The High Terms 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 in addition to budgetary history of U.S. Federal entitlement programs. It is total of lessons for exactly why the programs have got expanded inexorably over time, in addition to exactly how difficult it volition live for our political scheme to reform them.

If indeed the Congress volition straight off plough to entitlement reform, equally identify speaker Paul Ryan has promised, this volition live the volume to have got on your desk. (Ryan already blurbed it (back cover) equally did Bill Bradley, Sam Nunn, George Shultz in addition to Alan Greenspan.)

If you lot intend entitlement programs, in addition to the political hash that enacts them, are recent problems, or the error of i political party, intend again. John's original 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 firstly entitlement program. ... betwixt 1789 in addition to 1793, the federal regime agreed to pay annual pensions to Continental Army soldiers in addition to seamen who became disabled equally a upshot of wartime injuries or illness. [later, equally an inducement to service]... 

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

That costs powerfulness balloon beyond forecasts was non a total surprise

Opponents of the 1818 police delineate 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 inward all countries get down on a minor scale in addition to are at firstly mostly granted on proper consideration, an that they growth till at final they are granted equally frequently on whim or caprice...[it] volition on experiment, live found an endless task. It volition drain whatsoever treasury, no thing how full." 

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

produced a massive surge inward applications in addition to an unexpected in addition to unprecedented cost to the Treasury. The law's proponents had estimated that fewer than 2 G veterans would qualify in addition to that the annual cost powerfulness accomplish $115,000. But past times the halt of 1819, to a greater extent than than twenty-eight G 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 in addition to corruption. Influenza A virus subtype H5N1 police delineate designed to assist destitute veterans was providing pensions to many financially well-off veterans in addition to fifty-fifty many who had never fought for the nation's independence. 

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

This is a familiar theme inward entitlement programs, but exactly how far dorsum it goes was intelligence 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 inward his component of the country, when the semi-annual pay twenty-four hr flow arrived, they [pensioners] were inward the habit of forming themselves into companies, in addition to so forming a column in addition to thus marching to have their quota of earth bounty" 

This spectacle served equally an early on hint of the feel of entitlement that tin lavatory acquit on groups of recipients of world assistance... such groups tin lavatory prepare an expectation that social club 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 in addition to the sometimes remarkable behaviour it generates inward afterward chapters on twentieth-century entitlements. 

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

Paying payroll taxes gave [gives!] plan participants a feel that past times contributing to the plan 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 in addition to turn a profit of the individual.  

When [President Roosevelt] was challenged nigh financing Social Security amongst a regressive payroll taxation rather than full general fund revenues from the progressive income tax, he replied, "We seat those pay coil contributions at that topographic point so equally to give the contributors a legal, moral, in addition to political correct to collect their pensions in addition to their unemployment benefits. With those taxes inward there, no damn politico tin lavatory e'er fight my social safety program. Those taxes aren't a thing 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 plan began amongst the same high-mihnded, noble, in addition to express destination equally Revolutionary War pensons: to compensate soldiers for the loss of life in addition to limb suffered inward wartime service to their country... Influenza A virus subtype H5N1 half-century afterward the plan evolved into a full general disability in addition to retirement plan for virtually all Union soldiers...Congress also eventually stretched eligibility for pensions to virtually all widows in addition to survivors of matrimony 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 original deadlines

The bill's senate flooring manager, Sentaor John Ingalls, had seat the total at $18 to $20 million. Hayes direction officials estimated a much higher cost of betwixt $50 in addition to $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 police delineate added nearly $400 i G one thousand to pension expenditures during the 1880s alone  

New involvement in addition to lobbying groups emerged

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

... The arrears human activity also spawned a minute large national lobbying force: The Grand Army of the Republic (GAR). The GAR's development from a service organization ta special involvement lobby..would live followed fourth dimension in addition to i time to a greater extent than past times twentieth-centry foyer groups...

At this time, politicians discovered how of import entitlements could live to electoral success, firstly the mad exercise of world coin to purchase votes that nosotros come across today.

The (1884) election drive witnessed the exercise of the Pension component equally a political machine to gain partisan advantage. (good story follows) 

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

The story repeats i time to a greater extent than amongst WWI veterans.

