Bill Bonner

We used to like traveling. Now, it’s a drag.

“No, we don’t want to go through your new x-ray machine,” we told the TSA guard.

“Whassa matter? It’s safe…” she replied.

“How do you know that?”

“The government said it was safe.”

“Do you believe everything the government tells you?”

“Heh…heh… Okay…” then, turning to no one in particular… “REFUSAL on 11. Male.”

We were out quickly…but the poor old woman behind us had to get up out of her wheelchair…hobble through the x-ray machine…and then they still wanted to feel her up on the other side.

You can’t be too safe, right?

This has been going on for 10 years. But it is still shocking. No one seriously believes that 85-year-old crippled Lutherans are going to cause mayhem on commercial airliners. But no one seems willing to say so.

You can’t even ask the question. Because it leads to other questions. Who, actually, is a threat? Probably no one. So, why are we herded…inspected…and pawed…as if the survival of the nation depended on it?

For the money and aggravation, all this security has probably done little to make air-travel any safer. But it’s done wonders at turning the American population into whipped dogs. They bark on command. When they begin the round-ups, interrogations and deportations…Americans will be ready to get in line…

You’ll see part of the reason why, below…

Recent news brought reports of more new jobs. We suspect that most of the good news was merely misinterpretation of the data. Many people have been looking for work for so long, the feds have stopped counting them. Besides, they routinely adjust jobs upward in winter, to make up for bad weather. So when there isn’t any bad weather in January, the job numbers go up automatically.

But there’s another problem.

“Most of the new jobs being created,” complains Robert Reich, “are in the lower-wage sectors of the economy — hospital orderlies and nursing aides, secretaries and temporary workers, retail and restaurant. Meanwhile, millions of Americans remain working only because they’ve agreed to cuts in wages and benefits. Others are settling for jobs that pay less than the jobs they’ve lost. Entry-level manufacturing jobs are paying half what entry-level manufacturing jobs paid six years ago.”

He continues, in the Christian Science Monitor:

Other people are falling out of the middle class because they’ve lost their jobs, and many have also lost their homes. Almost one in three families with a mortgage is now underwater, holding their breath against imminent foreclosure.

The percent of Americans in poverty is its highest in two decades, and more of us are impoverished than at any time in the last fifty years. A recent analysis of federal data by the New York Times showed the number of children receiving subsidized lunches rose to 21 million in the last school year, up from 18 million in 2006-2007. Nearly a dozen states experienced increases of 25 percent or more. Under federal rules, children from families with incomes up to 130 percent of the poverty line, $29,055 for a family of four, are eligible.

Too bad; Reich misunderstands everything. He thinks Republicans are to blame for wanting to reduce government handouts. Reich believes he can replace real middle-class earnings with a cushier safety net…as if there was no difference between a person who earns a living…and one who begs one….

…and as if the middle class wouldn’t have to pay for it.

On the subject of handouts, the Republicans are on slightly more solid ground than Reich and the democrats. They say they will cut them back. At least, those that don’t go to the voters.

For example, Mitt Romney says he doesn’t care about the poor; he cares about the middle class. Why? The middle class votes; the poor don’t.

Trouble is, there are more and more people who are slipping from the middle class…to the poor side of town.

Investment Business Daily is on the story:

The American public’s dependence on the federal government shot up 23% in just two years under President Obama, with 67 million now relying on some federal program, according to a newly released study by the Heritage Foundation.

The conservative think tank’s annual Index of Dependence on Government tracks money spent on housing, health, welfare, education subsidies and other federal programs that were “traditionally provided to needy people by local organizations and families.”

The two-year increase under Obama is the biggest two-year jump since Jimmy Carter was president, the data show.

The rise was driven mainly by increases in housing subsidies, an expansion in Medicaid and changes to the welfare system, along with a sharp rise in food stamps, the study found.

“You can’t get around the fact that policy decisions made over the past two years, on top of those made over the past several decades, are having a large effect on the pace of growth of the index,” said William Beach, who authored the Heritage study.

Government dependence has climbed steadily since 1962, when the index stood at 19. By 1980, the index had risen to 100. It stood at 294 in 2010, the last year for which the data are available. D.C.-based Heritage has produced the index for nine years.

The report also found that spending on “dependence programs” accounts for more than 70% of the federal budget. That, too, is up dramatically. In 1990, for example, the figure stood at 48.5%, and in 1962 just over a quarter of federal spending went to dependence programs.

At the same time, fewer Americans pay income taxes, the report notes. Almost half (49.5%) didn’t pay income taxes in 2009, the latest year for which the researchers have data. Back in the late 1960s, only 12% of Americans escaped the income tax burden.

Other findings:

The number of people dependent on the federal government shot up 7.5% in the past two years.

In 2010, for the first time ever, average spending on dependence programs per recipient exceeded the country’s per-capita disposable income.

Our quick-witted Dear Readers are probably already gasping for air. The zombies now are getting more money than wage earners. And millions of those wage earners are zombies themselves, on the government payroll…or the payroll of some industry — health, education, military — that depends on federal spending.

That leaves honest working people in a minority. And everybody gets a vote.

How do you think the zombies will vote? To cut back on spending on education? On healthcare? On foreign wars or new weapons? On welfare? On food stamps? On unemployment comp?

No, dear reader, there are some ailments that can’t be cured…and some problems democracy cannot solve.


