Archive for Sunday, February 1, 2009

Entitlements crippling federal budget

February 1, 2009


— “Recidivism” is Rep. Jim Cooper’s laconic explanation of why he, although only 54, has spent portions of five decades on Congress’ payroll. Responding with aphorisms (e.g., “Bad government starts at the grass roots”) to the tedium of Congress’ culture of avoidance, he grows more laconic as the welfare state’s implosion approaches.

The son of a Tennessee governor, Cooper, a Democrat who represents Nashville, was a congressional page starting in 1969 and then a Rhodes Scholar before being elected to Congress in 1982. Having run unsuccessfully for the Senate in 1994, he returned to the House in 2002. A mordant Cassandra (“If members of Congress were paid on commission to cut spending we’d see fabulous results”), he is no longer astonished by Congress’ bipartisan avoidance of the predictable crisis coming to the big three entitlement programs: Social Security, Medicare and Medicaid.

“Astonishing,” says Cooper of the new president’s avowed determination to confront the crisis. Leadership, says Cooper, who has seen precious little of it concerning entitlements, enlarges the number of “things that can be talked about.” Such as the Social Security payroll tax, which Cooper would cut for several stimulative years from 12.4 percent to 8 percent. It suppresses job-creation, is raising more revenue than Social Security is dispensing and will continue to do so until 2017. The surplus is invested in Treasury bonds. That amounts to lending it to the government “which in turn,” Cooper says, “spends it on everything except Social Security.”

President Lyndon Johnson, to make the deficit numbers during the Vietnam War less scary, adopted the “unified budget,” under which Social Security’s surplus was mingled with general revenues, thereby reducing — disguising, really — the deficit’s size. That, Cooper says, was the “original sin” in the budgeting sleight-of-hand that prevents the public from knowing, and Congress from being compelled to act on, facts about the entitlement programs’ unfunded liabilities — promises to future beneficiaries that future taxpayers may not be willing to pay.

Cooper, who has an unshakable appetite for unappetizing numbers, wishes more Americans were similarly eccentric and would read the 188-page 2008 Financial Report of the United States Government — the only government document that calculates what deficit and debt numbers would be if the government practiced, as businesses must, accrual accounting.

Under such accounting, future outlays to which beneficiaries are entitled by existing law are acknowledged as expenditures before they are paid. Were the Social Security surplus sequestered for accounting purposes, reflecting the truth that it is already obligated, and were there similar treatment of the other entitlement programs’ liabilities, the deficit for the fiscal year that ended Sept. 30 would have been $3 trillion rather than $454.8 billion. The report’s numbers show that the true national debt is $56 trillion, not the widely reported $10 trillion.

The report says that in 25 years the portion of the population 65 and older will increase from 12 percent to 20 percent, while the share of the population that is working and paying taxes will decrease from 60 percent to 55 percent. If Medicare spending continues to grow, as it has for four decades, more than one and a half times as fast as the economy, the big three entitlements, which currently are 44 percent of all federal expenditures (excluding interest costs of the national debt), will be 65 percent by 2030. Under current law, 30 years from now government revenues will cover only half of anticipated expenditures.

For years, many conservatives advocated a “starve the beast” approach to limiting government. They supported any tax cut, of any size, at any time, for any purpose, assuming that, deprived of revenue, government spending would stop growing. But spending continued, and government borrowing encouraged government’s growth by making big government cheap: People were given $1 worth of government but were charged less than that, the balance being shifted, through debt, to future generations. In 2003, Republicans fattened the beast with the Medicare prescription drug benefit (Cooper opposed it), which added almost $8 trillion in the present value of benefits scheduled, but unfunded, over the next 75 years.

Liberalism’s signature achievement — the welfare state’s entitlement buffet — will, unless radically reduced, starve government of resources needed for everything on liberalism’s agenda for people not elderly. Conservatives want government limited, but not this way.

Although President Obama promises entitlement reforms, what can be expected from a Congress with a long bipartisan record of reckless enrichments of the entitlement buffet? Recidivism.

