Tag Archives: Debt

Who pays the bill for handing out $2.2 trillion of entitlements per year?

This article by Nicholas Eberstadt is the most popular article on the Wall Street Journal right now. I found it through Doug Ross’ links.

First, a quick review of the entitlement situation:

What is monumentally new about the American state today is the vast empire of entitlement payments that it protects, manages and finances. Within living memory, the federal government has become an entitlements machine. As a day-to-day operation, it devotes more attention and resources to the public transfer of money, goods and services to individual citizens than to any other objective, spending more than for all other ends combined.

The growth of entitlement payments over the past half-century has been breathtaking. In 1960, U.S. government transfers to individuals totaled about $24 billion in current dollars, according to the Bureau of Economic Analysis. By 2010 that total was almost 100 times as large. Even after adjusting for inflation and population growth, entitlement transfers to individuals have grown 727% over the past half-century, rising at an average rate of about 4% a year.

In 2010 alone, government at all levels oversaw a transfer of over $2.2 trillion in money, goods and services. The burden of these entitlements came to slightly more than $7,200 for every person in America. Scaled against a notional family of four, the average entitlements burden for that year alone approached $29,000.

Government’s job used to be to handle responsibilities like roads and bridges or like defending us at home and to defending our national interests abroad. But now government seems to be more interested in redistributing money taken from job creating businesses and their workers to those don’t create jobs and those who don’t work. What happens when you punish people for trying to succeed and reward people who don’t even try?

This is the result of wealth redistribution:

The proud self-reliance that struck Alexis de Tocqueville in his visit to the U.S. in the early 1830s extended to personal finances. The American “individualism” about which he wrote did not exclude social cooperation—the young nation was a hotbed of civic associations and voluntary organizations. But in an environment bursting with opportunity, American men and women viewed themselves as accountable for their own situation through their own achievements—a novel outlook at that time, markedly different from the prevailing attitudes of the Old World (or at least the Continent).

The corollaries of this American ethos were, on the one hand, an affinity for personal enterprise and industry and, on the other, a horror of dependency and contempt for anything that smacked of a mendicant mentality. Although many Americans in earlier times were poor, even people in fairly desperate circumstances were known to refuse help or handouts as an affront to their dignity and independence. People who subsisted on public resources were known as “paupers,” and provision for them was a local undertaking. Neither beneficiaries nor recipients held the condition of pauperism in high regard.

Overcoming America’s historic cultural resistance to government entitlements has been a long and formidable endeavor. But as we know today, this resistance did not ultimately prove an insurmountable obstacle to establishing mass public entitlements and normalizing the entitlement lifestyle. The U.S. is now on the verge of a symbolic threshold: the point at which more than half of all American households receive and accept transfer benefits from the government. From cradle to grave, a treasure chest of government-supplied benefits is there for the taking for every American citizen—and exercising one’s legal rights to these many blandishments is now part of the American way of life.

As Americans opt to reward themselves ever more lavishly with entitlement benefits, the question of how to pay for these government transfers inescapably comes to the fore. Citizens have become ever more broad-minded about the propriety of tapping new sources of finance for supporting their appetite for more entitlements. The taker mentality has thus ineluctably gravitated toward taking from a pool of citizens who can offer no resistance to such schemes: the unborn descendants of today’s entitlement-seeking population.

We used to want to earn our own success. Now we want to live on the backs of children not yet born. Slavery is a horrible crime, no matter where it is practiced. Isn’t it a kind of slavery to live it up now and then pass the bill for it on to generations not even born yet? It strikes me as a kind of slavery – taking an unfair portion of the income of others so that we can live at a higher standard than what we can afford through our own choices and labor.

Mark Steyn: the Democrat debt war on children

From National Review.

