\u201cprograms for the poor are only a tiny portion of the U.S.\nwelfare state. In fact, the Congressional Budget Office estimates that more\nthan 60 percent of American households receive more in government benefits than\nthey pay in taxes. To get an idea of just how big the American welfare state\nhas become, consider that those transfer payments from the federal government\nare equal to 34 percent of all wages and taxes in the U.S.\u201d<\/p>\n\n\n\n
\u2026<\/p>\n\n\n\n
\u201cThe largest transfer programs are the middle-class entitlements,\nSocial Security and Medicare. In addition, a large portion of the third biggest\nentitlement program, Medicaid, actually goes to the middle-class elderly and\ndisabled individuals, not the poor. Those three programs alone now make up more\nthan half of all federal spending.\u201d<\/p>\n\n\n\n
\u2026<\/p>\n\n\n\n
\u201cwe need to understand that, in practice, when an individual\npays Social Security taxes, none of those taxes are set aside for that\nindividual\u2019s benefits. Rather, they are used to pay benefits to those who\nare currently retired. Social Security is merely a transfer payment from\nworkers to retirees. In that sense, it operates exactly the same as any\nother transfer or welfare program.\u201d<\/p>\n\n\n\n
\u2026<\/p>\n\n\n\n
\u201cMany individuals will receive more than taxes paid plus a\nreasonable amount of interest on those taxes.\u201d<\/p>\n\n\n\n
\u2026<\/p>\n\n\n\n
\u201caccording to the Social Security system\u2019s trustees, the\nprogram faces a future shortfall of more than $43 trillion7<\/a><\/sup> (measured in discounted present value over an\ninfinite horizon\u2014that is, if the government put away $43 trillion today and\nearned 3 percent interest on those funds, it would have enough money so that,\ncombined with payroll taxes, it could pay all future benefits). Unfortunately,\nhowever, the federal government doesn\u2019t have an extra $43 trillion. As a\nresult, there is simply no way that Social Security can pay future benefits\nwithout a massive tax increase.\u201d<\/p>\n\n\n\n