A half-century of unfettered expansion of entitlement outlays has completely inverted the priorities, structure and functions of federal administration as these were understood by all previous generations. Until 1960 the accepted task of the federal government, in keeping with its constitutional charge, was governing. The overwhelming share of federal expenditures was allocated to some limited public services and infrastructure investments and to defending the republic against enemies foreign and domestic.
In 1960, entitlement payments accounted for well under a third of the federal government’s total outlays—about the same fraction as in 1940, when the Great Depression was still shaping American life. But over subsequent decades, entitlements as a percentage of total federal spending soared. By 2010 they accounted for just about two-thirds of all federal spending, with all other responsibilities of the federal government making up barely one-third. In a very real sense, entitlements have turned American governance upside-down.
It’s not just a fiscal problem, or a governance problem. It’s a moral problem, when so many think that they are literally entitled to live off the productivity of others. It can’t go on, so, one way or the other, it won’t.
It can’t go on
Why not? If high levels of entitlement spending was a “moral problem” you’d expect Sweden to be a basket case. Instead it’s a very nice place to live, with high per-capita income and more social mobility than we have in the U.S.
Most entitlement spending is on the elderly. Is it really a moral problem that retirees receive fairly modest Social Security benefits (averaging $1,230/mo, just over the poverty line)? That they get medical coverage? Does preservation of the American character require that we cut them off?
hahaha… you actually believe the propaganda about Sweden?
For a start, your two “facts” are about 15 years outdated.
Well, there was this notorious study; and I note that Sweden has a population slightly less than that of North Carolina and is relatively monoethnic and monocultural. Also, Social Security is less than a third of Federal entitlement spending.
But I think the real story here is about evolutionary psychology. Not only does the overwhelming majority of Federal spending consist of transfer payments, but the overwhelming majority of recipients are female. It’s an obvious case of emergent behavior by instinctively protective male lawmakers.
Isn’t 43% of US federal government spending borrowed? It can go on until people decide to no longer lend to the US Government. I don’t know why anybody lends money to governments of any stripe.
So what would you do if you had a lot of extra money, and wanted to minimize the risk of losing it? People lend money to the US government because it’s the safest investment around. The safety of US treasury bonds is so prized that investors are currently paying the US government to hold their money.
We are in no danger of being unable to borrow money to run the government.
We are in no danger of being unable to borrow money to run the government.
History tells us that can change very quickly. Or are you a newfound believer in American exceptionalism? 🙂
The US dollar, and the US economy, are definitely exceptional. But even lesser economies and currencies (Japan, UK) don’t have trouble borrowing money in spite of high levels of debt.
Things can change, but it is hard to imagine a scenario in which T bills become undesirable.
So what would you do if you had a lot of extra money, and wanted to minimize the risk of losing it? People lend money to the US government because it’s the safest investment around.
What makes you think that, Jim? Perceptions don’t always match reality. The recent real estate crisis established that.
So back in the 1940’s when tax rates were higher and according to leftists, there was less income inequality because wealth was being redistributed at a higher rate. There also happened to be less spending on social programs than there is today where tax rates are lower and social spending is much higher. Wouldn’t this point to some flaws in leftist redistribution theories regarding income inequality, social mobility, and taxation?
We lost over a third of our millionaires since 2008 and some people still claim there is no social mobility.
Thanks, Jim, for providing yet another example that American leftists are just as patriotic as we odious wingnuts, it’s just that the patria being enthused about is never the U.S.A.
If Sweden was really such a swell place to live, one would think its consular offices would have lines of disaffected American lefties looking to get residence permits snaking around the block 24/7. Not so much though.
As noted by Jay, Sweden’s population is less than 3% that of the U.S. and was, up until the last 20 years or so, nearly all of racial origins good left-wing journalists here in the U.S. would call “frighteningly white”. But, hark, nearly all the Swedish immigration of the last two decades has been from the Levant and the Maghreb. Absent this immigration, Sweden’s population would now be below 8 million and shrinking instead of just above 9 million and holding.
