[StBernard] Even Critics of Safety Net Increasingly Depend on It

[Westley Annis]

Even Critics of Safety Net Increasingly Depend on It
By BINYAMIN APPELBAUM and ROBERT GEBELOFF
LINDSTROM, Minn. - Ki Gulbranson owns a logo apparel shop, deals in jewelry
on the side and referees youth soccer games. He makes about $39,000 a year
and wants you to know that he does not need any help from the federal
government.

He says that too many Americans lean on taxpayers rather than living within
their means. He supports politicians who promise to cut government spending.
In 2010, he printed T-shirts for the Tea Party campaign of a neighbor, Chip
Cravaack, who ousted this region's long-serving Democratic congressman.

Yet this year, as in each of the past three years, Mr. Gulbranson, 57, is
counting on a payment of several thousand dollars from the federal
government, a subsidy for working families called the earned-income tax
credit. He has signed up his three school-age children to eat free breakfast
and lunch at federal expense. And Medicare paid for his mother, 88, to have
hip surgery twice.

There is little poverty here in Chisago County, northeast of Minneapolis,
where cheap housing for commuters is gradually replacing farmland. But Mr.
Gulbranson and many other residents who describe themselves as
self-sufficient members of the American middle class and as opponents of
government largess are drawing more deeply on that government with each
passing year.

Dozens of benefits programs provided an average of $6,583 for each man,
woman and child in the county in 2009, a 69 percent increase from 2000 after
adjusting for inflation. In Chisago, and across the nation, the government
now provides almost $1 in benefits for every $4 in other income.

Older people get most of the benefits, primarily through Social Security and
Medicare, but aid for the rest of the population has increased about as
quickly through programs for the disabled, the unemployed, veterans and
children.

The government safety net was created to keep Americans from abject poverty,
but the poorest households no longer receive a majority of government
benefits. A secondary mission has gradually become primary: maintaining the
middle class from childhood through retirement. The share of benefits
flowing to the least affluent households, the bottom fifth, has declined
from 54 percent in 1979 to 36 percent in 2007, according to a Congressional
Budget Office analysis published last year.

And as more middle-class families like the Gulbransons land in the safety
net in Chisago and similar communities, anger at the government has
increased alongside. Many people say they are angry because the government
is wasting money and giving money to people who do not deserve it. But more
than that, they say they want to reduce the role of government in their own
lives. They are frustrated that they need help, feel guilty for taking it
and resent the government for providing it. They say they want less help for
themselves; less help in caring for relatives; less assistance when they
reach old age.

The expansion of government benefits has become an issue in the presidential
campaign. Rick Santorum, who won 57 percent of the vote in Chisago County in
the Republican presidential caucuses last week, has warned of "the narcotic
of government dependency." Newt Gingrich has compared the safety net to a
spider web. Mitt Romney has said the nation must choose between an
"entitlement society" and an "opportunity society." All the candidates,
including Ron Paul, have promised to cut spending and further reduce taxes.

The problem by now is familiar to most. Politicians have expanded the safety
net without a commensurate increase in revenues, a primary reason for the
government's annual deficits and mushrooming debt. In 2000, federal and
state governments spent about 37 cents on the safety net from every dollar
they collected in revenue, according to a New York Times analysis. A decade
later, after one Medicare expansion, two recessions and three rounds of tax
cuts, spending on the safety net consumed nearly 66 cents of every dollar of
revenue.

The recent recession increased dependence on government, and stronger
economic growth would reduce demand for programs like unemployment benefits.
But the long-term trend is clear. Over the next 25 years, as the population
ages and medical costs climb, the budget office projects that benefits
programs will grow faster than any other part of government, driving the
federal debt to dangerous heights.

Americans are divided about the way forward. Seventy percent of respondents
to a recent New York Times poll said the government should raise taxes.
Fifty-six percent supported cuts in Medicare and Social Security. Forty-four
percent favored both.

Support for spending cuts runs strong in Chisago, where anger at the
government helped fuel Mr. Cravaack's upset victory in 2010 over James L.
Oberstar, the Democrat who had represented northeast Minnesota for 36 years.

