NYT’s Keller gets it half-right on need to reform entitlements

In a column addressed to his fellow baby boomers (sorry, this Gen-Xer peeked anyway!) New York Times columnist Bill Keller says one way for his generation to shed its reputation of entitlement and selfishness is, well, to be less selfish about entitlements.

He refers to a study by the Democratic think tank Third Way that examines the tremendous growth of, as Keller puts it, the federal government’s “safety-net programs that provide a measure of economic stability for the aging and poor: Social Security, Medicare, Medicaid, etc.” The growth of this spending, he and Third Way argue, is crowding out federal spending for “‘investments,’ which includes maintaining our national infrastructure, keeping our military equipped, helping assure that our work force is educated to a high standard, and underwriting the kind of basic scientific research that is too risky or long-term to attract private money.”

The answer, he suggests, is for liberals to embrace reforms of the entitlement programs. I agree with his conclusion, but there’s an important misperception to correct along the way.

Here’s how Keller summarizes Third Way’s findings:

In 1962, we were laying down the foundations of prosperity. About 32 cents of every federal dollar, excluding interest payments, was spent on investments, only 14 percent on entitlements. In the mid-70s the lines crossed. Today we spend less than 15 cents on investment and 46 cents on entitlements. And it gets worse. By 2030, when the last of us boomers have surged onto the Social Security rolls, entitlements will consume 61 cents of every federal dollar, starving our already neglected investment and leaving us, in the words of the study, with “a less-skilled work force, lower rates of job creation, and an infrastructure unfit for a 21st-century economy.”

Sounds pretty bleak for “investments,” huh?

But what these figures obscure is that spending on Third Way’s “investments” category — adjusted for inflation and population growth — has in fact increased significantly during the past 50 years.

How can that be?

Start with the fact that, in 1962, federal spending (see Table 8.4) minus net interest payments equaled 17.6 percent of gross domestic product, or GDP. In 2012, it’s expected to hit 22.9 percent of GDP. So federal spending as a share of the economy is higher today by almost one-third.

Then move on to the fact that GDP, adjusted for inflation, is nearly 4.5 times larger today: Annualized, it stood at $13.56 trillion in the second quarter of 2012 (the most recent data available) compared to $3.06 trillion in the same three months of 1962.

Finally, consider that our population has grown by only about 70 percent during the past half century: from 186.5 million to 314.4 million (note: the Census Bureau has not yet released its estimate for July 1, 2012, so I took the figure for a year earlier and applied the same growth rate the Census Bureau applied for 2010 to 2011; my number ought to be pretty close to the eventual Census estimate, or at least close enough for today’s exercise).

Run the numbers, including Third Way’s calculations of “investments” and “entitlements” as percentages of the federal budget, and here’s what you get:

Inflation-adjusted, per capita federal spending

1962 vs. 2012

So, while it’s true that entitlement spending has grown massively since JFK’s presidency — by more than 1,000 percent on a real per capita basis — it’s also true that real per capita spending on that group of “investments” has grown by 60 percent. Not too shabby. Viewed similarly, spending on everything else (besides net interest payments) has also soared by almost 150 percent.

To reiterate: I agree with Keller and Third Way that entitlement reform is desperately needed. And I join them in urging boomers, particularly those of the liberal persuasion, to be open to such changes. Where I part company with them is in the reason this needs to happen.

It’s not to spend more money elsewhere in the federal budget, but to free the economy from the burden of all excessive federal spending.

– By Kyle Wingfield

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728 comments Add your comment

Normal Free...Pro Human Rights Thug...And liking it!

July 31st, 2012
7:14 am

“It’s not to spend more money elsewhere in the federal budget, but to free the economy from the burden of all excessive federal spending.”

Then let us drop all corporate subsidies and cut the defense budget by half. (We would still be spending more foe defense than most nations combined). It really IS a no brainer, but the the GOP is too beholding to their corporate masters.

Remember,,,Only two kinds of Republicans…The Rich and the Duped.

BTW: Voting today for TSPLOST and against every incumbent.

