Are government benefits fueling US poverty?

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New concerns over government programs, high jobless rate

Doug McKelway reports from Washington, D.C.

Mitt Romney was roundly skewered during the presidential campaign when he was secretly recorded telling a group of donors about the "47 percent" of Americans who are, "dependent upon government."

Romney later said his remarks were "completely wrong." But Ohio University economist Richard Vedder believes they were right.

He says an expanding system of government benefits has helped create a poverty rate of 14 percent.

"They're actually creating a dependency on government, which is unhealthy both for the individuals involved and their children, and also for the broader society,"  he said.

Vedder said Department of Labor statistics show four programs in particular contribute to  Americans' increasing dependence on government.

• Food stamps, or The Supplemental Nutrition Assistance Program, as it's now known. Nearly 30 million more Americans receive them than in the year 2000.
• Social Security Disability: 3 million Americans  received payments in 1990 -- today it's 8.6 million.
• Pell grants: 3.9 million students were awarded them in 2000. Today it's 9.7 million, even though  nearly half of graduates work in jobs that require no degree.
• And extended unemployment benefits: 26 weeks had been the standard -- today it's 52 weeks or more for many.

Vedder's blunt assessment rings hollow for Lennie Isabelle, a laid-off worker with 33 years of paralegal experience who now receives unemployment benefits that, she says,  she hates collecting. "People are crying being unemployed. It's not helping the economy at all. When people are working, the country is happy," she told Fox News.

Economic Policy Institute economist Heidi Shierholz suggests to blame government assistance for high unemployment is to confuse causation with correlation. "In fact, we know that there are three times as many job seekers as there are job openings right now. Even if every single job opening was filled tomorrow, more than two-thirds of our unemployed workers would still be unemployed," she said. "It's just that the jobs aren’t there."

Kyle Murphy, who runs a sandwich shop in Annapolis, Md., described how anecdotal evidence he sees as an employer jibes with Vedder's assessment. He often sees new hires quit to seek government benefits.

"The people who know how to use the system best get the most out of it. It's not necessarily the people who need the assistance the most," he said. Murphy has seen many of his employees quit jobs, then claim they were fired to obtain unemployment benefits.

Economist Vedder said, “We have had nearly four decades with growing incomes, rising standard of living for the majority, yet the poor have grown in number even as a proportion of the population. So some of these policies are not working.”