http://www.cnbc.com/id/41969508

Currently 1/3 of all income counted as wages in the U.S economy are government handouts.  What would happen to the U.S economy if this went away, and they got rid of all welfare?

Whatever data their using to count as "US Economy" would go down by 1/3?

...And the savings would go to everyone in the 2/3rds to create new businesses to employ those needing the handouts?

You mean go to the 1% that pay the most in income taxes, which they would then invest in speculative overseas markets and ponzi schemes

So, would more jobs be created for those receiving handouts than are currently receiving them?  Part of those who get the money are currently on social security, so that would then mean that no one would no longer receive social security and never retire, right?

Care to name what KIND of jobs would be created?

The reduction in taxes from the rest of citizens would drive greater spending and investment which would spur growth within the productive economy; and that would lead to job growth and the lack of need for nearly as much welfare.

It wouldn't really disapear.

I mean, those "1/3rd of wages" are paid for by taking away wages from other people.

I also find it odd that you are quoting an article that is basically saying "This is 1/3rd of wages... and this is bad."

From the article you posted....

“Consumption supported by wages and salaries is a much stronger foundation for economic growth than consumption based on social welfare benefits.”

I forgot to mention that one of the consequences of reducing/eliminating welfare payments would be a reduction in the cost of living allowing many poor people to maintain or improve their current standard of living without depending on welfare subsidies. The most obvious example of what I am talking about can be seen in the rental real-estate market, where increases in the number or size of rental subsidies tends to drive up the rent on low end properties directly (and on nicer properties indirectly); and the reason for this is that the capacity for people to pay for a rental property increases, driving up the quantity demanded, creating a shortage of rental properties at every price, and rents necessarily increase to find a new market equilibrium. 

Here's the problem with our current system:

Services such as Medicare and Social Security are massively, and I mean MASSIVELY flawed. In the case of Social Security, people that put their money in as a worker for 30, 40 or 50 years do not receieve a decent return on the money they are forced to put into the system. As it stands, any money that is put into the system is converted to our government bonds, and then returned at an interest rate of 2.32% APY. Because of this, people cannot live off of what they put in. Instead, money is taken from people at the higher end of the SS bracket (those near the $100,000 cut-off) and given to those that put less in.

Therefore, the 8.5% that you and I put in, is poorly utilized. The money we put in the system does virtually nothing other than bloat the size of government which created a false economy, and fuels politicians shameful guarentees of increasing government services without raising taxes.

If we did not have such a system, and instead allowed citizens to invest into other means - stocks, bonds, property, investments via venture capital, ect, we would have a much better system.

The advantages would be two-fold:

• Much higher rate of return on investments. Yes, I know you lost money in the stock market, but on average, annual rates of return are 7.0% via non-Social Security investment programs. Those not wanting risks could take on high-yield corporate bonds that accrue at 4-6% and make twice the rate of return that Social Security does.
• Far more money would be invested in businesses. Instead of needing government subsidies, there would be a glut of capital for start-ups because of the amount of money invested, which would create many, many new jobs. In general, you see societies that have better investment programs via their pensions are recovering faster from the recession (for example, Norway has a system like most states do that allow for directed investment in companies, which has mad them much stronger).

Therefore, the system would be much, much better than what we have. Obviously those that have paid into the system deserve their share, but the fact is, our system is so flawed and atrocious, we are robbing every American of a far better retirement.

Medicare is in a similar situation. Many services are tied to whatever the government is willing to pay via medicare payouts. Rather than hospitals competing with eachother on services, to offer the lowest price, they instead charge whatever the government is willing to pay out. Furthermore, with more government payouts comes more regulations. We have one of the most expensive medical systems in the world not because we don't have a universal system, but because our system is so deeply flawed, it must be fixed by getting the extensive government controls out. Without Medicare in place, prices would drop significantly, which would allow EVERY American to get health insurance, and not just those that qualify in Medicare, or can afford insane premiums.

In answering your question "What kind of jobs would be created?" - with every American taking home more money per paycheck, due to less money being required for pensions (we pay about 15% of every check to Social Security/Medicare, with about 5% of it being paid by our employers, which would instead be given to the workers via pay raises and less taxation), and pensioners being delivered more money for their retirement, any and every kind of job would flourish. New start-ups would grow and flourish due to more capital being available in the system as the government would not sit on trillions of American dollars in retirement monies. Current businesses would have to hire more workers as people would have more available money to purchase products and services, because more money was available in the system.

I can vouch for this as a landlord.

As a landlord, I can charge $450.00 USD per month for my apartments on the free market, or $600.00 USD per month via HUD. Which one do you think I'd rather charge everyone?