Bill Bonner
for The Daily Reckoning

Bill Bonner

Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America's most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind The Daily ReckoningDice Have No Memory: Big Bets & Bad Economics from Paris to the Pampas, the newest book from Bill Bonner, is the definitive compendium of Bill's daily reckonings from more than a decade: 1999-2010. 

  • Scott

    I live in Edmonton which has long cold winters. At the end of summer I stamp my feet for summer to keep going. Invariably, the protective forces of old man winter appear again, thus allowing the return of spring.

  • Bob

    Bill- do a column on how I can get in on the scam…I feel like a sucker.

  • Sky Pilot

    Consumers don’t have the extra cash these days to be creating jobs in the private sector.

    As for flying, I can’t understand why people still do so.

  • rex v willard

    i see argentina now only allows exchanging 1000 paso’s per day last week it was 10,000 per day. it makes sense setting up camp there in the mts. safety..i bought my first piece of gold from cheeper 2000 or 2001 somehow you folks were there clicked on it been with ya ever since..sure hope u come home to the u.s again or whatever they will call it after we self destruct..any case thank you and God bless..

  • gman

    “The zombies now are getting more money than wage earners.”

    think of it as competition.

  • Le Petomane

    When employers willingly shift manufacturing jobs (and now service jobs) to foreign economies for cheap labor and politicians simultaneously cut high end taxes and the Fed artificially lowers interest rates, you would think a fairly large advantage had accrued to the private sector.
    Govt policy delivers for the rich and then it prints or borrows money to deliver for the unrich (and for purchasing weapons of course).
    The USA still has the wealth and the individuals to be a great country but it doesn’t have the will or the culture.
    Check out the book The Economic Hitman for an inside look at how US foreign policy works and the ‘culture’ this demonstrates.

  • ken

    How many would work for the TSA if there were plenty of good paying jobs around?

  • 2 funny

    How many would work for the TSA if there were plenty of good paying jobs around?

    Exactly the same number as if there WEREN’T plenty of good paying jobs around.

  • *Sparkie*

    Yeah,BB were all slowly bcome’in “Trained Seals!” And we don’t even know it! I guess when they start diggin large trenches,in the middle of nowhere,and tell us 2 march in2 them! I guess then will all suddenly wake up, on the other side of nothingness!!! CU’s there! *S*

  • Deft

    Robert Wenzel thinks the Feds new money is making it’s way into the economy. He’s expecting an uptick.

  • phelps

    Democracy solves few problems, but creates many. Earned Income Credit is a creation of democracy. When you have people who only make $10,500 per year who get roughly $7,329 from $ someone else earned, then why change anything. Just vote yourself more EIC, or whatever your favorite gov goody is. Just like the zombies in Fla. and SC did.

  • Scott

    “the poor old woman behind us had to get up out of her wheelchair…hobble through the x-ray machine…and then they still wanted to feel her up on the other side.”

    And the irony? We’ve been told that the remains of our enemy, al Queada (or however you spell it) can now be counted on two hands. They couldn’t form a baseball team if every one left alive in the world came to Fenway Park.

    Stockholm Syndrome. It’s the only explanation that makes sense.

  • Paul

    Bill -

    I am a 24 year old male, graduate in 2010 with a Finance degree, and have since focused on Healthcare Administration. I work at MGH in Boston, and have a solid job as a business analyst.

    I really value the information on this website, but I get the distinct impression that because health care is a recipient of Federal spending, I am now one of the ‘drains on society’ (or in your words, a Zombie, who adds no real value)

    What am I supposed to do here? I get the feeling using my Finance degree to go work at Goldman is not exactly the best bet…

    What are your thoughts for a person like me?

Recent Articles

A Simple Strategy for Investing in the US Energy Boom

Byron King

Too often investments are made in a vacuum. But as Byron King demonstrates, the global economic crash... easy money... and technological advancements are all interdependent. In particular, that connection has changed the investment calculus in the resource market. Read on to learn how...

The Traffic Jam That Kills Thousands of People Every Day

Juan Enriquez

Back in the 1980s, John Nestor became infamous for single-handedly causing massive traffic jams on the Capital Beltway. But in his professional life, he created a completely different kind of traffic jam... one that may have contributed to the deaths of thousands of innocent people. Juan Enriquez has the full story. Read on...

Laissez Faire
New and Unexpected Ways to Fund Long-Term Care Expenses

Jamie Hopkins

Too many people think that long-term care planning is just a decision about whether to purchase long-term care insurance. However, long-term care planning is so much more... It is a discussion about how you will fund this expense, where you will receive long-term care, and who will provide the care. Jamie Hopkins explains...

Beware the Barrage of New Tech IPOs

Greg Guenthner

Lately, the market seems to be obsessed with new tech darlings with flashy names and exciting stories. But there are more sinister forces at work... Today Greg Guenthner explains why you should pay no attention to the man behind the curtain, and avoid being tempted by big name tech IPOs. Read on...

5 Min. Forecast
The 2 Forces Driving the Current Stock Market Boom

Dave Gonigam

Stocks have started off this week pretty flat. But is more volatility to come as the week progresses? Today, Dave Gonigam takes a look at a few scenarios for the rest of this week, and for 2014 as a whole - specifically relaying what one analyst sees as the two main forces currently driving the market boom. Read on...