A friend's e-mail got me thinking. "I guess Gore's vision is that now that his boss 'ended welfare as we know it' for the underclass, he will institute welfare as we have never known it for the rest of us," he writes. Of course, this is exactly what Al Gore is trying to do. Gore's economic proposals -- everything from prescription drug benefits for the elderly to new programs to train women for high-tech jobs -- are nothing more than a new welfare state for the middle class. And apparently, a lot of Americans, especially women, like the idea, if recent polls are any indicator.
A dramatic -- and complex -- transformation in the role of government is taking place. Government's role in the daily lives of most Americans has expanded dramatically since the 1960s. Before the mid '60s, most middle class Americans received few benefits, directly or indirectly, from the federal government.
Today, most average Americans depend on myriad federal programs from cradle to grave: free and subsidized immunizations and subsidized day care for their infants, federal aid to elementary and secondary schools (which didn't exist before 1965) for their children, federal grants and guaranteed loans for the kids when they reach college age, federally-mandated employee benefits for themselves, Social Security and Medicare for their parents. Increasingly, Americans have come to expect Uncle Sam to take care of them and their families.
Some benefits come directly in the form of government checks. Others come in the form of services that are paid for or subsidized by federal dollars. Still others come as tax credits, or Gore's favorite, 'targeted tax cuts,' which are really just another way for the government to tell you how to spend your own money by rewarding you if you do it on things the government approves of.
And who pays for these programs? Not the government, that's for sure, since the government has no money of its own. Taxpayers pay for it -- but not everyone pays taxes. The poor don't, by and large. And a few of the very rich don't, either. So what about the middle class Americans who are receiving these benefits -- they pay for the bulk of taxes, so they should receive the most benefits, right? Not exactly.
It depends on what kinds of taxes and benefits you're talking about. Working Americans pay hefty taxes to cover Social Security and Medicare -- and this is not money set aside for their own future benefits but to pay for benefits of current recipients. Half of the money comes directly out of workers' paychecks -- a tax of 6.25 percent of the first $76,200 earned goes for Social Security taxes, while an additional 1.45 percent tax on all earnings goes toward Medicare. The other half is "paid" by employers -- but not really. This is money that employers could afford to give their employees in pay or other benefits if the government didn't require that it be handed over to redistribute to others. Employers are simply acting as tax collectors for the federal government, not really paying the taxes.
But what about federal income taxes -- certainly the middle class pays the lion's share of these taxes, don't they? Most politicians act as if this were so, but it's not true. The top 25 percent of earners pay more than 80 percent of all taxes collected, with the richest 10 percent of Americans paying fully 60 percent of all federal taxes. Since the lowest 5 percent of earners pay no taxes, that leaves nearly 70 percent of Americans -- the great middle class -- paying less than 20 percent of federal taxes.
Which brings us back to Al Gore's new, middle class welfare state. Gore has outlined a host of new spending programs -- most of which will go to middle class Americans -- while promising tax cuts to those same middle class Americans. His strategy may be smart politics, but it's disastrous policy.
The strength of the American middle class -- unlike its European counterpart, for example -- has been its self-sufficiency. Americans have never looked to government to take care of them. But if Al Gore has his way, more and more Americans will become dependent on the government, and will share even less of cost of the programs they demand. That's a sure way to end America's economic miracle, and ruin the great American middle class in the process.