There are occasional retrenchments in addition to reforms, specially useful to ponder now.

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

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

shared the founding fathers' belief that all citizens had an obligation to serve their province inward wartime, in addition to thence did non stand upwards for a special degree of individuals entitled to regime benefits exactly because they had served during wartime. .. His views were decidedly at odds amongst Congress, which invariably concluded that all wartime veterans, specially when they reached one-time age, stood equally a special class. 

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

On Dominicus night, the President gave the firstly of his legendary fireside chats, reassuring earth that the USA banking scheme was inward 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 inward a bind. Under Senate rules, activity on the Volstead human activity could non have got identify until the Economy human activity had been addressed... 

in addition to they passed it

The police delineate repealed all entitlements to pensions that had been granted to veterans of World War I, the Castilian American War, the Boxer Rebellion in addition to the Philippine insurrection.. For the firstly [last?] fourth dimension inward USA history, a large-scale entitlement had been repealed. ... 

Several factors concern human relationship for President Roosevelt's remarkable success inward reducing veteran's pensions. The economic scheme in addition to federal budget's dire province of affairs presented the president amongst a national emergency, in addition to inward Washington such emergencies are a rigid predicate for action.. President Roosevelt was also willing to exercise his veto powerfulness to sustain his policies... 

Roosevelt's mental attitude to veterans did non last.

*****

I'm upwards to the beginning, really, of the book, "The nascency of the modern entitlement state." The centerpiece of the volume is non these historical antecedents, but the political story of how the electrical flow USA entitlements scheme evolved.

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

The novel Deal entitlements ushered inward a novel era for the federal courts. ... i time federal entitlement rights had been granted, the nature in addition to extent of these legal correct had to live adjudicated....In the 1960s in addition to 1970s, the federal courts .. expanded[ed] the legal rights of entitlement claimants inward welfare, wellness care, in addition to 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 inward the ancient history, in addition to I won't prolong the quotes delicious equally they are.

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

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

If i wishes for a reform on the expenditure side, the groovy interrogation 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 groovy agency to heighten much to a greater extent than revenue, in addition to my critics complain it before long volition make that in addition to provoke fifty-fifty greater spending. The VAT shifts the top of the Laffer bend to the right, in addition to inward my critics' view, the USA 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 comprise itself to pass less than the top of the Laffer bend allows, so nosotros tin lavatory jettison the insane inefficiency in addition to corruption of our taxation code, in addition to have got i that is vastly to a greater extent than economically efficient. The contrary persuasion actually amounts to belief that republic is fatally flawed. Moreover, I notation that starve the animate existence taxation reductions have got led to massive deficit expansions, yet large debt in addition to deficits have got non yet seemed to render much pressure level against entitlement spending.

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

Another theme: The accounting gimmicks such equally "trust funds." Surpluses inward trust funds Pb to make goodness expansions, fifty-fifty if at that topographic point are huge deficits outside. And "trust fund" accounting gimmicks also larn dorsum a long way.

As nosotros (hopefully) start to intend nigh reform, I intend the only hope is to suspension out of "we're spending also much at that topographic point volition live a debt crisis" vs. "you heartless evil person, exactly expression at (deserving person). How tin lavatory you lot 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 or so comfort inward John's history, that occasional retrenchments, including the to a higher identify in addition to the welfare reforms of the 1990s got through politically past times looking at fraud (a shape of disincentive) in addition to other disincentives.

This is a history in addition to 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 one-time tension inward welfare programs betwixt helping those inward demand in addition to disincentives, which I'll comprehend inward the side past times side post. That history ought to help.

Influenza A virus subtype H5N1 notation for graduate students: This volume is real good written, in addition to you lot should read it to emulate writing trend equally good equally for the subject. No, it does non knock you lot over the caput amongst beautiful sentences equally John McPhee might. It is, however, beautifully structured. The whole volume in addition to each chapter starts amongst a consummate summary of the argument, in addition to the chapter fills it out. It could larn on for thousands of pages, but manages to tell exactly plenty of the story so you lot come across the historical detail, but non plenty so you lot larn lost inward 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 in addition to reference all together.

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