From Independence to Dependency: America's Journey to Government Reliance
In my last article, we explored four reasons why taxes keep increasing. We saw that the increase in taxes is closely tied to the growth of government responsibilities and the expanding number of federal agencies as, over the last century, programs and policies aimed at addressing societal needs have not only broadened the scope of government but also significantly raised the financial obligations placed on taxpayers. We did, however, not look at the events and associated government programs that caused the dependency on government support. This is what we will discover in this post.
When Did Americans Become Dependent on the Government?
The shift toward dependence on government programs is a relatively recent phenomenon in U.S. history.
The federal government initially played a limited role in citizens' lives due to the founding principles of the United States, which emphasized individual liberty, local governance, and limited federal authority. The Constitution was designed to establish a framework of checks and balances, where most powers were reserved for the states or the people under the Tenth Amendment.
Those of you who are like me and need a little refresher can explore the key points about the early limited role of the federal government by expanding the list below. The rest of you can skip over the list and scroll right to the next section.
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In the early republic, state governments held significant power over issues like education, infrastructure, and law enforcement. The federal government mainly managed national defense, foreign relations, and interstate commerce.
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The limited role of the government was explicitly codified in the Constitution, focusing on preventing federal overreach and preserving the autonomy of states.
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Alligned with its limited role, the federal government operated with a minimal bureaucracy and focused on essential tasks such as running the postal service, maintaining a military, and collecting tariffs.
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In the early days, citizens largely depended on themselves, their families, and their local communities for social and economic support. Churches and voluntary organizations often addressed education, poverty, and healthcare.
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On the economic side, the federal government adopted a laissez-faire approach, refraining from intervening in business activities or individual livelihoods.
In contrast to the federal government's limited role, state governments were envisioned to take a proactive role in the lives of their citizens, embracing expansive responsibilities. Those who seek to reflect on these responsibilities can uncover further insights into the early distinctions of state governance by expanding the list below.
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State governments were directly responsible for many aspects of daily life, including public education, law enforcement, transportation infrastructure, property laws, and regulations on commerce within their borders.
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Historically, state governments were viewed as being more closely connected to the people they served. Because of their proximity, citizens could easily interact with their state legislators, governors, and local officials, for example, through town hall meetings, letters, or direct visits. This proximity often led to a sense of greater accountability.
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As all states are sovereign jurisdictions, it was up to them to govern their citizens in all areas not delegated to the federal government. Different states applied varying levels of intervention and regulation shaped by their distinct cultural, economic, and geographic set-up. For example, while some states championed public education, others entrusted these vital responsibilities to private or local entities, showcasing a diverse approach to state governance.
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The government of each state was, and still is, structured in accordance with its individual constitution. Those state constitutions were often more flexible and allowed for a broader scope of governance than the U.S. Constitution, allowing state governments to enact laws and programs suited to their populations.
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While the federal government avoided providing direct aid to individuals, state governments sometimes established rudimentary systems for public welfare. These included poorhouses, public schools, and early forms of infrastructure like canals and railroads.
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Despite their broader role, state governments were still limited by checks and balances within their constitutions and the overarching framework of federalism, which prevented them from encroaching on federal powers or violating individual rights as interpreted by the courts.
But as we all know, over time, the federal government's role expanded significantly, driven by factors such as wars, economic crises, and the evolving expectations of what government should provide for its citizens. Which leads me to the question that you came here for:
Where does the reliance on government support come from?
To answer this question, let's have a closer look at some of the events that lead Americans to become more and more dependent on the federal government.
The New Deal (1930s):
The Great Depression, triggered by the 1929 stock market crash, widespread bank failures, and a collapse in consumer spending and investment, led to a dramatic shift in federal spending and taxation. Unemployment reached 25%, with approximately 12-15 million struggling, prompting the federal government to intervene through programs like Social Security and public works projects under the New Deal. Federal spending increased from $4.7 billion in 1933 (equivalent to ~$80 billion today) to $9.4 billion by 1939 (equivalent to ~$160 billion today), while federal taxes were raised, particularly on the wealthy. Programs like the Works Progress Administration (WPA) employed over 8 million people, and initiatives like the Civilian Conservation Corps (CCC) and Public Works Administration (PWA) funded large infrastructure projects. These changes marked a shift toward greater federal involvement in welfare and economic recovery.