Uncle Billy

July 31st, 2012
7:42 am

How about the money the super rich feel entitled to have and the taxes on them that they think are too high. How do we deal with that sense of entitlement? By lowering taxes and removing regulations? That happened and the result was a disaster.

stands for decibels

July 31st, 2012
7:49 am

Lord Help Us

July 31st, 2012
7:50 am

I believe our budget situation and the fact that people are living a lot longer require us to reform entitlements.

I also believe that we need to increase taxes in some cases to help with our deficit.

The problem is that while lots of Dems agree with both, ZERO Repubs agree with both…

Del

July 31st, 2012
7:52 am

Kyle, good commentary on the most important topic of our time if we’re to survive as a nation. O.T. hopefully, you won’t once again find it necessary to close down your blog early

Bud Wiser

July 31st, 2012
7:55 am

So Uncle Billy, if you are not one of the ’super rich’, I presume by your statement that you obviously do not feel ‘entitled’ to whatever money you have?

Do you not feel that you pay enough taxes?

Is it your loving nature to give most of what you have to the poor, the needy, the old, the lazy and shiftless amongst us, because you feel you are not entitled to it?

Do you own your own business? You didn’t build that. Give it to Obama. In his world, you own nothing anyway, it belongs to the govt.

The economy is doing fine, according to Obama.

You’ll get by.

Tool.

Del

July 31st, 2012
8:05 am

Republicans for the most part agree with reforming and expanding the tax base. When you have a mentality in government that individuals earning over 200k per year and married taxpayers earning over 250k per year should have their tax increased, while continuing to remove lower income people from the tax roles we regress rather than progress. Increasing tax only on higher income earners only producing revenues that would cover federal government expenditures for one week doesn’t reflect much objective thought in effectively running our government.

Finn McCool (The System isn't Broken; It's Fixed)

July 31st, 2012
8:05 am

Yeah, we only spend more on defense than the next, what, 25 countries combined? I suppose we won’t be safe from everybody until we surpass 50?

What a bunch of skeered paranoid people we Americans are.

Finn McCool (The System isn't Broken; It's Fixed)

July 31st, 2012
8:06 am

oh, on a lighter note:

Mitt’s gaffe-in-every-country tour continues to dazzle.
http://www.alternet.org/election-2012/mitt-romney-disses-palestinians-mexicans-whos-next

I Report (-: You Whine )-: mmm, mmmm, mmmmm! Just sayin...

July 31st, 2012
8:09 am

This is a great article on what all this spending has gotten us-

California: The Road Warrior Is Here – Victor Davis Hanson, PJ Media

http://www.realclearpolitics.com/2012/07/30/california_the_road_warrior_is_here_286068.html

Finn McCool (The System isn't Broken; It's Fixed)

July 31st, 2012
8:09 am

while continuing to remove lower income people from the tax roles

Hey Del, how much tax does a rich person pay on the purchase of a gallon of gas? And that is different from a poor person? How about a can of tomatoes? The rich person pays more for that can in taxes?

Income tax is only one part of the equation. Poor people don’t have a lot of income so, yes, there’s not much there to tax. But, you are still taxing them through consumption.

So, quit hating on poor people.

Aquagirl

July 31st, 2012
8:12 am

Pry entitlements out of the Boomers’ hands? Over their cold, dead, greedy bodies.

I’m not sure this guy’s column is worth discussion anyhow, he thinks Boomers demonstrated the “spirit of sacrifice” in the Viet Nam war. Only in his acid-fogged memories.

Finn McCool (The System isn't Broken; It's Fixed)

July 31st, 2012
8:12 am

Victor Davis Hanson is an idiot. At least he’s a hair smarter than Jonah Goldberg.

Del

July 31st, 2012
8:18 am

“So, quit hating on poor people.”

Finn, not hating on anyone. You’re ass u ming. Do you think that Obama’s tax proposal is objective or is it subjective?

stands for decibels

July 31st, 2012
8:20 am

the fact that people are living a lot longer

Please do not ever accept “people are living longer” as a reason to cut SS. That’s a con job, and you’ve swallowed it hook, line and sinker when you repeat it.

There were these things called “actuaries” around way back when FDR and his team first formulated SS. They were well aware of what was happening with life expectancy and built a system to accommodate it. In fact, we Americans who were being withholding-taxed, actually went along with having additional funds taken out of the SS revenue stream to be placed in a trust to account for the post WWII bulge.

