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Benefit spending climbs in first quarter

June 4, 2009 at 12:35 PM   |   Comments

WASHINGTON, June 4 (UPI) -- The recession-driven safety net of government benefits is at a record high, as $1 of every $6 of U.S. income is a government payment, an analysis showed.

The Bureau of Economic Analysis said benefits such as Social Security, food stamps, unemployment insurance and healthcare accounted for 16.2 percent of personal income during the first quarter of this year, the highest since the government began compiling records in 1929, USA Today reported Thursday.

Federal data indicate government spending on benefits will top $2 trillion in 2009, averaging $17,000 provided to each U.S. household. Benefits rose at a 19 percent annual rate in the first quarter of 2009 compared to the last three months of 2008.

USA Today said drivers of the $209 billion increase in benefit costs from a year ago include:

-- Unemployment insurance. A quarter of the extra spending covers jobless benefits.

-- Social Security. The anemic economy prompted a 10 percent to 15 percent jump in early retirement, meaning $55 billion in new costs.

-- Food stamps. Enrollment hit a record 33.2 million people in March, up 5.2 million over last year.

"The increase in social spending is still relatively modest given the severity of the downturn," says economist Dean Baker of the liberal Center for Economic and Policy Research.

Adam Lerrick, economist at the conservative American Enterprise Institute, told USA Today the explosion in benefits eventually will lead to an economic crisis.

"We've seen this movie before in many countries. It always has the same ending," Lerrick said.

© 2009 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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