time have led to a Supreme Court that has allowed government to go beyond the constitution (“constitutional erosion”)
Did it start prior to the Civil War? • Also changed: • Line-item Veto for President • Single issue bills only (with funding source included) • 2/3 majority for spending bills • No open ended entitlements • Benefits received taxation
When or Why? • But even if we knew when, the big question is still WHY? • Did we lose the “moral” argument, or did we simply lose the “numbers” in an economic and political sense and get “out voted”??