Now, thieves like the Third Way are asking Americans to forgo these entitlements so billionaires can enjoy tax breaks indefinitely.

This is insane, and frankly, you are complicit when you repeat their nonsense. We do not need to cut back on SS. And the only reform needed for Medicare is a more intelligent management of the operation, including a strong, independent advisory board that can send the charlatans and cheats packing.

It isn’t any more complicated than that, but you can go on believing liars like Bill Keller if you like since, you know, he works for the Times and everyone knows it’s a “liberal” publication so he must be facing some uncomfortable “truth.” right?

lefty_316

July 31st, 2012
8:22 am

In addtion to entitlement reform we need sane social policy. Currently 40% of all babies born are born to parents or a single mother on Medicaid. It is essential we adopt stringent pro-taxpayer restrictions to completely eliminate reproduction by those receiving any public assistance, force them to delay having children until such time they can do so without burdening the tax payer. Therefore we must have mandatory birth control and abortion policies where the indigent are concerned. But that does not seem to be anything the forces that have destroyed the GOP, the social conservatives, are interested in. Quite the contrary.

“During almost fifteen centuries the legal establishment of Christianity has been on trial. What has been its fruits? More or less, in all places, pride and indolence in the clergy; ignorance and servility in the laity; in both, superstition, bigotry and persecution.” James Madison, 1785.

Finn McCool (The System isn't Broken; It's Fixed)

July 31st, 2012
8:24 am

Mitt said the Palestinian territories’ economy is worse than Israel’s because their culture is inferior. He completely ignored the effects of the Israeli occupation.

Yeah, I thought W was dumb. Guess we got us another yokel for the Cons to look UP to.

Finn McCool (The System isn't Broken; It's Fixed)

July 31st, 2012
8:25 am

completely eliminate reproduction by those receiving any public assistance, force them to delay having children until such time they can do so without burdening the tax payer.

Heil Hitler!

St Simons - he-ne-ha

July 31st, 2012
8:27 am

Read the front page, and keep cutting the social safety net, cons.

I find myself today hoping there actually IS a jaysus & a judgement day.
I want front row seats for that one.

Jeffrey

July 31st, 2012
8:29 am

Baby boomers will support entitlement cuts for everyone younger than them. This should not only cement their status as the most selfish and narcissistic generation ever but show them as they truly are, sociopathic.. Let’s just say Manson is a more apt symbol of boomers than Woodstock. Yeah, I’m gen x and I hate boomers, at least I admit it.

Lord Help Us

July 31st, 2012
8:32 am

‘They were well aware of what was happening with life expectancy and built a system to accommodate it.’

The ’system’ broke down. I say reform the system…

Finn McCool (The System isn't Broken; It's Fixed)

July 31st, 2012
8:34 am

Politico finally accepts what progressive critics have long argued — new Republican-backed voter ID laws, ostensibly meant to combat voter fraud, could disenfranchise millions of voters and potentially sway the election. The beltway paper reports: “At least 5 million voters, predominantly young and from minority groups sympathetic to President Barack Obama, could be affected by an unprecedented flurry of new legislation by Republican governors and GOP-led legislatures to change or restrict voting rights by Election Day 2012.”
salon.com

Cons are running the real voter fraud scheme.

stands for decibels

July 31st, 2012
8:36 am

Baby boomers will support entitlement cuts for everyone younger than them.

some will. that’s the nature of things. And some Xers will behave irrationally.

Whereas, some of us will simply hold politicians and pundits’ collective feet to the fire, and call out liars when we hear them and see them.

You want to do something that helps, or do you simply want to complain about how unfair it is that some people’s circumstances might’ve been more historically fortunate than yours?

Because if it’s the latter, I could do that too. The earlier boomers had more secure employment, better benefits, etc. than the later boomers. Wahh!

I choose not to. Just as I choose to support allowing ALL of the Bush era tax cuts to expire (phased in over the next two years, I’ll add) because it never made sense to cut taxes at a time when we were gearing up for war.

Such a measure would hurt me financially, short term, but long term it does make sense.

The ’system’ broke down.

Not intended as a factual statement.