"Spending like this is simply unsustainable, and it's time to cut up
Washington, D.C.'s credit card," Mr. Cravaack said in a February speech to
the Hibbing Area Chamber of Commerce. "It may hurt now, but it will be
absolutely deadly for the next generation - that's our children and our
grandchildren."

But the reality of life here is that Mr. Gulbranson and many of his
neighbors continue to take as much help from the government as they can get.
When pressed to choose between paying more and taking less, many people
interviewed here hemmed and hawed and said they could not decide. Some were
reduced to tears. It is much easier to promise future restraint than to deny
present needs.

"How do you tell someone that you deserve to have heart surgery and you
can't?" Mr. Gulbranson said.

He paused.

"You have to help and have compassion as a people, because otherwise you
have no society, but financially you can't destroy yourself. And that is
what we're doing."

He paused again, unable to resolve the dilemma.

"I feel bad for my children."

Middle-Class Blues

Mr. Gulbranson has tried several ways to make a living in the storefront he
bought from his father in 1979. He ran a gift shop, then shifted to selling
jewelry. Nine years ago, he moved the gold scales to the back and bought
equipment for screen-printing clothing. Through it all, he has never made
more than about $46,000 in a year.

Meanwhile, the cost of life - and of raising five children - has climbed
inexorably.

"I used to go out and try to have a meal at Perkins, which is a restaurant
here, and get out of the store with $5," Mr. Gulbranson said. "And now it's
probably up to $10."

In recent years he has earned so little that he did not pay federal income
taxes, although he still paid thousands of dollars toward Medicare and
Social Security. The earned-income tax credit is intended to offset those
payroll taxes, to encourage people with lower-paying jobs to remain in the
work force.

Mr. Gulbranson said the money covered the fees for his children's sports
leagues and the cost of keeping the older ones on the family's car
insurance.

"If we didn't get these government things, then probably my kids could not
participate in some of the sports they do," he said.

Almost half of all Americans lived in households that received government
benefits in 2010, according to the Census Bureau. The share climbed from
37.7 percent in 1998 to 44.5 percent in 2006, before the recession, to 48.5
percent in 2010.

The trend reflects the expansion of the safety net. When the earned-income
credit was introduced in 1975, eligibility was limited to households making
the current equivalent of up to $26,997. In 2010, it was available to
families making up to $49,317. The maximum payout, meanwhile, quadrupled on
an inflation-adjusted basis.

It also reflects the deterioration of the middle class. Chisago boomed and
prospered for decades as working families packed new subdivisions along
Interstate 35, which runs up the western edge of the county like a flagpole
with its base set firmly in Minneapolis. But recent years have been leaner.
Per capita income in Chisago excluding government aid fell 6 percent on an
inflation-adjusted basis between 2000 and 2007. Over the next two years, it
fell an additional 7 percent. Nationally, per capita income excluding
government benefits fell by 3 percent over the same 10 years.

Mr. Gulbranson's business struggled as other companies, particularly
construction firms, stopped ordering logo-emblazoned shirts. In 2009, the
family claimed the earned-income credit for the first time on the advice of
their accountant, who was claiming it for herself. The share of local
families claiming the credit climbed 33 percent between 2000 and 2008, the
most recent year for which data are available.

To make extra money, Mr. Gulbranson refereed 40 soccer games on Tuesday and
Thursday nights last fall. His wife sold clothes at equestrian events and
air-brushed novelties at craft fairs, driving around the country with a
one-ton trailer hitched to a 20-foot van.

Their difficulties, Mr. Gulbranson said, have made it hard to imagine asking
anyone to pay higher taxes.

"I don't think most people could bear to pay more," he said.

Instead, he said he would rather give up the earned-income credit the family
now receives and start paying for school lunches for his children.

"I don't demand that the government does this for me," he said. "I don't
feel like I need the government."

How about Social Security? And Medicare? Can he imagine retiring without
government help?

"I don't think so," he said. "No. I don't know. Not the way we expect to
live as Americans."

