The High Toll Of Practiced Intentions

The High Cost of Good Intentions is a superb novel volume past times my Hoover colleague John Cogan. It is a political too budgetary history of United States of America Federal entitlement programs. It is total of lessons for exactly why the programs have got expanded inexorably over time, too exactly how difficult it volition live for our political scheme to reform them.

If indeed the Congress volition right away plough to entitlement reform, every bit household speaker Paul Ryan has promised, this volition live the volume to have got on your desk. (Ryan already blurbed it (back cover) every bit did Bill Bradley, Sam Nunn, George Shultz too Alan Greenspan.)

If yous call back entitlement programs, too the political hash that enacts them, are recent problems, or the error of i political party, call back again. John's principal lesson is that the emergence of bloated entitlements is a hardy characteristic of our (and many other countries') democracies.  He does this past times exactly reading the history.

The habit of expanding entitlements started early. Chapter 2:

Revolutionary War pensions were the nation's foremost entitlement program. ... betwixt 1789 too 1793, the federal regime agreed to pay annual pensions to Continental Army soldiers too seamen who became disabled every bit a lawsuit of wartime injuries or illness. [later, every bit an inducement to service]... 

For 40 years, Congress enlarged too expnaded these benefits until, past times the 1830s, they covered virtually all Revolutionary War seamen too soldiers, including volunteers too members of the province militia too their widows, regardless of disability or income. 

That costs powerfulness balloon beyond forecasts was non a total surprise

Opponents of the 1818 constabulary predicted that granting lifetime pensions to Revolutionary War veterans who were "in reduced circumstances" would live costly. Senator Nathaniel Macon of North Carolina observed, "Pensions inwards all countries start out on a small-scale scale too are at foremost to a greater extent than oftentimes than non granted on proper consideration, an that they increase till at final they are granted every bit oftentimes on whim or caprice...[it] volition on experiment, live found an endless task. It volition drain whatever treasury, no affair how full." 

Yet, the service pension constabulary of 1818, which granted such pensions to all revolutionary state of war veterans who were "in reduced circumstances"

produced a massive surge inwards applications too an unexpected too unprecedented cost to the Treasury. The law's proponents had estimated that fewer than 2 one m veterans would qualify too that the annual cost powerfulness attain $115,000. But past times the goal of 1819, to a greater extent than than twenty-eight one m individuals had applied... The 1818 law's annual cost to the Treasury had ballooned from $300,000 to a staggering $1.8 million. ..widespread charges of pension fraud too corruption. Influenza A virus subtype H5N1 constabulary designed to assist destitute veterans was providing pensions to many financially well-off veterans too fifty-fifty many who had never fought for the nation's independence. 

...Congress's underestimate of the cost was on the foremost of many underestimates. These miscalculations are invariably due to Congress's failure to appreciate how an offering of entitlement assistance tin cause individuals to modify their circumstances to qualify for assist they have got previously managed to alive without. 

This is a familiar theme inwards entitlement programs, but exactly how far dorsum it goes was word to me.

Influenza A virus subtype H5N1 bigger theme of the volume is the politics of entitlements. That also starts long ago. Congressman Dudley Marvin of New York reports

"In the villages inwards his component division of the country, when the semi-annual pay hateful solar daytime arrived, they [pensioners] were inwards the habit of forming themselves into companies, so forming a column too thus marching to have their quota of Blue Planet bounty" 

This spectacle served every bit an early on hint of the feel of entitlement that tin impact groups of recipients of world assistance... such groups tin educate an expectation that lodge owes them benefits that initially were bestowed out of gratitude for state of war machine service or a want to alleviate hardship. We volition regain this expectation too the sometimes remarkable demeanour it generates inwards subsequently chapters on twentieth-century entitlements. 

For example, a century later, the linkage betwixt private payroll taxes too benefits was crucial to the "enactment, long-run endurance, and, ultimately high cost" of Social Secrurity

Paying payroll taxes gave [gives!] programme participants a feel that past times contributing to the programme during their working years, they were establishing an earned correct to benefits when they retired. ... Senate Finance Committee chairman Walter George noted" Social safety is non a handout; it is non a charity; it is non relief. It is an earned correct based upon the contributions too net turn a profit of the individual.  

