Meanwhile, the economy of Greece is stagnate. Since October, the slump in the Greek economy has been much deeper than anticipated. The Greek government needs approximately $20 billion on top of the October bailout to cover its immediate financing needs. The prospects for economic growth are bleak.

Greece’s creditors are demanding the government bring its fiscal accounts into balance in exchange for the agreement to write off $130 billion worth of Greek debt held by foreign lenders—an amount of debt equal to roughly 70% of its total debt burden. To satisfy these demands, Greece would have to bring it’s debt-to-GDP ratio down to 120% by 2020 (and even that is an exceptionally high ratio).

But here’s the bad news.

As Dalibor Rohac, deputy director of economic studies at the Legatum Institute, points out in an article in the the National Review Online:

But that reduction is not going to occur unless the most optimistic of scenarios materializes and the Greek economy rebounds. So far, there have been no signs of that occurring. In 2012, the Greek economy is expected to contract by 3.7 percent, after a 6 percent fall in output last year. Unemployment is getting dangerously close to 20 percent, with almost one half of all young Greeks out of work.

...

The ugly truth is that Greece has a distinctly inhospitable business environment. It ranks 100th in the World Bank’s “Doing Business” report, below Kyrgyzstan, Yemen, and Zambia. Its protection of investors is worse than that of Liberia, Mauritania, and Togo. According to Transparency International, the country suffers from higher corruption levels than Brazil or China—or Macedonia, Greece’s very poor immediate neighbor.

All of this points to a dreadful situation. Even if the Greek government manages to cut spending and improve revenue collection policies, there are still deep structural problems with the economy. Perhaps even more importantly there are strong prevailing collectivist views regarding the role of government in society. Labor unions in Greece are striking, protesting, and calling the demands to scale back the state “blackmail”.

In reflecting on Joseph Schumpeter’s “Capitalism, Socialism, and Democracy”, James Buchanan made a gloomy prediction that despite the fall of communism and fact that collectivist views had fallen into disrepute, socialism will not only survive but advance in the future.

His argument was that socialism would survive not because it was more efficient or more equitable, but “because ceding control over their actions to others allows individuals to escape, evade and even deny personal responsibilities. People are afraid to be free; the state stands in loco parentis. The breaching of plausibly acceptable fiscal limits in the first half of the new century will determine how the basic conflict between welfare dependency and liberal principles will be resolved. (emphasis added).”

Eerie, isn’t it? How this argument can be seen playing out on the Greek stage as a result of “breaching plausibly acceptable fiscal limits”. Sadly, there are no simple solutions. But there are a few simple lessons that policy makers would be wise to learn sooner rather than later.

First, government spending is not the source of economic growth. Pundits reporting on the Greek crisis say that Greece is in some kind of catch-22: they need economic growth to get out of their problems but if you cut government spending, you won’t get economic growth. The argument is the same Keynesian logic that underpins U.S. policy-makers decisions. Real economic growth comes when private entrepreneurs and businesses can operate within a framework that enables protection of property, performance of promises, and transference by consent. IF government can produce that framework, only then does it have a role in providing the conditions under which growth can occur.

Second, ideas matter. It is important that we—regular people, leading regular lives—learn the first lesson. Part of the reason why politicians adopt spending and bailout policies is because they think that you think those policies work. If you know better, they have more of an incentive to do better. If we consistently allow the Keynesian economic logic to prevail, we run the risk of destroying the principles of a free society and surrendering our liberty to control.

© Michael Flippo | Dreamstime.com

It’s easy to spend money on frivolous projects, when it’s not your money to spend. CBN News Washington Sr. Correspondent Paul Strand exposes various wasteful spending initiatives that makes one question, who even thinks of these things? Some of these projects are extremely creative, I will give Washington that much.

• More federal funding in the amount of $593,000 went to a primate research center to study where in chimpanzees’ brains they get the idea to throw their feces.
• A Virginia university received $55,000 to study Jordanian students’ water pipe smoking habits.
• A new grant of $176,000 joined $350,000 already spent to study how cocaine hurts or helps the sex drive of Japanese quail.
• A museum of magic received $147,000 to study the audiences of magic shows.
• More than $550,000 of U.S. taxes went to the production of a documentary on how rock bands contributed to the fall of the Soviet empire.
• IPad 2s were purchased for $96,000 for students in Maine, where 96 percent of their parents said the cost wasn’t worth it.
• Nevada’s Western Folklife Center received $50,000 for cowboys and cowgirls to gather once a year to recite cowboy poetry.