A Starring Role

Bob Kopka and his wife often drive to the American Legion hall in North
Branch on Thursday nights, joining the crowd gathered in the basement bar
for the weekly meat raffle. Almost everyone present relies on the government
to pay for their medical care.

Mr. Kopka, 74, has had three heart procedures in recent years. His wife
recently had surgery to remove cataracts from both eyes.

Without Medicare, Mr. Kopka said, the couple could not have paid for the
treatments.

"Hell, no," he said. "No. Never. She would have to go blind."

And him?

"I'd die."

Few federal programs are more popular than Medicare, which along with Social
Security assures a minimum quality of life for older Americans.

None are more central to the nation's financial problems. The Congressional
Budget Office projects that government spending on medical benefits, even
taking into account the cost containment measures in the 2010 health care
law, will rise 60 percent over the next decade. Then it will start rising
even more quickly. The cost of caring for each beneficiary continues to
increase, and the government projects that Medicare enrollment will grow by
roughly one-third as baby boomers enter old age.

Spending on medical benefits will account for a larger share of the
projected increase in the federal budget over the next decade than any other
kind of spending except interest payments on the federal debt.

Medicare's starring role in the nation's financial problems is not well
understood. Only 22 percent of respondents to the New York Times poll
correctly identified Medicare as the fastest-growing benefits program. A
greater number of respondents, 27 percent, chose programs for the poor. That
category, which includes Medicaid, is slightly larger than Medicare today
but is projected to add only half as much to federal spending over the next
decade.

Medicare's financial problems are much worse than Social Security's. A
worker earning average wages still pays enough in Social Security taxes to
cover the benefits the worker is likely to receive in retirement, according
to an analysis by the Urban Institute. Social Security is still running out
of money because the program must also support spouses who do not work and
workers who earn lower wages. But Medicare's situation is even more dire
because a worker earning average wages still contributes only $1 in Medicare
taxes for every $3 in benefits likely to be received in retirement.

A woman who was 45 in 2010, earning $43,500 a year, will pay taxes that will
reach a value of $87,000 by the time she retires, assuming the money is
invested at an annual interest rate 2 percentage points above inflation,
according to the Urban Institute analysis. But on average, the government
will then spend $275,000 on her medical care. The average is somewhat lower
for men, because women live longer.

Medicare is often described as an insurance program, but its premiums are
not nearly high enough. In simple terms, Americans are getting more than
they pay for.

But many older residents in Chisago say this problem belongs to younger
generations. They paid what they were told; they want to collect what they
were promised.

Some, like the Kopkas, have savings they can tap. Mr. Kopka still owns the
landscaping business he started after leaving the Navy in the early 1960s.
He and his wife own a three-bedroom home on three acres, valued by the
county at $153,700. The mortgage is paid. They hope to pass the house to
their children.

Others have nothing else. Barbara Sullivan, 71, moved last year to the
apartments above the Chisago County Senior Center in North Branch. Waiting
on a recent Friday for the hot lunch, which costs $3.50, she watched roughly
20 people play bingo for prizes including canned soup and Chef Boyardee
pasta.

"Most of the seniors around here are struggling to make it," she said.

She counts herself among them. She lives on $1,220 a month in Social
Security benefits and relied on Medicare to pay for an operation in
November.

She believes that she is taking more from the government than she paid in
taxes. She worries about the consequences for her grandchildren. She said
she would like politicians to propose solutions.

"We're reasonable people," she said. "We're not going to say, 'Give it to me
and let my grandchildren suffer.' I think they underestimate seniors when
they think that way."

But she cannot imagine asking people to pay higher taxes. And as she
considered making do with less, she started to cry.

"Without it, I'm not sure how I would live," she said. "With the check I'm
getting from Social Security, it's a constant struggle on making sure that I
pay my rent and have enough left for groceries.

"I haven't bought a Christmas present, I haven't bought clothing in the last
five years, simply because I can't afford it."

Keeping a Promise

Representative Cravaack often says he entered politics to lift the burden of
debt from the shoulders of his two sons.

"I vision that I open up their backpacks and I put in a 50-pound rock and
zip it back up again," Mr. Cravaack told the Minnesota Freedom Council in
October 2010. "And I say, 'Sorry, son, you're going to have to hump this the
rest of your life.' Because that's exactly what we're doing to our national
debt right now to our children."

