The Big World of Government Subsidies — Where’s My Ride Voucher?

If you were working hard and caring for your family you might have missed some federal subsidies that parallel consumers’ spending.  The Consumer Expenditure Survey for 2011, shows an average household spent $64,000 and the top seven categories account for 87% of it.  Except for vehicle-related and entertainment, the federal government already offers subsidies in each category.

Spending Category2011 Spent ($)

% Spending

Housing20,664

32

Vehicle related10,285

16

Food  8,315

13

Pensions & Social Security  7,189

11

Health care   4,479

7

Entertainment  3,418

5

Education  1,340

2

55,690

87

 

The federal Department of Housing and Urban Development subsidized 1.2 million households during FY 2013 under its Section 8 programs providing $17 billion in Tenant Based Assistance and $8.4 billion in Section 8 Contract Renewals, amounting to $22,500 per beneficiary.

Help with food goes to 47 million people in 23 million households for the federal Supplemental Nutrition Assistance Program (SNAP, aka Food Stamp) benefits. Only 38 million were enrolled in October 2009.  Yearly SNAP benefits average $3,300 per household and will cost taxpayers $51 billion during FY 2013.  The women infant and children (WIC) supplemental food program for pregnant or lactating mothers serves 8.9 million enrollees with $45 of benefits each per month, costing $7 billion in FY 2012.

There are massive federal pension and income subsidy programs.  Within the FY 2013 Social Security cluster are: Old-Age and Survivor’s Income, $668 billion; Disability income, $141 billion; and SSI, $53 billion — for a total of $862 billion.  Social Security payroll taxes collected $670 billion in premiums for these subsidies.  Unemployment insurance adds another $70 billion in benefits and collects about the same in premiums.  In any given year, the $932 billion in income subsidies is available to people who are eligible – it is not reabsorbed by payers.

The US Department of Education spent about $30 billion on subsidies for higher education in 2009.  It spent $73 billion in K-12 subsidies during 2008.  About 90% of all education spending comes from state and local governments.  A small part comes from private payments.

Of the major health care programs in FY 2013, Medicare will incur $586 billion in subsidy costs, offset by $90 billion in premiums.  Medicaid will subsidize another $265 billion.  Obamacare subsidies start at $1 billion in 2013, but explode to $135 billion by 2023.  States offer programs with subsidies, especially for children.

Smaller is a telecommunications subsidy for individuals (“Lifeline” or more recently “Obamaphone”) funded via taxes on telephone subscribers.  Lifeline provides a $9.25/month subsidy, costing us about $1.5 billion per year.   Another subsidy for internet access in K-12 classrooms is called the “E-Rate” which has grown in size to $2.3 billion.  That is likely to skyrocket due to a demand that it pay for 100 megabit service to at least 99% of classrooms.

An enterprising politician should consider vehicle subsidies – it’s a new frontier – fresh entitlement territory looking to be branded.  Consider the “Cash for Clunkers” program as test marketing.  “Ride Stamps” could move us to the next level, absorbing inventories of unpopular green vehicles that cost too much or have too little range.   What a vote getter it could be!

Alan Daley is a retired businessman who lives in Florida and who writes for The American Consumer Institute Center for Citizen Research

 

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