Don’t get me wrong, I appreciate cowboy poetry as much as the next guy. But with the nation coming up on a $15 trillion dollar debt, it is definitely something I can live without, as far as taxpayer funding goes.

© Dmitry Ersler | Dreamstime.com

Richmond Times Dispatch reported a calculation of each individual’s ”responsibility” to the debt.

“The national debt is equal to $48,700 for every American or $128,300 for every U.S. household,” Forbes, R-4th, wrote in a January 24 blog post.  ”It is now equivalent to the size of our entire economy.”

Those are some eye-catching numbers, so wanted to see if Forbes was right.

Forbes is referring to gross national debt –which includes publicly held debt as well as the amount the government owes trust funds for Social Security and Medicare. The gross debt was about $15.2 trillion on the day the congressman made his statement, according to data from the U.S. Treasury Department.

Joe Hack, Forbes’ spokesman, said the congressman used census data to break down the debt load to per-person and per-household shares.

Hack referred us to the U.S. Census population clock, which continuously updates the estimated number of people living in the the nation. On Feb. 1, the clock showed the U.S. population was 312.9 million.

When you divide the amount the U.S. owes creditors by the population,  the national debt equals $48,686. So Forbes, rounding up, is right in saying the debt comes to $48,700 per person.

Now, let’s turn to households. There were 118.7 million of them in the U.S. in March 2011, according to the most current Census Bureau estimate. Doing the math, that means the debt per household comes to $128,378 — just above Forbes’ calculation of $128,300.

Still, Forbes is comparing a January 2012 debt figure to a March 2011 household number. We found a sure-fire way to make an updated estimate.

The Census 2012 Abstract of the United States shows that the size of the average household was 2.6 people in 1990, 2000 and 2010. So we divided 312.9 million (the Feb. 1, 2012 U.S. population tally) by 2.6, and arrived at 120.4 million households. That would equal $126,585 of debt per household at the of this month — pretty close to the number Forbes cited.

What was even more disturbing was a response made regarding this statement:

“The debt is owed by the U.S. government, which ultimately pays up through its ability to tax,” said Frenzel, a former Republican congressman.

Read Full Article Here

Congressional Budget Office

Some headlines from Tuesday, January 31, 2012:

Congressional Budget Office Reports Another $1 Trillion Deficit

The government faces a fourth year of trillion-plus deficits in 2012, according to new projections released Tuesday—numbers which also show little relief in the future unless Washington comes to grips with needed changes in its tax and spending policies.

Like Aunt Cassandra coming down from the attic, the Congressional Budget Office steps squarely into the 2012 campaign season with the 147-page report which might have been subtitled “It’s not just the economy stupid, it’s also the debt.”

The $1.079 trillion deficit now projected for this fiscal year ending Sept. 30 is a step backwards from what CBO had predicted in August. And to punch home its message, the non-partisan agency outlines an especially grim scenario in which Congress not only extends all the current Bush-era tax cuts but pulls the plug on the $1.2 trillion in sequester set in motion by the Budget Control Act last summer.

Under this scenario—which can’t be ruled out politically—deficits would stubbornly hover just under $1 trillion through 2017, adding another $4.7 trillion altogether to the mounting federal debt.

Under the more prudent—and many would say unrealistic— scenario of ending tax breaks and implementing cuts, the cumulative deficits would be $1.72 trillion or $3 trillion less from 2013-2017. But even this path comes with a warning from CBO: that debt service costs are already on the rise and will command an ever greater share of the annual budget.

“The federal budget remains out of balance throughout the decade,” the report reads. “The resulting accumulation of debt, along with rising interest rates, drives up the cost of financing that debt; in CBO’s projections, net interest costs grow significantly from 1.4 percent of GDP this year to 2.5 percent in 2022.”

To put this in some perspective, by 2017, annual interest payments on the debt would begin to rival and soon exceed what Washington will be spending on Medicaid, the state-federal healthcare program for the poor and disabled.

CBO: Taxes Will ‘Shoot Up by More Than 30 Percent’ Over Next 2 Years:

(CNSNews.com) – The amount of money the federal government takes out of the U.S. economy in taxes will increase by more than 30 percent between 2012 and 2014, according to the Budget and Economic Outlook published today by the CBO.

At the same time, according to CBO, the economy will remain sluggish, partly because of higher taxes.