Mr. Cravaack, a 53-year-old Navy veteran and a retired pilot for Northwest
Airlines, was grounded by sleep apnea in 2007. He and his wife, an executive
at the drug company Novo Nordisk, decided he would stay home with their
sons. He soon became the first man to serve as president of the Chisago
Lakes Parent Teacher Organization.

In August 2009, while driving the children to North Branch, he heard a talk
radio host urging people to protest President Obama's health care
legislation. Mr. Cravaack and about two dozen others spent more than two
hours the next day in Mr. Oberstar's North Branch office before a staff
member told them the congressman would not meet them. The rejection
convinced Mr. Cravaack that Mr. Oberstar should be replaced. One of the
other protesters, a woman who had taken her six children to the office,
became Mr. Cravaack's campaign scheduler.

Two weeks after speaking to the Freedom Council, he beat Mr. Oberstar by 1.6
percentage points, or 4,407 votes. Voters in Chisago, the southern tip of an
expansive district, provided the margin of victory.

"We have to break away," Mr. Cravaack told supporters, "from relying on
government to provide all the answers."

Mr. Cravaack has said he drew unemployment benefits during a furlough from
Northwest in the early 1990s. He did not respond to several requests for an
interview, nor to an e-mail with questions about his views and about whether
his family has drawn on other benefits programs. This account is based on a
review of his public statements.

Shortly after arriving in Congress, Mr. Cravaack voted with a vast majority
of House Republicans for a plan to remake Medicare by providing money to its
beneficiaries to buy private insurance. Senate Democrats have rejected that
plan.

But Mr. Cravaack has also consistently said the government should not reduce
its largest category of spending - benefits for the current generation of
retirees. He also says he does not support cuts for people who will turn 65
over the next decade.

"If you're 55 years and older, you don't have to listen to this conversation
because we have to keep those promises," Mr. Cravaack told The Daily Caller
last April. "People like myself, 52, if you're 54 or younger, we're going to
have a conversation."

Tomorrow, Tomorrow

The government helps Matt Falk and his wife care for their disabled
14-year-old daughter. It pays for extra assistance at school and for trained
attendants to stay with her at home while they work. It pays much of the
cost of her regular visits to the hospital.

Mr. Falk, 42, would like the government to do less.

"She doesn't need some of the stuff that we're doing for her," said Mr.
Falk, who owns a heating and air-conditioning business in North Branch. "I
don't think it's a bad thing if society can afford it, but given the
situation that our society is facing, we just have to say that we can't
offer as much resources at school or that we need to pay a higher premium"
for her medical care.

Mr. Falk, who voted for Mr. Cravaack, said he did not want to pay higher
taxes and did not want the government to impose higher taxes on anyone else.
He said that his family appreciated the government's help and that living
with less would be painful for them and many other families. But he said the
government could not continue to operate on borrowed money.

"They're going to have to reduce benefits," he said. "We're going to have to
accept it, and we're going to have to suffer."

One of the oldest criticisms of democracy is that the people will inevitably
drain the treasury by demanding more spending than taxes. The theory is that
citizens who get more than they pay for will vote for politicians who
promise to increase spending.

But Dean P. Lacy, a professor of political science at Dartmouth College, has
identified a twist on that theme in American politics over the last
generation. Support for Republican candidates, who generally promise to cut
government spending, has increased since 1980 in states where the federal
government spends more than it collects. The greater the dependence, the
greater the support for Republican candidates.

Conversely, states that pay more in taxes than they receive in benefits tend
to support Democratic candidates. And Professor Lacy found that the pattern
could not be explained by demographics or social issues.

Chisago has shifted over 30 years from dependably Democratic to reliably
Republican. Support for the Republican presidential candidate has increased
relative to the national vote in each election since 1984. Senator John
McCain won 55 percent of the vote here in 2008.

Residents say social issues play a role, but in recent years concerns about
spending and taxes have predominated.