Excerpt:

China becoming the world’s biggest economy, another American downgrade, total U.S. liabilities equivalent to about three times the entire planet’s GDP. A “non-partisan” Pew Research study says the American middle class faces its “worst decade in modern history” — and the first bump down starts on January 1: The equally “non-partisan” Congressional Budget Office now says that the tax and budget changes due to take effect at the beginning of 2013 will put the country back in recession and increase unemployment. This is a revision of their prediction earlier this year that in 2013 the economy would contract by 1.3 percent. Now they say 2.9 percent. These days, CBO revisions only go one way — down. They’re gonna need steeper graph paper. In a global economy, atrophy goes around like syphilis in the Gay Nineties: A moribund U.S. economy further mires Europe, and both slow growth in China, which means fewer orders for resource-rich nations. . . . Four wheels spinning in the mud, and none with a firm-enough grip to pull the vehicle back on to solid ground.

[…]But don’t worry, Obamacare will “lower costs.” Since passage of the bill in 2010, the CBO has revised its estimate of Obamacare’s gross costs over ten years. Can you guess in which direction, boys and girls? Yes, up from $944 billion to $1.856 trillion. That’s some “revision.” I wonder where it’ll be in another two years.

Well, I’m not the CBO, but I’ll take a wild guess: Obamacare is going to be expensive on a scale unknown to European health systems. Look around you. Americans are not Swedes. Obesity rate in the United States: 36 percent; Sweden: 9.7 percent; Japan: 3.2 percent; China: 2.9 percent; India: 0.7 percent. Ours is a country where 78 million people (or about the entire population of Germany) are classified by the Centers for Disease Control as “obese” — including over 40 million women. If 40 million women have it, isn’t that a “women’s health” issue? Perhaps even a bigger “women’s health” issue than the right of thirtysomething students to free contraception? It’s the first thing the average American of, say, 1950 would notice if you catapulted him forward from his mid-century Main Street to today: not how amazing all these computer gizmos are, but how large and sick today’s Americans look.

[…]So we can’t fight a war in Afghanistan, but we can fight a “war on women” that only exists in upscale liberal feminists’ heads. We can’t do anything about exploding rates of childhood obesity, diabetes, and heart disease, but, if you define “health care” as forcing a Catholic institution to buy $8 contraception for the scions of wealth and privilege, we’re right on top of it. And above all, we’re doing it for the children, if by “doing it” you mean leaving them with a transgenerational bill unknown to human history — or engaging in what Boston University’s Larry Kotlikoff, speaking at the International Institute of Public Finance in Dresden last week, called “child fiscal abuse.”

If that sounds a trifle overheated, how about . . . hmm, “legitimate fiscal rape”? No? Then let’s call it a “war on children.” Unlike the “war on women,” it’s real.

Are you a young person living with your parents with student loans and no job? Are you worried about how you will have to pay for ballooning entitlements for the elderly out of your future earnings? Then stop voting for Democrats.

Paul Ryan teams up with Democrat Ron Wyden to push Medicare reform plan

Rep. Paul Ryan
Rep. Paul Ryan

From Investors Business Daily.

Excerpt:

Pity the poor Democrats. Here they were counting on scaring seniors about GOP plans to “destroy” Medicare when Rep. Paul Ryan teams up with a prominent Senate Democrat to offer a compromise reform.

From the White House on down, Democrats were wringing their hands this week about the bi-partisan Medicare reform plan offered up by Ryan and Sen. Ron Wyden, D-Ore.

Their plan would shift Medicare from an open-ended health benefit to one in which the government provides a set amount of money for insurance. Seniors could choose from a variety of private, approved plans, as well as the traditional government-run Medicare.

The subsidy would be based on the second cheapest plan in an area, and if seniors wanted more expansive coverage, they’d have to pay the difference out of their own pockets. The reform would also cap the growth in Medicare.

[…]As one Democratic congressional aide told the New York Times, “this plan gives bipartisan political cover to Ryan and other Republicans against whom we have been waging a very successful political offensive.”

[…]While we prefer Ryan’s original proposal to his current one, it’s to his credit that he realized the political need to produce a bi-partisan compromise. Wyden, too, deserves credit for his willingness to buck his party and sacrifice short-term political gain for much needed long-term reforms.

I took a look at Wyden’s ACU ratings, and he has a 9.23 out 100. I have no idea how Ryan got this guy on board. It’s magic.