“In particular, between 2012 and 2014, revenues in CBO’s baseline shoot up by more than 30 percent,v said CBO, “mostly because of the recent or scheduled expirations of tax provisions, such as those that lower income tax rates and limit the reach of the alternative minimum tax (AMT), and the imposition of new taxes, fees, and penalties that are scheduled to go into effect.”

One important thing to note about the second story – these kinds of tax increases have been forecast by the CBO through its Extended Baseline Projection to rise above the typical level of roughly 18% of GDP for years, but has never actually happened, as U.S. politicians have acted to prevent them from taking place – “kicking the can down the road”, so to speak.

The CBO also creates an Alternative Fiscal Projection, which makes more realistic assumptions about how politicians will act and what changes in taxes and spending will actually take place. The MyGovCost calculator is based upon the CBO’s Alternative Fiscal Projection.

Logo of Ener1 Inc.

In an Associated Press article in the San Jose Mercury News,

“Parent of Obama-backed battery maker goes bankrupt,”Matthew Daly reports that yet another “green” company that received corporate welfare from the Obama administration has now gone bankrupt. In this case, the electric car-battery company Ener1 received $118 million from the Department of Energy in 2009 and Vice President Joseph Biden acclaimed the company in a special visit last year.

The parent company of an electric car battery maker that received a $118 million grant from the Obama administration filed for Chapter 11 bankruptcy protection on Thursday.

New York-based Ener1 said it has been affected by competition from China and other countries.

Ener1 subsidiary EnerDel received a $118 million stimulus grant from the Energy Department in 2009, and Vice President Joe Biden visited the company’s new battery plant in Indiana last year.

Ener1 is the third company to seek bankruptcy protection after receiving assistance from the Energy Department under the economic stimulus law. California solar panel maker Solyndra Inc. and Beacon Power, a Massachusetts energy-storage firm, declared bankruptcy last year. Solyndra received a $528 million federal loan, while Beacon Power got a $43 million loan guarantee.

Solyndra, of Fremont, Calif., was the first renewable-energy company to receive a loan guarantee under the 2009 stimulus law, and the Obama administration frequently touted it as a model for its clean energy program.

Since then, the company’s implosion and revelations that the administration hurried a review of the loan in time for a 2009 groundbreaking has become an embarrassment for President Barack Obama and a rallying cry for GOP critics of the administration’s green energy program.

The chairman of a House subcommittee that is investigating Solyndra said the latest bankruptcy showed that the administration’s clean energy program has failed.

“Unfortunately, you can now add Ener1 to the growing list of failed companies that went belly up after hundreds of millions of dollars in administration backing,” said Rep. Cliff Stearns, R-Fla. . . .

Click here for full article.

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Crony capitalism is the theme of tonight’s “State of the Union” address. Warren Buffet’s longtime secretary, Debbie Bosanek will be seated next to Michelle Obama at tonight’s speech. Bosanek has recently become the White House’s new symbol for higher taxes and what the administration terms “economic fairness”. But fairness couldn’t be farther from the truth.

Last week, the Obama administration decided to reject TransCanada Corporation’s Keystone XL oil pipeline permit which would have allowed the company to build a more efficient oil pipeline from Canada to the Gulf of Mexico. Railroads instead will carry the oil. Who’s railroads, you ask? Warren Buffett’s Burlington Northern Santa Fe LLC is among the direct beneficiaries of the decision.

The San Francisco Chronicle and Bloomberg report Burlington Northern spokeswoman Krista York-Wooley saying “whatever people bring to us, we’re ready to haul,” If Keystone XL “doesn’t happen, we’re here to haul.”

The State Department did not grant the permit despite the fact that rail shipping would be more costly and cause more greenhouse gas emissions. In fact, according to the article, shipping oil using tanker cars on rail costs about $3 more a barrel than pipeline transport (using prices in North Dakota as measure) and currently there is a lack of readily available tanker cars. Higher costs of production and distribution translate into higher prices and less oil for consumers.

So Obama wins. Buffet wins. Consumers lose. That’s Crony Capitalism.

When politicians get to pick winners and losers, that’s not capitalism. Profits and losses are no longer determining which suppliers meet consumer needs in the best ways possible. Crony capitalism replaces the disinterested (and efficient) mechanism of the price system with the arbitrary (and inefficient) pet policies of those in power. Success in business comes to depend on close relationships between business people and government officials. Business people must now engage in “rent seeking” to acquire favoritism and privilege for legal permits, government grants, special tax breaks, etc.

