VOL. 45, NO. 8 RO. BOX 618, ALTON, ILLINOIS 62002 MARCH 2012

Phony Divide Between Fiscal & Social IssuesContrary to politicians who want to call a truce about

social issues, there is absolutely no way to separate social and fiscal issues; they are locked in a tight political embrace. Politicians who say we can ignore social issues, or avoid talking about them, are really saying that they have no plan to cut federal spending and the growing national debt.

That’s because the social issue of marriage, and its importance to our society, has become a tremendous fiscal issue. The problem of marriage absence is now costing the taxpayers even more than national defense.

We used to have a social structure in the United States where husbands and fathers provided the financial support of wife and children. Last year, 41% of all babies bom in the U.S. (including 53% of babies bom to women under 30) were illegitimate, growing up without their own fathers.

It is obvious that when the mother of these children has no husband to support her and her babies, she calls on Big Brother Government. You and I then pay the bills for what is labeled welfare. It’s not poverty that causes broken families; it’s the absence of marriage that causes poverty and puts kids below the designated poverty line. Social issues cause fiscal expenses.

I grew up during the Great Depression of the 1930s, and the American family, white and black, was not broken. It stayed together to face life’s reversals.

The massive national problem of having babies without marriage started with Lyndon Johnson’s War on Poverty in the 1960s. LB J Welfare channeled all the money and benefits to the woman, making the husband and father unnecessary. Charles Murray laid this all out more than 20 years ago. He said “Illegitimacy is the single most important social problem of our time . . . because it drives everything else,” imposing gigantic costs on the taxpayers.

After Barack Obama became President, he increased federal welfare spending by a third because, as he told Joe the plumber, Obama wants to “spread the wealth around.” This was a conscious political strategy; it promotes depen dence on government and more votes for the Democrats.

Most Americans are unaware that nearly $900 Billion a year of federal taxpayers’ money is handed out to non taxpayers allegedly below a designated poverty line. Americans’ lack of knowledge of the enormity of these

handouts is why we call it the “hidden” welfare state.The Heritage Foundation reports that more than 70

types of federal means-tested handouts, in cash or benefits, are distributed. Half of Americans (47%) pay no income tax and depend for their living expenses in whole or in part on government handouts paid by the other half who do pay income taxes.

This federal welfare apparatus includes 12 programs providing food, 10 for housing assistance, 10 for social services, 9 for educational assistance, 8 programs giving cash, 8 for vocational training, 7 for medical assistance, 3 for energy and utility assistance, and 2 for child care and child development. Welfare recipients are eligible for a free cell phone with monthly minutes from the Universal Service Fund that the rest of us pay into.

So we get more illegitimate babies supported by taxpaying Americans every year. This extraordinary change in our social structure is the primary reason that government budgets, both federal and state, are so bloated.

The Rasmussen Poll reports that 78% of American adults rate marriage as at least somewhat important to U.S. society, 60% consider it Very Important, and 77% say it’s better for children to grow up in a home with both their parents. So why are we using tax dollars to discourage marriage and subsidize illegitimacy?

We should ask our presidential candidates who are w orried about extravagant governm ent spending, unbalanced budgets, and repeated raising of the debt ceiling, how they will stop the flow of money that promotes more and more dependency on government.

This hidden welfare state is the fastest growing component of government spending. And these figures do not include Social Security or Medicare payments.

Nor do they count the social and fiscal costs of the expensive problems that come mostly from female-headed households: drug addition, promiscuous sex, suicides, school dropouts, runaways, and crime.

Welfare spending is a failure; it doesn’t advance us toward any constructive goal, such as helping recipients to get on their feet economically. It merely increases dependence on government handouts and increases votes for big-spending politicians.

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The Big Issue: DepeDependence on Governo

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fesss«*^Four in 10 children are born to unwed mothersThe percentage of children bom outside of marriage has skyrocketed, with a six-fold increase since I960. Currently, the figure is highest among blacks, but the rate of increase is highest among whites and Hispanics.

PERCENTAGE OF BIRTHS TO UNWED MOTHERS

Sourer. NMIenM CMar tor Hi

Housing Assistance Breaks Record 4296 increase3 from 2006 to 2010

Expenditures in Billions o f 2005 Dollars $60

Year-to-Year Change

B Increase ■ Decrease

$59.4-

$52.3-1

4996 increase from 1990 to 1995

1990 1995 2000 2005 2010

Source: Office of Management and Budget Historical Tables: Budget o f the United States Government

Fiscal Year 2012,2011 .Table 3.2, p. 57. and Table 113. p 276Chart 3 • CDA 12-02 X heritage.org

The Hidden Welfare State

More than 70 types of federal mea in cash or benefits, are distributed. (47%) depend for their living exper part on government handouts paid pay income taxes.