— George Will is a columnist for Washington Post Writers Group.


just_another_bozo_on_this_bus 9 years, 4 months ago

No, Liberty, nearly every problem with the economy right now stems from capitalists and greedy corporations controlling the government to further their agendas. Government is made up of people, and until the great majority of people start paying attention to what it does, and changing it, government will continue to be primarily an extension of corporate power.

just_another_bozo_on_this_bus 9 years, 4 months ago

I think it's a problem with both government and corporate action. The solution is not to do away with government (unless you want to dramatically depopulate the planet, too) but to make government responsive to the needs of all humans, not just those who run major corporations. But that will only happen when a lot more people are paying attention, and demanding that it happen. It may never happen, and we're just doomed to a race to the bottom, which is what laissez faire libertarianism essentially seems to concedes.

rusty2 9 years, 4 months ago

of course Will omits from the discussion the 'entitlement' of the Department of Defense.DOD currently uses about 1 of every 4 barrels of oil exported to the USA.DOD in 2007 spent $58 Billion on ABM missle defensetheories with no actual working model yet.DOD spend 1/2 of every tax dollar left after entitlementslike interest on the debt, social security, etc. 1/2 of what's left after 'entitlements'.DOD = almost $600 Billion and then the war cost is on top of that.DOD is where the 'war profits' are mined just like oil from the ground.

Godot 9 years, 4 months ago

The meltdown of pensions can to be put directly on the shoulders of incompetent government and union bureaucrats and their penchant for "socially responsible investing.""Funds worth trillions of dollars start to plummet in value. Political pressure to be “socially responsible” distorts the market decisions of government-related enterprises, leading to risky investments. Investors who once considered their retirements safely protectedwake up to a sinking feeling of uncertainty and gloom. Sound like the great mortgage-fueled financial crisis of 2008? Sure. But it also describes a calamity likely to hit as soon as 2009. State, local, and private pension plans covering millions of government employees and union workers with “defined benefit” accounts are teetering on the brink of implosion, victims of both a sinking stock market and investment strategies influenced by political considerations.(snip)But during the last 30 years, state pension funds began playing the market, putting their money into riskier and riskier securities—first stocks, corporate bonds, and foreign investments, then real estate, private equity firms, and hedge funds. Concurrently, baby boomers whose politics were forged in the 1960s and ’70s began using those pension funds to advance their social visions. Investments designed for the long-term welfare of retirees began to evolve into a political hammer. Some good occasionally came from the effort, as when companies were pushed to become more accountable in their practices. But advocacy groups often used their clout to direct money into pet social projects with dubious fiduciary prospects. Sometimes the money went to the very companies and financial instruments that, in the wake of the market meltdown, are now widely derided. "Read the whole article, several pages long. Kansas and KPERS earned a full paragraph.

Godot 9 years, 4 months ago

Here is more from the Reason article, including the bit about Kansas. "The earliest pension fund social investing initiatives were often cobbled together during crises, with little appreciation for unintended consequences. In the 1980s, for example, the Alaska public employee and teacher retirement funds loaned $165 million—35 percent of their total assets—for the purpose of making mortgages in Alaska. When oil prices fell in 1987, so did home prices in the nation’s most oil-dependent state. Forty percent of the pension loans became delinquent or resulted in foreclosures. While unions and social investors often work together, their investment strategies are not always in sync. In 1989, under union pressure, the State of Connecticut Trust Funds invested $25 million in Colt’s Manufacturing Co. after the beleaguered gun maker—hardly a favorite of the SRI crowd—lobbied the state legislature to save jobs. Colt’s filed for bankruptcy just three years later, endangering the trust funds’ 47 percent stake. In the late 1980s, the Kansas Public Employees Retirement System, then considered a model of activist social investing, placed $65 million in the Home Savings Association, after its lobbyists told top officials that this would help struggling segments of the state economy. That investment evaporated when federal regulators seized the thrift. All told, the Kansans wrote off upward of $200 million in economically targeted investments.

Richard Heckler 9 years, 4 months ago

Want to talk about entitlements eh?The repub party is largest law breaker in our nations history. Is the party entitled to that?Isn't it odd each time our nations financial institutions crumble there are Bush family near by and a McCain still in office?Who has history with financial institutions going south such as the savings and loan scandal? Republicans! The Most Reprehensible of the Keating Five. The story of "the Keating Five" has become a scandal rivaling Teapot Dome and Watergate ... Who hosted the Iran Contra secret illegal sale of weapons? Republicans! eh? The Military Cost of Securing EnergyAccording to a new report from National Priorities Project (NPP), the United States is spending between $97 and $215 billion dollars annually on military action to defend access to oil and natural gas reserves around the globe. The Military Cost of Securing Energy provides a critical analysis of the military cost of defending U.S. energy concerns overseas. The report estimates that the military spends up to 30 percent of its annual budget to secure access to energy resources internationally.In the meantime all of the above are ignored by too many voters while this group gets screwed out of their entitlements:

Richard Heckler 9 years, 4 months ago

Madmike it could have summed up something like this. Why in the world would anyone support a so called republican administration ever again? The past three republicans administrations have included some rather big time crime. The past three repub administrations have taken the economy down the tubes. AND the republican legislators just stand around doing nothing to stop their president from breaking laws. My word where did this republican party come from....Folsom Prison? Criminal activiy must be considered an entitlement to the repub party after all there is an established pattern and documented material.

rusty2 9 years, 4 months ago

Senator Pat Roberts should be impeached for his lies & deception regarding his so called 'intelligence reports' regarding WMD, and the run up to the war in Iraq.Instead people like Madmike never question the college journalist now turned senator who works for the 'machine'.DOD has a big slice of the so called Kansas Bio-Science authority funds. guess what?the DOD portion of the funds and what they are to be used for is "classified top secret".who runs this country? the military industrial complex.$58 billion spent o aerospace companies in 2007 for anABM anti-ballistic missle system with only a proposed location in Poland? against whom? $58 billion is a lot of money for engineering studies in one year? and no one questions it. instead idiots like madmike question our patriotism when real questions are raised. how many engineer man hours does it take of computer time to bill out $58 Billion.Bush/Cheney never asked those questions instead handing over billions to the 'machine'. now where are we?

rusty2 9 years, 4 months ago

Merrill raises a great question.Reagan made America the worlds largest arms dealer.Reagon send us into huge deficits.ReagON with Neil Bush sent us into deregulatory hell with the S&L crisis with Neil Bush leading Silverado Savings into a $1.2 billiion banktruptcy in 1982 dollars!ReagUN got us into Iran/Contra and Herbert W. Bush liedhis way out of that pardoning people from the truth about Iran/Contra guns for drugs and the CIA (cocaine in america).Germany was reunited with East Germany in the 1980's for the same cost as our S&L crisis brought about by republKLAN deregulation. Germany got 17 milliion new skilled workers in their unification and enlarged their economy. USA for the S&L same amount of money gotsmoke & mirrors much like today's bailout.who is the partriot?The Bush (CIA regime).and then came 9/11.Buildings falling down (#7) with no airplanes hitting them.the Pentagon 'hit' by what? a 757 can't come in that lowwithout completely stalling. 9/11 was under W.Bush Knew.when do we get the truth?Pat Roberts lied about Iraq and he will lie again this termuntil he is held to task to tell the truth about WMD.

rusty2 9 years, 4 months ago

what BUSH knew before 9/11CBS news. as Bill Moyers says"connect the dots" they link Bush to Bush..........

rusty2 9 years, 4 months ago

madmikeBush and the 'war profit motive'.According to Fleischer, after the information was presented to President Bush in August, the administration put domestic agencies on alert in the summer, just months before the Sept. 11 attacks. That alert was not announced publicly but Fleischer suggested it may have prompted the hijackers to change their tactics. "The administration, based on hijackings, notified the appropriate agencies and, I think, that's one of the reasons that you saw that the people who committed the 9-11 attacks used box cutters and plastic knives to get around America's system of protecting against hijackings," he said. Fleischer did not say which agencies were put on alert and what they did in response. On Thursday, National security adviser Condoleezza Rice described a series of threats uncovered by intelligence officials, beginning in September of 2000 and reaching a height in the summer of 2001, that dealt mostly with American interests overseas. Those threats prompted a series of alerts issued by the FBI to law-enforcement agencies and from the Federal Aviation Administration to the nation's airlines and airports, she said. There also were strong warnings to Americans to be careful overseas. Earlier this month, Senate Intelligence Committee Chairman Bob Graham complained that the Justice Department and CIA had not provided congressional investigators with adequate access to documents and witnesses for a probe into intelligence failures related to the Sept. 11 attacks. Graham said through a spokesman Wednesday that the revelations in the FBI memo mark an important discovery in Congress' investigation into why the FBI, CIA and other U.S. agencies failed to learn of and prevent the Sept. 11 plot."It represents a failure to connect the dots," said Graham spokesman Paul Anderson. "This was dismissed rather lightly at FBI headquarters."

Godot 9 years, 4 months ago

Deflection and misdirection are tactics of the desperately outmatched debater. Like the kid who says, 'OH,Yeah, well, your mother wears army boots." It shows they know they are unable to win the argument.

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