Crony capitalism stifles growth, innovation, and prosperity. So tonight, when you are watching the State of the Union address, remember that real economic fairness does not entail granting the politically privileged preferential treatment. Real economic fairness requires letting competition, profit and loss, determine what goods are produced, how those goods come to market, in what quantities and of what qualities. Free trade is the only form of fair trade.

Source: U.S. National Park Service

Stunning.

That’s really the only word we can use to describe the release of a “sensitive and confidential” 57 page memo, written by then soon-to-be U.S. Treasury Secretary Larry Summers in December 2008, about what became President Obama’s signature economic program in the first year of his presidency: the “stimulus package”.

James Pethokoukis has summarized some of the most significant aspects of the memo, which we’ve excerpted below, and which reveals the Obama administration’s thinking behind what became an over 821 billion dollar boondoggle. The bold text represents Pethokoukis’ summary of that thinking, which is directly followed by a supporting quotation from Larry Summers’ memo:

1. The stimulus was about implementing the Obama agenda.

The short-run economic imperative was to identify as many campaign promises or high priority items that would spend out quickly and be inherently temporary.... The stimulus package is a key tool for advancing clean energy goals and fulfilling a number of campaign commitments.

2. Team Obama knows these deficits are dangerous (although it has offered no long-term plan to deal with them).

Closing the gap between what the campaign proposed and the estimates of the campaign offsets would require scaling back proposals by about $100 billion annually or adding new offsets totaling the same. Even this, however, would leave an average deficit over the next decade that would be worse than any post-World War II decade. This would be entirely unsustainable and could cause serious economic problems in the both the short run and the long run.

3. Obamanomics was pricier than advertised.

Your campaign proposals add about $100 billion per year to the deficit largely because rescoring indicates that some of your revenue raisers do not raise as much as the campaign assumed and some of your proposals cost more than the campaign assumed.... Treasury estimates that repealing the tax cuts above $250,000 would raise about $40 billion less than the campaign assumed.... The health plan is about $10 billion more costly than the campaign estimated and the health savings are about $25 billion lower than the campaign estimated.

4. Even Washington can only spend so much money so fast.

Constructing a package of this size, or even in the $500 billion range, is a major challenge. While the most effective stimulus is government investment, it is difficult to identify feasible spending projects on the scale that is needed to stabilize the macroeconomy. Moreover, there is a tension between the need to spend the money quickly and the desire to spend the money wisely. To get the package to the requisite size, and also to address other problems, we recommend combining it with substantial state fiscal relief and tax cuts for individuals and businesses.

5. Liberals can complain about the stimulus having too many tax cuts, but even Team Obama thought more spending was unrealistic.

As noted above, it is not possible to spend out much more than $225 billion in the next two years with high-priority investments and protections for the most vulnerable. This total, however, falls well short of what economists believe is needed for the economy, both in total and especially in 2009. As a result, to achieve our macroeconomic objectives—minimally the 2.5 million job goal—will require other sources of stimulus including state fiscal relief, tax cuts for individuals, or tax cuts for businesses.

[...]

7. Team Obama thought a stimulus plan of more than $1 trillion would spook financial markets and send interest rates climbing.

To accomplish a more significant reduction in the output gap would require stimulus of well over $1 trillion based on purely mechanical assumptions—which would likely not accomplish the goal because of the impact it would have on markets.

[...]

11. The financial crisis wasn’t just Wall Street’s fault.

A significant cause of the current crisis lies in the failure of regulators to exercise vigorously the authority they already have.

On December 31, 2008, the total public debt outstanding for the United States was $10,699,804,964,612.13.  President Obama’s economic stimulus package of approximately $821,000,000,000 represents 7.7% of that figure, all of which was added to the national debt and went to no good end.

Over three years later, there is little-to-no indication that the Obama administration has learned what it already knew would be true from the very beginning: their idea of an economic stimulus package was an extraordinarily bad idea that would be a monumental waste of taxpayer dollars.  We’ll have to see what new ideas the President has for spending taxpayer dollars in tonight’s State of the Union address.

Is the point that a debt ceiling shows the world we’re not profligate, that we won’t take on more debt than we can afford? How can it possibly fulfill this function if it is never not raised whenever we approach it?

