If nothing else, the crisis over the debt ceiling is reminding the country of the astonishing reach of the federal spigot, encapsulated by a figure that President Obama tossed out recently: The government sends out “70 million checks” every month.
That works out to 27 payments per second, day after day — not just to the expected recipients, such as contractors, federal workers and Social Security beneficiaries, but also to those you might not think of, such as the victims of black lung disease and their widows (50,032 checks in June), and pensioners supported by the Railroad Retirement Board (613,912).
Obama used the figure to illustrate the dire consequences if the government fails to raise the debt ceiling by the Aug. 2 deadline. This week, Treasury Secretary Timothy F. Geithner upped the figure to 80 million in making a similar point.
The mind-boggling number challenges a common critique of the federal government as a creaky apparatus where tax dollars are lost in the bureaucratic cracks. From the vantage point of the 70 million or 80 million checks, the government is a finely tuned machine that brings in revenue and disperses it back out across the country.
To many conservatives, this machine represents redistribution run amok, a life-support system for a nation of supplicants hooked on federal largess — “The 70-Million-Check Constituency,” as a headline in the conservative online magazine American Thinker put it. (Indeed, the Treasury Department’s term for programs such as Social Security and veterans benefits is “lifeline payments.”)
To others, the machine is one achievement of a country that, although not nearly as egalitarian-minded as the social democracies of Europe, has evolved to provide a fairly substantial safety net for its citizens and an active role for the central government.
“It’s amazing how big the government is,” said Richard Johnson, director of the Urban Institute’s program on retirement policy. “It plays an incredibly large role in people’s lives, and it’s easy to forget that if you’re not one of the people affected.”
Even some of the people who are affected forget it. In addition to those receiving the 70 million checks, there are many more who benefit from give-backs in the tax code, such as credits and deductions for mortgage interest, retirement savings and employer-provided health coverage. Studies have shown that these beneficiaries are far less likely than the recipients of actual checks to be aware of the perks they are getting.
‘80 million’ still too low
The figures used by Obama and Geithner were, if anything, too low. They relied on Treasury Department figures from June that include Social Security (56 million checks that month), veterans benefits (4.5 million checks), and spending on non-defense contractors and vendors (1.8 million checks).
But those numbers do not include reimbursements to Medicare providers and vendors (100 million claims in June), and electronic transfers to the 21 million households receiving food stamps.
Nor do they include most spending by the Defense Department, which has a payroll of 6.4 million active and retired employees and, on average, pays nearly 1 million invoices and 660,000 travel expense claims per month.
Obama’s and Geithner’s statements were hyperbolic only in one sense: The vast majority of the payments are now electronic, not checks per se. Of the roughly 80 million payments that the Treasury Department made in June, just 12 million were paper checks, half of them to Social Security recipients who prefer to get their allotment in the mail.
Bill Frenzel, a former Republican congressman from Minnesota who is at the Brookings Institution, said it is difficult for Americans to wrap their minds around the numbers.
“It tells you what the government can do for people and reassures you, and on the other hand, it scares the hell out of you because we do so many things,” he said. “If you’re a compassionate liberal, you say, ‘Isn’t it wonderful we’re helping everybody,’ and if you’re a constitutional conservative, you say: ‘How did the government get into all these things? I don’t see these things in the Constitution; it’s bewildering, get rid of it.’ ”
The ‘check is in the mail’
In the American Thinker article, Michael Filozof laments that “Obama and the left have a massive constituency of tens of millions who do not comprehend the true meaning of money, only caring that the government check is in the mail.” He adds: “Obama is not leading the nation to socialism; we are a socialist nation and have been for some time.”
Socialism or not, it goes back nearly a century. The creation of the Veterans Administration in 1930 consolidated benefits programs for World War I veterans.