AU Liberal in ATL

July 31st, 2012
8:36 am

Keller must be thrilled that you agree with him and really appreciative of your ability to correct what he got wrong. Why oh why aren’t you King of the World?
Thinking you know what “shows them are they really are” puts you in the exact same boat, Jeffrey. Talk about narcissistic. Do you even know the meaning of the word? Here’s something you can admit. Stupidity!

Peadawg

July 31st, 2012
8:40 am

“Please do not ever accept “people are living longer” as a reason to cut SS. ”

Not cut exactly, but raise the age limit a few years.

Keep Up the Good Fight!

July 31st, 2012
8:42 am

So its entitlements that are crowding out investment in infrastructure. Not the lowest tax rates, not the many corporate loopholes and the offshore accounts, and not military spending…. :roll:

So how many entitlements must be cut to cover Mitt’s failure to pay his fair share of taxes? :roll:

Peadawg

July 31st, 2012
8:44 am

“So its entitlements that are crowding out investment in infrastructure. Not the lowest tax rates, not the many corporate loopholes and the offshore accounts, and not military spending…. ”

I say it’s all of those.

GT

July 31st, 2012
8:47 am

I am with stands for decibels

There is a law of nature here unless bailed out by government which postpones the ultimate results. We can make opinions all day but the reality trumps those opinions. Model the country without those entitlements. What benefits do we get from them? It is a little like this vote today. What benefit do we get from spending money on transportation? The real question is will the money be spent on transportation? We seem to try so hard to get this money to a grass root level where corruption is a fixed cost. We become one of those third world countries that can’t be helped because corruption is so ingrained in our system. Fix that at our local levels in the next 30 years and your numbers will come out better. Federalism would work if it was honest, cause does not trump reality.

Lord Help Us

July 31st, 2012
8:50 am

So sfd, are you saying our ’system’ (as in, ‘They were well aware of what was happening with life expectancy and built a system to accommodate it’) for keeping SS solvent is working?

If so, please explain the ’system…’ and what happens when the number of SS recipients greatly outnumbers the number of SS contributors.

iggy

July 31st, 2012
8:52 am

Im all for helping the aged and handicapped. The poor can get a job or starve, makes no difference to me.

Jose

July 31st, 2012
8:52 am

lowest tax rates are the cause

CORRECT!

THOSE 50% NOT PAYING ANY FEDERAL INCOME TAX MUST START PAYING THEIR FAIR SHARE

DANG FREELOADERS

finn mccool

July 31st, 2012
8:52 am

Rich people just love poor republican voters.

Like good little sheep unaware of the wolf.

Jeffrey

July 31st, 2012
8:52 am

Paul Ryan’s plan would mean I get to pay for my Medicare and the baby boomers and I can’t go for that. And Ryan is an xer. It makes no sense.

Keep Up the Good Fight!

July 31st, 2012
8:54 am

Jose, tell me again, what is Mitt’s fair share?

iggy

July 31st, 2012
8:55 am

“Cons are running the real voter fraud scheme.”

Typical liberal excuse making…kinda like global warming and all the other “sky is falling” minutia. This morning I showed my ID to vote and have no problem with it.

stands for decibels

July 31st, 2012
8:57 am

raise the age limit a few years.

The age limit is being raised, already. We don’t need to change the schedule to accommodate the voracious appetites of the likes of the Simpson-Bowles / Third Way liars.

Peadawg

July 31st, 2012
8:59 am

Oh cry me a river, Finn. “f you don’t have any of the above (valid forms of ID), you may obtain a photo ID free of charge from your local county registration office.”

stands for decibels

July 31st, 2012
9:00 am

please explain the ’system…’

these guys do a pretty good job. suggest you read it.

http://www.ssa.gov/history/briefhistory3.html

Keep Up the Good Fight!

July 31st, 2012
9:00 am

Well there is it. If Iggy has an ID, EVERYONE obviously does…. Welcome to Fantasy Land.

Numbers-R-US

July 31st, 2012
9:00 am

Kyle,

In your Utopian makeover, how would we proceed. Let’s see. In 2010, the federal receipts consisted of 864.8 billion in payroll taxes, 898.5 billion in individual income taxes, 191.4 billion in corporate income taxes and 207.9 billion in excise and other taxes.

Now, if we look at outlays, social security accounted for 707 billion while medicare accounted for 452 billion. So, subtracting those two from payroll taxes leaves a deficit of 294 billion. Shall we raise payroll taxes to make up that difference or cut people’s current payments or something else.