Voters in the North Branch school district have rejected increased financing
for local schools in each of the past three years. In 2010, the district
switched to a four-day school week, striking Monday from the calendar to
save money.

Some of the fiercest advocates for spending cuts have drawn public benefits.
Many, like Mr. Falk, have family members who rely on the government. They
often cite that personal experience as the reason they want to cut
government spending.

Brian Qualley, 49, has a sister who survived a brain tumor but was disabled
by its removal. The government pays for her care at an assisted-living
facility. Their mother scrapes by on Social Security.

Mr. Qualley said that the government should provide for those who need help,
but that too much money was being wasted. Mr. Qualley, who owns a tattoo
parlor in Harris, north of North Branch, said some of his customers paid
with money from government disability checks.

"They're getting $300 or $400 tattoos, and they're wearing nice new Nike
shoes that I can't afford," he said, looking up from working a complicated
design into the left leg of a middle-aged woman. "I guess I shouldn't say it
because it's my business, but I think a tattoo is a little too extravagant."

But Mr. Qualley said he did not want to reduce benefits for the current
generation of retirees. Rather, he said his own generation should get less,
because they have time to prepare. This is a common position among the young
and healthy in Chisago.

Mr. Qualley said he was saving some money for retirement, although, he
added, "I don't have a 401(k) or anything like that."

"I also have a job that I don't necessarily ever want to - or have to -
retire from," he said.

What if his hands start to shake as he gets older?

"Actually," he said, the electric needle falling silent in his hand, "it's
my shoulders and neck that bother me most."

Safety in Numbers

Barbara Nelson has little patience for people who say they will not need
government help. She considers herself lucky she has not, and obligated to
provide for those who do.

"Catastrophes happen in life," she said, sitting in a coffee shop in Taylors
Falls. "To be so arrogant that you think it won't happen to you, that
somehow you're going to be one of the special ones, I disagree with that."

Ms. Nelson, 61, who describes herself as a centrist Democrat, also dismisses
the claim that people cannot afford to pay more taxes.

"Anyone who can come into a coffee shop and buy coffee is capable of paying
more," she said. "If someone's life can be granted, in terms of adequate
health care, if that means I give up five cups of coffee a month, that is a
small price to pay."

Gordy Peterson, 62, who has used a wheelchair for 30 years since a
construction accident, has reluctantly reached a similar conclusion.

"I'm a conservative," he said by way of introducing himself. He built his
own house before his injury and paid for it in cash. He still thinks the
government should operate that way. He never intended to depend on federal
aid and said he sometimes felt guilty about it.

But for the last three decades, he has received a regular check from the
Social Security disability insurance program, and Medicare has helped to pay
his medical bills.

"Here I'm getting money, and everybody is struggling," he said. "Even though
it ain't no cakewalk for me."

Mr. Peterson used a workers' compensation settlement to buy a farm that he
managed with his brother-in-law, who is mentally handicapped and also on
government disability.

"He was my legs, and we worked it," Mr. Peterson said.

They grew corn, soybeans and rye, and even kept steers for a while. In good
years they earned enough to live on. In bad years they lived on the
government's checks. Life would have been very difficult without them, he
said.

Mr. Peterson, an easygoing man who looks down when he thinks and smiles
sheepishly when he offers an opinion, looked down after completing the story
of his own dependence on the safety net.

"It's hard to beat up on the government when they've been so good to you,"
he finally said. "I've never really thought about it, I guess."

Lately, the government has been very good, indeed. The county, with federal
financing, bought a corner of Mr. Peterson's farm to build a new interchange
for Interstate 35. He used the money to open a gas station at the edge of
the farm in 2008 to serve the traffic that rolls off the new ramp. The
business is prospering, and he no longer worries that he will need to depend
on Social Security.

"But you can't take that away," he said. "My own sister has only Social
Security. That's all. That's all she's going to have. And if you take that
away from her, Christ, she'd be a street person. I don't think we can cut
them off on that."

How about higher taxes?

Maybe a little higher, he said. Maybe.

"I'm glad I'm not a politician," he said. "We're all going to complain no
matter what they do. Nobody wants to put a noose around their own neck."