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TheStreet Open House

Government Payouts Make Up 35% of U.S. Wages

A Wall Street Journal/NBC News poll released last week showed that less than a quarter of Americans supported making cuts to Social Security or Medicare in order to reign in the mounting budget deficit.

Those poll numbers may be skewed by a demographic shift the likes of which the nation has never seen. Only this year has the first round of baby boomers begun collecting Medicare benefits -- and here comes 78 million more.

Social welfare benefits have increased by $514 billion over the last two years, according to TrimTabs figures, in part because of measures implemented to fight the financial crisis. Government spending normally takes on a larger part of the spending pie during economic calamities, but how can the country change this make-up with the root of the crisis (housing) still on shaky ground, benchmark interest rates already cut to zero, and a demographic shift that calls for an increase in subsidies?

At the very least, we can take solace in the fact that we're not quite at the state welfare levels of Europe. In the U.K., social welfare benefits make up 44 percent of wages and salaries, according to TrimTabs' Schnapp.

"No matter how bad the situation is in the U.S., we stand far better on these issues (debt, demographics, entrepreneurship) than other countries," said Steve Cortes of Veracruz Research. "On a relative basis, America remains the world leader and, as such, will also remain the world's reserve currency."

-- Written by John Melloy of CNBC

CNBC is a world leader in business news, providing real-time financial market coverage and business information.
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