World War II and Post-War Policies:
Following World War II, the reliance on the government grew even more and was normalized, for example, through the G.I. Bill. The G.I. Bill (Servicemen's Readjustment Act of 1944) significantly shaped post-World War II America by providing veterans with education and housing benefits, which normalized reliance on government support. Within the following seven years, it enabled over 5.8 million veterans to attend college and vocational schools and 3.4 million to get on-the-job training. By 1955, 4.3 million veterans used G.I. Bill-backed loans to purchase homes. By 1956, the program had distributed ~$47 billion on education, training, and home loans (equivalent to ~487.6 billion today), fueling the post-war economic boom and contributing to the growth of the American middle class. The G.I. Bill helped democratize higher education and homeownership, setting a precedent for future government interventions that would further expand federal programs supporting citizens.
The Great Society (1960s):
The "Great Society" initiatives, launched by President Lyndon B. Johnson in the 1960s, introduced Medicare and Medicaid, two monumental healthcare initiatives that provided coverage to the elderly and low-income individuals, respectively. Both were created under the Social Security Amendments of 1965 (Public Law 89-97); Medicare now serves over 65 million Americans, while Medicaid covers about 83 million people, including low-income families and individuals with disabilities. These programs significantly expanded the federal government's role in healthcare, creating large, dependent constituencies.
By 2022, federal spending on Medicare and Medicaid had reached nearly $1.7 trillion, highlighting the long-term impact of these programs on federal budgets and the lives of millions of Americans. However, the Great Society launched other programs as well.
Other programs that significantly increased government spending include Education Programs under the Elementary and Secondary Education Act (ESEA, 1965) and Higher Education Act (1965), Anti-Poverty Programs under the Economic Opportunity Act (1964; the program was officially repealed in 1981, though major programs were absorbed into other federal programs) and Food Stamp Act (1964), Housing under the Housing and Urban Development Act (1965), Civil Rights and Equal Opportunities Programs under the Civil Rights Act of 1964, the Voting Rights Act of 1965, and the Model Cities Program (1966; program ended in the 1970s), as well as Cultural and Environmental Initiatives under the National Endowment for the Arts (NEA), National Endowment for the Humanities (NEH) (1965), and Clean Air Act (1963, expanded in 1967).
It's noteworthy, however, that those programs not only increased federal spending but state spending as well. While two of those programs no longer exist in their original form, the majority of surviving programs have evolved or been restructured and continue to be integral parts of federal spending.
Economic Shifts (1980s–2000s):
Between the 1980s and 2000s, the U.S. experienced significant economic shifts, marked by a decline in manufacturing jobs and wage stagnation. Manufacturing employment peaked in 1979 but fell by over 35% by 2019, with nearly 6.7 million jobs lost, partially due to an increase in imports, particularly from countries with lower labor costs such as China (which contributed 25% of the decline) and a skill mismatch, the gap between the skills workers have and those employers need.
Employment in manufacturing and selected Industries provided by the Bureau of Labor Statistics
This decline, coupled with stagnant wages, led to increased reliance on government assistance programs. Welfare spending, including food assistance and housing subsidies, became crucial for many Americans. In these two decades, social welfare spending for children and the elderly grew, particularly through programs like Medicaid and food stamps, as economic challenges left many dependent on federal support. These trends reflect the evolving economic landscape and its impact on social safety nets.
Looking at the events above, it becomes clear how America gradually shifted from independence to reliance on government support. One thing that many people forget, though, is the fact that all these programs are taxpayer-funded. While the intentions behind these initiatives were good, aiming to address immediate societal challenges, they also set a precedent for long-term government involvement in citizens' lives not only at the receiving end but also from the perspective of financing them.
In the next and final chapter, ‘How to Overcome Government Reliance, I will explore how, through potentially monumental changes, we can overcome dependency, reclaim individual autonomy, and reduce government systems.
I would also love to hear your thoughts about this: Should the government be focused on creating employment opportunities, or should the priority be on fostering a thriving private sector that can generate jobs and economic growth independently of government intervention?