When [President Roosevelt] was challenged well-nigh financing Social Security amongst a regressive payroll taxation rather than full general fund revenues from the progressive income tax, he replied, "We set those pay coil contributions in that place so every bit to give the contributors a legal, moral, too political correct to collect their pensions too their unemployment benefits. With those taxes inwards there, no damn pol tin e'er fight my social safety program. Those taxes aren't a affair of economics, they're straight politics" 

Civil state of war pensions followed the same path, on a larger scale

The civil state of war pension programme began amongst the same high-mihnded, noble, too express goal every bit Revolutionary War pensons: to compensate soldiers for the loss of life too limb suffered inwards wartime service to their country... Influenza A virus subtype H5N1 half-century subsequently the programme evolved into a full general disability too retirement programme for virtually all Union soldiers...Congress also eventually stretched eligibility for pensions to virtually all widows too survivors of spousal human relationship soldiers, fifty-fifty those who had married many decades after the state of war had ended..

Costs ballooned, for instance on the 1879 arrears law, that allowed soldiers to file disability claims after the master deadlines

The bill's senate flooring manager, Sentaor John Ingalls, had set the total at $18 to $20 million. Hayes direction officials estimated a much higher cost of betwixt $50 too $150 million. ... Two years after the law's passage President Chester A. Arthur reported that arrears payments had already cost taxpayers $235 million...It is fair to conclude that the constabulary added nearly $400 i one m thousand to pension expenditures during the 1880s alone  

New involvement too lobbying groups emerged

claims agents led the advocates for arrears payments. These agents, certified past times the pensions office, assisted veterans too widows amongst the complex application process, represented claimants inwards appeals earlier the pension office, too received compensation for their services. ... claims' agents had emerged every bit a powerful lobbying force. 

... The arrears human activity also spawned a instant large national lobbying force: The Grand Army of the Republic (GAR). The GAR's development from a service organisation ta special involvement lobby..would live followed fourth dimension too over again past times twentieth-centry entrance hall groups...

At this time, politicians discovered how of import entitlements could live to electoral success, kickoff the mad utilization of world coin to purchase votes that nosotros meet today.

The (1884) election cause witnessed the utilization of the Pension purpose every bit a political machine to gain partisan advantage. (good story follows) 

... Along amongst this legislation came an of import too powerful regain past times the Congress too the executive branch: broadly distributing cash benefits straight to a large segment of the voting population could make meaning electoral advantages. 

The story repeats over again amongst WWI veterans.

There are occasional retrenchments too reforms, peculiarly useful to ponder now.

Candidate Cleveland renewed his previous cause hope to `cleanse the pension rolls too bound ... benefits to 'worthy' veterans. ...Voter backlash against the tariff too pension corruption contributed to President Cleveland's landslide victory.... Cleveland took immediate actions... The GAR rallied against this nestling reform every bit if the pension rolls had been purged, decrying "false economic scheme which shaves too pares to the quick at the expense of honor, jurist too principle." ... past times the fourth dimension Preisdent Cleveland left purpose inwards 18997, in that place were 12,500 to a greater extent than Civil state of war pensioners than when he had taken office. 

Interestingly, Franklin Roosevelt was a keen enemy of large veteran benefits. Roosevelt

shared the founding fathers' belief that all citizens had an obligation to serve their province inwards wartime, too so did non stand upward for a special degree of individuals entitled to regime benefits but because they had served during wartime. .. His views were decidedly at odds amongst Congress, which invariably concluded that all wartime veterans, peculiarly when they reached quondam age, stood every bit a special class. 

 Roosevelt also idea balanced budgets were important. He acted cleverly:

On Lord's Day night, the President gave the foremost of his legendary fireside chats, reassuring Blue Planet that the U.S.A. banking scheme was inwards should shape. On Mon he sent to Congress his 3rd message: to modify the Volstead Act to permit the sale of beer... an extremely pop proposal. Now the Senate was inwards a bind. Under Senate rules, activity on the Volstead human activity could non have got house until the Economy human activity had been addressed... 

too they passed it

The constabulary repealed all entitlements to pensions that had been granted to veterans of World War I, the Castilian American War, the Boxer Rebellion too the Philippine insurrection.. For the foremost [last?] fourth dimension inwards U.S.A. history, a large-scale entitlement had been repealed. ... 

Several factors occupation organisation human relationship for President Roosevelt's remarkable success inwards reducing veteran's pensions. The economic scheme too federal budget's dire province of affairs presented the president amongst a national emergency, too inwards Washington such emergencies are a potent predicate for action.. President Roosevelt was also willing to utilization his veto powerfulness to sustain his policies... 