This federal welfare apparatus incl

121010988732

programs providing food aic housing assistance prograr programs funding social se educational assistance pro; programs providing cash as vocational training program medical assistance progran energy and utility assistanc child care and child develo)

The Heritage Foundation estimate

The hidden welfare state is the 1 component of government spen

► One in five Americans — the highest in the nation’s history — relies on the federal government for everything from housing, health care, and food stamps to college tuition and retirement assistance. More than 67.3 million Americans receive subsidies from Washington.

► The greatest danger is th of Americans who enjoy gove benefits for which they pay fev to a spreading sense of entitl incompatible with self-governr

farmlyfect8«g

Medicaid Costs Rapidly IncreasingExpenditures in Billions of 2005 Dollars

$300

Year-to-Year Change

■ Increase ■ Decrease

$273 — mI$251— 1 1

$200

$100

$0 1 1 1 11985 1990 1995 2000 2005 2010

Source: O ffice o f Management and Budget Historical Tables: Budget o f the United States Government Fiscal Year 2012 ,2011 .Table 3.2, p. 57, and Table 12.3 p. 266.

C hart 4 • CD A 12-02 X heritage.org

► ObamaCare relies on a massive expansion in Medicaid and the creation of a new income-related subsidy to purchase insurance through government-controlled insurance exchanges.

91 Million Americans Dependent on Government

Sum of Program Participants and Government Employees, in Millions

too

80

60

20

91.2 million t

33.6 million

► S ince P res iden t Lyndon Johnson de­clared the War on Pov­erty in 1964, the federal government has spent approximately $16 trillion on means-tested welfare a id . Today, m eans- tested assistance is the fastest-growing part of government, with the na­tion spending more on welfare than on national defense.

1962 1970 1980 I 990 2000 20 I0

Source: Heritage Foundation calculations based on data from the U.S. Departm ent o f Education, Social Security Adm inistration,U.S. Departm ent o f Health and Human Services, O ffice o f Management and Budget

C hart 14 • CDA 12-02 X heritage.org

►h i

Pf

jendency vs. Libertyrnment Is All-Time Highe State

sderal means-tested handouts, distributed. Half of Americans iving expenses in whole or in idouts paid by the other half who

»aratus includes:

ing food aid; ice programs; g social services; stance programs; ing cash assistance; lg programs; ice programs;/ assistance programs; and, lild development programs.

in estimates $16,800 per person.

ate is the fastest growing ment spending.

Welfare and Low-Income Health Care SurgesExpenditures in Billions o f2005 Dollars 41% « n a sc Son 2008 to 2010

Source Office of Management and Budget Mstcncol fetes Budget ofthe Owed Stotts GaemmentFacai"bar2012.201 l.labte 3.2.ps57.andlable HXpp.265.266.27l.and 299.

Chan5 «CDA12-02 £ herioge.org

ige r is that the swelling ranks ijoy government services and ;y pay few or no taxes will lead 3 of entitlement that is simply f-government.

► The country is now at a point where roughly one-half of “taxpayers” do not pay federal income taxes, and where most of that same population receives generous federal benefits.

The gap between married and unmarried birth rates has narrowedSince 1960, the rate of births to married mothers has decreased by 45 percent to 85.7 per 1,000 married women. During the same period, the rate of unwed childbirths has increased by 134 percent to 50.5 per 1,000 unmarried women.

BIRTH RATES BY MOTHER'S MARITAL STATUS. WOMEN AGE 15 TO 44

t78 ------------- r -------------p-------156.6

► 70% of the federal government’s budget goes to individual assistance

Programs Used to Calculate Index Values1. H ousing III . R e tirem ent

Mortgage credit MedicareHousing assistance Social SecurityCommunity developm ent block grants General retirement and disabilityUrban developm ent action grants insuranceSubsidized housing programs

IV . E duca tionII. H ealth and W elfa re Federal higher education

Health care services State higher educationHealth research and trainingConsumer and occupational health V . Rura l and A g r ic u ltu ra l S ervices

and safety Farm income stabilizationUnemployment compensation Agricultural research and servicesFood and nutrition assistance Community developmentO ther income security Area and regional developmentDisease control (preventive health Disaster re lie f and insurance

care services) Rural community advancementHealth resources and services programSubstance abuse and mental health Homeland Security disaster relief

servicesGrants to states fo r MedicaidChild nutrition programsFood stamp programsFamily support payments to statesSocial services block grantsChildren and fam ilies service

programsTraining and employment servicesUnemployment trust fund

S ource: T h e H eritag e Foundation

Table 2 * C D A 12-02 X heritage.org

► Nearly all the financial support that was once provided to temporarily unemployed workers by unions, m utua l-a id associa tions, and local charities is now provided by government programs.