Is the point that having a debt ceiling creates incentives for spending restraint? But government growth has been MUCH larger from 1917-2011 than it was from 1787-1917. From the pre-Civil War period to just before WWI, government grew from 1.5% of GDP to 5%. From WWI to Obama, government has grown from 5% of GDP to 25%. So the debt ceiling is clearly unsuccessful in creating incentives for spending restraint.

—

Alan Greenspan, former head of the Federal Reserve, commented on Meet the Press in late spring, 2011, that he saw no reason to have a debt ceiling. Greenspan certainly didn’t mean he saw no reason for spending restraint. He merely meant this repeated political theatre, this habitual kabuki dance, this routine wringing of hands and gnashing of teeth, this recurring financial brinksmanship, serves no purpose. With or without a debt ceiling, those who buy our bonds will judge for themselves whether or not we can pay it back. That, not an arbitrary and continually increasing ceiling, is what is important in the end.

I agree with Levy, the debt ceiling is a tool for political theater. Bond markets serve to price government’s credit-worthiness, not political dictates. But I will take the argument a step further. Having an arbitrary and non-binding rule is not only useless for fiscal restraint, it’s harmful. The general public views the debt ceiling as a mechanism for limiting Congressional spending. And while theory and history point out that this is not the case, having rules that people think create real limits on political power—that are in fact not effective—undermine the credibility of binding constraints.

Believing that the debt ceiling places limits on federal spending creates a false notion that we have an effective mechanism to limit Congress. These false notions of limited power lead people to overestimate the control they have over their own government and underestimate the necessity of real limits on political power.

The situation in Congress is what James M. Buchanan would refer to as “the fox guarding the hen house.” The debt ceiling is impotent against pressures for fiscal spending—it does nothing to keep the hens safe from the hungry fox. True, if the debt ceiling isn’t serving as an effective fence, it is pointless to have it in place. But the situation becomes even more dangerous when the American public think they are protected from the fox.

Levy says that when federal spending pushes up against the ceiling once more, the debate should not be on whether to raise the debt ceiling. The debate should center on whether or not to repeal the debt ceiling. I agree—repeal false constraints. But do so not only because the debt ceiling is impotent but because the illusion of restraint is itself dangerous.

Despite having imposed a record 67 percent increase in the personal income tax and 46 percent increase in the corporate tax in January 2011, Illinois state government’s debt situation continues to crumble.

Credit rating agency Moody’s Investor Service on January 6 downgraded Illinois government debt, from A1 to A2, giving Illinois the nation’s lowest credit rating.

Moody’s wrote: “The downgrade of the state’s long-term debt follows a legislative session in which the state took no steps to implement lasting solutions to its severe pension under-funding or to its chronic bill payment delays. Failure to address these challenges undermines near- to intermediate-term prospects for fiscal recovery.”

A second rating agency, Standard & Poor’s, warned of a future credit downgrade by giving Illinois a negative outlook.

A lower credit rating means state taxpayers can expect to pay higher interest rates on money state government borrows.

How bad is the situation? Stanek continues:

The state owes approximately $32 billion, up from $9.4 billion 10 years ago. The state also has a $7 billion backlog of unpaid bills, which Gov. Pat Quinn (D) has said he’d like to pay off with borrowed money. Quinn’s budget office projects a deficit this fiscal year of $508 billion and a deficit exceeding 818 billion next fiscal year. These figures ignore the billions of dollars of unpaid bills.

Meanwhile, Quinn’s administration in early January announced the state’s fiscal situation is not improving despite the $7 billion annual tax increase Democrats last year imposed on citizens and businesses. Not a single Republican legislator voted for the tax increases.

Moody’s credit downgrade for the state of Illinois means that it will cost the state more to borrow money than it would if its fiscal management were more sound, as those who will lend money to the state will demand higher interest payments to compensate for the increased risk that the state will default upon its obligations.

But what is keeping the politician’s in the state’s governing politicians from being able to implement more sound fiscal management over the state government? Reuters reports:

Illinois faces heavy fiscal pressure as pension funding will rise to $5.3 billion in fiscal 2013 — $1 billion more than in the current fiscal year, according to an economic and fiscal policy report released by the governor’s office of management and budget this week.

But it doesn’t end there. The state’s ability to fund its Medicaid program will also fall extremely short. Steve Stanek notes:

“Our revenue growth is not enough to keep up with pensions and Medicaid. It creates a squeeze for everything else,” Quinn’s budget director, David Vaught, told The Associated Press.

