Source:
http://online.wsj.com/article/SB10000872396390444914904577619671931313542.html
The American republic has endured for well over two centuries, but
over the past 50 years, the apparatus of American governance has
undergone a radical transformation. In some basic respects—its scale,
its preoccupations, even many of its purposes—the U.S. government today
would be scarcely recognizable to Franklin D. Roosevelt, much less to
Abraham Lincoln or Thomas Jefferson.
Since 1960, entitlement programs have come to
dominate the federal budget. Worse, says Nicholas Eberstadt in a
conversation with WSJ's Gary Rosen, they have undermined our national
character.
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.
Our national character 'may be sacrificed long before the credibility of the U.S. economy,' says Nicholas Eberstadt
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.
Government data on public transfers can
be used to divide entitlement spending into six baskets: income
maintenance, Medicaid, Medicare, Social Security, unemployment insurance
and all the others. Broadly speaking, the first two baskets concern
entitlements based on poverty or income status; the second two,
entitlements attendant on aging or old-age status; and the next,
entitlements based on employment status. These entitlements account for
about 90% of total government transfers to individuals, and the first
four categories comprise about five-sixths of all such spending. These
four bear closest consideration.
Poverty-
or income-related entitlements—transfers of money, goods or services,
including health-care services—accounted for over $650 billion in
government outlays in 2010. Between 1960 and 2010, inflation-adjusted
transfers for these objectives increased by over 30-fold, or by over 7% a
year. Significantly, however, income and benefit transfers associated
with traditional safety-net programs comprised only about a third of
entitlements granted on income status, with two-thirds of those
allocations absorbed by the health-care guarantees offered through the
Medicaid program.
For their part, entitlements for older
Americans—Medicare, Social Security and other pension payments—worked
out to even more by 2010, about $1.2 trillion. In real terms, these
transfers multiplied by a factor of about 12 over that period—or an
average growth of more than 5% a year. But in purely arithmetic terms,
the most astonishing growth of entitlements has been for health-care
guarantees based on claims of age (Medicare) or income (Medicaid). Until
the mid-1960s, no such entitlements existed; by 2010, these two
programs were absorbing more than $900 billion annually.
In current political discourse, it is
common to think of the Democrats as the party of entitlements, but
long-term trends seem to tell a somewhat different tale. From a purely
statistical standpoint, the growth of entitlement spending over the past
half-century has been distinctly greater under Republican
administrations than Democratic ones.
Between 1960 and 2010, the growth
of entitlement spending was exponential, but in any given year, it was
on the whole roughly 8% higher if the president happened to be a
Republican rather than a Democrat.
This is
in keeping with the basic facts of the time: Notwithstanding the
criticisms of "big government" that emanated from their Oval Offices
from time to time, the administrations of Richard Nixon, Gerald Ford and
George W. Bush presided over especially lavish expansions of the
American entitlement state.
Irrespective of the reputations and the
rhetoric of the Democratic and Republican parties today, the empirical
correspondence between Republican presidencies and turbocharged
entitlement expenditures should underscore the unsettling truth that
both political parties have, on the whole, been working together in an
often unspoken consensus to fuel the explosion of entitlement spending.
From the founding of our nation until
quite recently, the U.S. and its citizens were regarded, at home and
abroad, as exceptional in a number of deep and important respects. One
of these was their fierce and principled independence, which informed
not only the design of the political experiment that is the U.S.
Constitution but also their approach to everyday affairs.
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.
A
mong policy
makers in Washington today, it is very close to received wisdom that
America's national hunger for entitlement benefits has placed the
country on a financially untenable trajectory, with the federal budget
generating ultimately unbearable expenditures and levels of public debt.
The bipartisan 2010 Bowles/Simpson Commission put this view plainly:
"
Our nation is on an unsustainable fiscal path."
The prospect of careening along an
unsustainable economic road is deeply disturbing. But another
possibility is even more frightening—namely, that the present course may
in fact be sustainable for far longer than most people today might
imagine.
The U.S. is a very wealthy society. If
it so chooses, it has vast resources to squander. And internationally,
the dollar is still the world's reserve currency; there remains great
scope for financial abuse of that privilege.
Such devices might well postpone the
day of fiscal judgment: not so the day of reckoning for American
character, which may be sacrificed long before the credibility of the
U.S. economy. Some would argue that it is an asset already wasting away
before our very eyes.