Roosevelt's mental attitude to veterans did non last.

*****

I'm upward to the beginning, really, of the book, "The nativity of the modern entitlement state." The centerpiece of the volume is non these historical antecedents, but the political story of how the electrical current U.S.A. entitlements scheme evolved.

That story starts amongst the New Deal. It also brings inwards the judiciary, the "role of the federal courts inwards making world policy:"

The novel Deal entitlements ushered inwards a novel era for the federal courts. ... i time federal entitlement rights had been granted, the nature too extent of these legal correct had to live adjudicated....In the 1960s too 1970s, the federal courts .. expanded[ed] the legal rights of entitlement claimants inwards welfare, wellness care, too nutrition. Ultimately federal courtroom decisions created welfare entitlement correct where none had been legislated. 

There are many to a greater extent than themes worth stressing, fifty-fifty inwards the ancient history, too I won't prolong the quotes delicious every bit they are.

One theme: Our regime routinely liberalizes entitlements when budget surpluses are strong, too at to the lowest degree slows downward their expansion inwards bad financial times. It also liberalizes entitlements inwards bad economical times.

That bears centrally on the electrical current reform question.  Our entitlements are, no surprise, on an unsustainable path. We volition either reform them, inwards a agency that reduces federal spending, or nosotros volition substantially heighten taxes on the "middle class," including a large payroll taxation increase too probable a european trend VAT on top of growth-killing income too corporate taxes.

If i wishes for a reform on the expenditure side, the keen inquiry is whether it must live done straight or via "starving the beast" of taxation revenue. For example, I advocate a VAT. Influenza A virus subtype H5N1 mutual complaint is that the VAT is non only a much to a greater extent than economically efficient agency of raising a given revenue, it is a keen agency to heighten much to a greater extent than revenue, too my critics complain it presently volition make that too provoke fifty-fifty greater spending. The VAT shifts the top of the Laffer bend to the right, too inwards my critics' view, the U.S.A. regime volition operate at the top of the long-run Laffer bend given structural limitations on its taxation code.

I have got held out hope that our republic could incorporate itself to pass less than the top of the Laffer bend allows, so nosotros tin jettison the insane inefficiency too corruption of our taxation code, too have got i that is vastly to a greater extent than economically efficient. The reverse persuasion actually amounts to belief that republic is fatally flawed. Moreover, I notation that starve the creature taxation reductions have got led to massive deficit expansions, yet large debt too deficits have got non yet seemed to supply much pressure level against entitlement spending.

John's history is a potent force toward starve the beast, at to the lowest degree inwards the negative direction. Surpluses Pb to make goodness expansions, quickly.

Another theme: The accounting gimmicks such every bit "trust funds." Surpluses inwards trust funds Pb to make goodness expansions, fifty-fifty if in that place are huge deficits outside. And "trust fund" accounting gimmicks also larn dorsum a long way.

As nosotros (hopefully) start to call back well-nigh reform, I call back the only hope is to interruption out of "we're spending besides much in that place volition live a debt crisis" vs. "you heartless evil person, exactly facial expression at (deserving person). How tin yous throw her off the bus." The agency to make that, I think, is to focus on the disincentives of our social programs, non on the cost or the worthiness of recipients. I regain roughly comfort inwards John's history, that occasional retrenchments, including the higher upward too the welfare reforms of the 1990s got through politically past times looking at fraud (a shape of disincentive) too other disincentives.

This is a history too a political history, non a reform proposal, nor an economical analysis of disincentives. Still, John's history is also total of quotes reflecting the centuries quondam tension inwards welfare programs betwixt helping those inwards demand too disincentives, which I'll encompass inwards the adjacent post. That history ought to help.

Influenza A virus subtype H5N1 notation for graduate students: This volume is real good written, too yous should read it to emulate writing trend every bit good every bit for the subject. No, it does non knock yous over the caput amongst beautiful sentences every bit John McPhee might. It is, however, beautifully structured. The whole volume too each chapter starts amongst a consummate summary of the argument, too the chapter fills it out. It could larn on for thousands of pages, but manages to tell exactly plenty of the story so yous meet the historical detail, but non plenty so yous larn lost inwards what must been have got fascinating historical detail. Yet this is non a measure quickie volume aimed at a policy controversy. This is a deep slice of scholarship. Everything is footnoted -- 78 pages of footnotes too reference all together.