“Under the outline presented by the budget office, virtually all state spending must remain flat for the next three years,” said Senate Republican Leader Christine Radogno (R-Lemont). “In order to achieve a balanced budget there could be no increase in education, public safety, welfare and healthcare spending.

“That’s a tall order, given that in just one area of state spending, Medicaid, current projections show that Illinois would need to spend about $3 billion more next year just to keep its current level of services and prevent the existing backlog of bills from growing.”

But why are these programs the ones most directly affected by the state’s top politicians’ inability to get their fiscal house in order?

The answer might be found in what the massive tax hike that the state’s Democratic party legislature and governor rammed through in 2010 achieved:

Meanwhile, the increase in Illinois’ income tax rates enacted a year ago has helped the state to compensate for a sharp drop-off in federal funding due to the end of the U.S. stimulus act, a state legislative commission reported on Thursday.

We’ll note that much of the federal bailout money received by Illinois was used to sustain the state’s spending in support of its Medicaid program, which the state’s top politicians used to avoid having to take steps to reign in its other spending programs, where the state’s leading politicians chose to continue their spending in the way to which they have become accustomed. This is why the state’s funding for its Medicaid programs is now in such jeopardy – thanks to the federal government bailout, the state’s politicians could more lavishly support their other priorities, leaving little money left to go to its Medicaid program once they ran out of bailout money.

In a nutshell then, Illinois’ leading politicians squandered all of the bailout money they received from the U.S. federal government, keeping their total level of spending elevated far beyond the level that the state’s taxpayers are capable of supporting, even with its massive tax hikes. At the same time, Illinois’ leading politicians bet big on its institutional status quo, enacting no meaningful changes to reign in the state’s exorbitant spending in support of its entrenched political institutions, which is now proving to have enduring consequences.

It didn’t have to be that way. Illinois’ problems didn’t just show up overnight. Andrew Thomason of Illinois Statehouse News reports on a study spanning the fourteen years from 1995 through 2009 conducted by the Illinois Policy Institute:

SPRINGFIELD — Illinois’ reputation for political corruption and government mismanagement could have cost the state billions of dollars and an income tax increase.

Illinois netted a loss of 366,616 tax-paying households between 1995 and 2009, according to a study of Internal Revenue Service figures from 1995 through 2009 released by the Illinois Policy Institute, a free-market think tank with offices in Springfield and Chicago. Those households took with them $26 billion in taxable revenue, according to the study. In 2009 alone, Illinois lost 20,725 households and their $1.5 billion in taxable income.

Ted Dabrowksi, vice president of policy for the institute, said the recent tax hike might have been avoided, if those taxpayers had remained in Illinois. “If we had more people here generating income, generating sales tax, hiring people, paying income taxes, we’d have a much better fiscal outlook,” he said.

Illinois lost taxpayers to 42 states during the 14-year period of the study, including to the border states of Missouri, Iowa, Wisconsin, Indiana and Kentucky. The higher the net loss of taxpayers for Illinois translates into a heavier financial burden for those who remain. “This is not a study to say what exactly led to people leaving, but we do note that taxes matter to people, a good, friendly environment to business matters, bad deficits and a bad governance matters to people, and people vote with their feet,” Dabrowski said.

It will be interesting to see how the number of taxpaying households in the state will have changed in the years since 2009. It’s not like the commitment of the top politicians in the state’s government to putting the state on a sound fiscal footing has improved at all.

The pool of Americans relying on government benefits rose to record highs last year as an increasing share of families tapped aid in a weak economy.

Some 48.6% of the population lived in a household receiving some type of government benefit in the second quarter of 2010, up a notch from 48.5% in the first quarter, according to Census data.

Expanding government programs combined with the worst downturn since the Great Depression have led to an explosion in the share of Americans relying on outside help. To combat prolonged economic weakness, Congress extended unemployment benefits to a record 99 weeks (up from the normal 26-weeks offered in most states). The food stamp program was tweaked so it was more generous. Americans flocked to Social Security disability, a last bastion of support for some of the long-term unemployed. . . .

That number is up from 32.8% a year ago (when a total of 46.8% of the population lived in a home receiving benefits). The biggest increases came from an uptick in those turning to food stamps and Medicaid.

Nearly 15% of Americans lived in a household receiving food stamps in mid-2010; Almost 26% had access to Medicaid.

Only a small share of the population accessed cash welfare benefits as the 1990s overhaul made it more onerous in many cases to receive and maintain those payments. Some 1.9% of the population lived in a household that received welfare in the second quarter of 2010.