The newcomers haven’t done much for Swedish GDP per capita, which is 20% below that of the U.S., by the way. While eschewing any significant cultural or religious assimilation to their new homes, the largely Muslim newbies have enthusiastically imitated their native-born Swedish countrymen in one respect; they have, for the most part, declined gainful employment, chosing instead to live one of the native-Swede-approved slacker subsidy lifestyles – “disability” being the favorite, it would seem.
As for the allegedly superior social mobility in Sweden, it’s a lot like the equally mythical superiority in infant mortality – when you leave blacks out of U.S. figures, the numbers are suddenly better than those of our supposed social democratic betters. Then there’s the problem at the very top of the social mobility ladder in Sweden – it’s constantly in a state of evaporation. Anyone who, in spite of the copious social and legal barriers placed in their way by Swedish society, manages to achieve great wealth tends to quickly decamp for more tax-favored shores. Often enough, these are American shores. We not only grow our own plutocrats, but we recruit as well; though any few Swedish swells heading this way in the next decade or so will find themselves lined up at ICE checkpoints behind a crowd of mostly nouveau riches Chinese.
The creation of a refractory dysfunctional underclass in the U.S. has been one of the signal achievements of leftist public policy this past half century as has its corollary achievement, the effective destruction of K-12 education here. Having beaten the pre-existing American social order senseless with a tire iron for 50 years, it seems a bit churlish of the Left to now criticize what is largely their own creation for getting blood all over the sidewalks – but I digress.
The Swedes are several decades behind we American pioneers of institutionalized racial antagonism and its predictably toxic effects, but I am confident they will catch up and that by mid-century the Muslim ghettos of Goteborg will be nearly as abysmal as the South Bronx is now.
Sooner or later you run out of other people’s money.
Why would you run out? We have enough money to afford a social safety net today, why wouldn’t we have enough tomorrow? Yes, we have to get over a one-time demographic shift to an older population (or else allow more immigration), but it isn’t as if US wealth has peaked. We expect ongoing technological progress, and improved productivity, as far into the future as we can see. Just as it’s easier to afford (say) old-age insurance in 2012 than it was in 1912, it will be easier still in 2112.
The author of the linked piece admits as much:
His objection isn’t that we can’t afford to help the young, old, sick, and disabled, but that it would be wrong to do so.
We have enough money to afford a social safety net today, why wouldn’t we have enough tomorrow?
McGehee already answered the question. Because we ran out of OPM.
Jim – I often find when I come across arguments that seem reasonable, but somehow disagree with what I believe, that my assumptions do not match the other guy, and therefore no amount of reasoning will bring us closer to understanding. I have some questions about your assumptions, stated and implied:
1) In one post you assume that US T-bills will never jump to high interest rates. You back up your assumption with some arguments from recent history. Even barring hyperinflation, I would posit that 1970’s interest rates sustained over the better part of a decade would probably force either a default, massive cutbacks in entitlement or defense spending, and/or massive tax hikes. Do you agree, and if so why are you confident that the US government cannot possibly get to 1970’s interest rates again in a relatively quick timeframe?
2) In this post you assume that we have a one-time demographic bump. However, Social Security was designed when average years lived after retirement age were much lower. So even the steady-state situation is a vastly expanded entitlement state versus when the programs were initially designed. Do you have evidence that suggests the initial program was in fact designed for current lifespans? Also, considering net present value, frontloading entitlement obligations at a massive deficit for 20-odd years is essentially the same regardless of what comes after. What is your plan to get over the one-time shift?
3) You say here that we can expect ongoing technological progress. Does the rate of progress in relation to the rate of indebtedness makes a difference in your argument? If you assume high levels of productivity growth, how do you propose to absorb the higher rate of jobless workers who are displaced by technology? What do you think drives what you call technological progress? How do you explain historical examples like the fall of the Roman Empire, the end of the Arabic enlightenment, and the end of China’s voyages of discovery, when localized technological progress reversed? Also, if we can expect continuing technological progress, it stands to reason that our life spans will continue to increase. This seems to nullify or significantly weaken your point about a one-time shift. What is your proposed solution?
4) You say that most entitlement spending is on the elderly, and imply through sarcasm that it is therefore moral. Do you claim that the elderly were not cared for prior to these entitlement programs? Or, that they were worse off on average when their charity did not come primarily through the government? Do you also imply that programs like food stamps and medicaid are immoral because they do not help the elderly?