Nearly Half of All Americans Don't Pay Income TaxesPercentage of U.S. Population N ot Represented on a Taxable Return 49J>%

1962 1970 I960 1990 2000 2009

Note: Figures fo r 1977 to 1982 were extrapolated due to unavailable data.

Source: Heritage Foundation calculations based on data from the Internal Revenue Service. "Individual Income Tax Returns."Publication 1304.1962-2009, Table 1.4, and various IRS reports.

Chart I • CCA 12-02 ■ heritage.org

► N early h a lf o f the U.S. population (49.5%) does not pay any federal income taxes.

programs.Quotes and charts from “The 2012 Index o f Dependence on Government” by the Heritage Foundation

We Can t Separate Social Policy from Tax LawContrary to foolish meanderings of politicians, social

issues are not only an integral feature of our fiscal policies but also specifically of our tax laws.

The majority of Americans say they support traditional marriage, the union of a husband and a wife, and support children being raised by their parents who are married to each other. So why are we permitting our income tax law to discriminate against traditional marriage and against the right and need of children to have a father and a mother married to each other?

Don’t let anyone tell you that federal tax policy should be neutral about marriage, children and the family. There is no such thing as a neutral tax or a neutral deduction or a neutral credit.

Every part of your income tax return that you will file by April 15 is a manifestation of social policy. The whole concept that those who have more income must pay higher rates of income tax than those with less income (known as a progressive income tax) is a momentous combination of social and fiscal policies.

It’s social policy that we can deduct gifts to charitable and religious organizations on our tax return. It’s social policy to allow us to postpone taxes on our accounts set up for retirement.

It’s social policy to permit homeowners to deduct mortgage payments. Favoring homeowners over renters was a social-policy decision made years ago and locked into the income tax law.

When we elected the great Republican Congress in 1946, it created the joint income tax return over President Harry Truman’s veto. This enabled married couples, where the husband was the major breadwinner and the wife a homemaker, to file their income tax return as two equal partners, with each tax bracket, deduction and exemption equal to twice that of a single person.

For more than 60 years, the federal income tax treated the family as an economic unit. A husband and wife had the benefit of pooling their income in a joint tax return which affords larger deductions and lower rates.

Meanwhile, pro-marriage social policy was repeatedly reaffirmed by the American people. Thirty states passed constitutional amendments endorsing traditional marriage, and Congress overwhelming passed the Defense of Marriage Act (DOMA). The General Accountability Office reported that 1,138 federal laws depend on the traditional definition of marriage set forth in DOMA.

Nevertheless, starting with the Nixon Administration, fiscal-social policy in the income tax code and in government spending steadily devalued marriage and gave non-marriage a better deal in the income tax law. Tax laws reduced the value of the husband and wife filing a joint return from 2 persons to only about 1.6 persons, while creating a new category called “head of household” for

unmarried persons, and valuing that person as 1.4 persons in the income tax system.

We have recently learned that a fourth o f those unmarried heads of household have an unreported live-in partner with a job. Simple arithmetic shows that a single parent with an unmarried live-in partner would then be valued at 2.4 persons, which is more favorable tax treatment than respectable married couples struggling to support their own children.

That means, if the single mom has a live-in boyfriend who files his own tax return, they end up with more favorable treatment in the income tax system than a married couple raising their own children. We should not allow marriage to be discriminated against in the income tax code.

Even ObamaCare contains a marriage penalty by reducing the insurance subsidy when cohabiting couples marry. As a Democratic staffer explained to the Wall Street Journal reporter who questioned the marriage penalty written into ObamaCare, “You have to decide what your goals are.”

The Democrats know that 70% of unmarried women voted for Obama in 2008. Democratic consultant Tony Podesta has cooked up 83 bills to increase handing out more taxpayers’ money to single moms.

Most Republican presidential candidates, as well as conservative think tanks, publications and PACs, have presented proposals to “reform” the tax code, but they don’t get it when it comes to income-tax respect for marriage. Again and again, they use such anti-marriage expressions as “individuals and their dependents.”

The only one who seems to understand the family’s relationship to the income tax is Rick Santorum. That could explain his surge with conservative voters.

Santorum even had to explain to the Wall Street Journal’s financial guru the difference between the personal exemption for dependent children and a child credit. The difference is between reducing income taxes on a married couple raising their own children and giving refundable “credits” (a.k.a. handouts) to children of an unmarried parent. It’s time to make our income tax system pro-marriage instead of anti-marriage.

The Phyllis Schlafly ReportPO Box 618, Alton, Illinois 62002

ISSN0556-0152Published monthly by the Eagle Trust Fund, PO Box 618, Alton,

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