Then, we spent 705 billion on defense and security and another 196 billion on interest. Subtract those two from the individual income tax receipts and we have a deficit of another 2.5 billion. Now we have another 245 billion in federal retiree and veteran’s benefits which completely wipes out the other taxes collected while leaving another deficit of 37.1 billion. Not to worry though. We’ll take the non-entitlement deficit amount so far of 39.6 billion and subtract that from the 191.4 billion in receipts from corporate income taxes and we have a whopping 151.8 billion to cover every remaining outlay. Anyway, just how much do you want to squeeze from the entitlement crowd? Enough to cover the deficit in social security and medicare outlays caused by the imbalance with payroll tax collection. Or more.

Then, there’s the little matter of what to cut to cover the rest of the deficit and then some to cover whatever new tax cuts for the job creators that we still have not discussed today. Give me something tangible to work with here, Kyle.

Jose

July 31st, 2012
9:01 am

KEEP

those 50% not paying anything are cheating single moms and the working poor who have to pay out of money to feed the kids……….. the 50% are cruel and are selfish

Keep Up the Good Fight!

July 31st, 2012
9:03 am

Jose, you are failing to answer the question. Mitt is not a cheating single mom or the working poor. Why I doubt his chef staff even shops at the Whole Foods.

Again, what is Mitt’s fair share?

Peadawg

July 31st, 2012
9:04 am

“Well there is it. If Iggy has an ID, EVERYONE obviously does…. ”

I’m not sure if that was directed at me or not. But all I was saying is that it’s pretty easy to obtain SOME form of ID.

independent thinker

July 31st, 2012
9:06 am

Finn McCool- You missed the best gaffe by Willard in Israel -he praised the Israeli health care system which is one of the best in the world, provides universal coverage (including Arabs) and costs 8% of GDP vs 18% of GDP in the US..The moron did not realize he was advocating an entirely socialist system The Israeli system requires everyone to pay or be subsidized with an escalating scale of premiums based on income and provider salaries are set by the government. Hardly anyone complains about the health care system in Israel. Of course the father of Romneycare would not be able to comprehend all that since he has only one talking point that as president is that he would end Obamacare and he would adopt the Ryan plan to decimate Medicaid and Medicare. Of course his racist comments about Palestinians and their success was made by Romney while shilling for campaign dollars so what’s the big deal.? He does not even realize that the Palestinians remained locked in a state of dependency because the UN with US dollars and food aid considers them to be permanent refugees growing from 750,000 in 1950 to over 5 million now . Is Willard willing to end UNWRA subsidies and incur the wrath of the rich oil states in the Arab World? Probably he could not comprehend something that complex. Even Newt said the Palestinians cannot succeed because they live in a dependent state, Yes Willard once again showed his brilliant foreign policy skills and competence as a leader in Israel like he did in England.

kayaker 71

July 31st, 2012
9:08 am

In Waukesha, WI, GE has a 115 yr old X-ray manufacturing facility which supplies lots of local jobs. It was announced recently that this facility will re-locate to Beijing where GE will invest over 2B in research facilities and plants and train over 65 engineers to run them. Yeah, that’s same GE that is run by Jeff Immelt, Bozo’s jobs czar. The same GE that earned 5.1 B in profits last year and didn’t pay a dime of federal income tax. Where is you indignation, liberals? And Romney is such a jerk for outsourcing American jobs. This selective indignation is something for the record books.

Keep Up the Good Fight!

July 31st, 2012
9:08 am

Oy vey, Pea… not every post is about you. And no, actual studies and cases have disproven your claim but continue on fact free.

GT

July 31st, 2012
9:10 am

How many ways can we steal money in government. We can fight a war, anyone looked at the audit of the last war? We can lose a war, how much waste was left in Iraq for our enemies to absorb. Look at the budget of the state government. A toll bridge that never closes, tire funds not use for tires, Hope not use for scholarship.

The fixation of the right on not spending should be tempered with the element dishonest government. Clever crooks that point your attentions to the sounds outside as they rob your houses. Our school systems that don’t educate, our roads filled with pot holes, sewers backed up, corrupt police… It is not the lack of money it is the lack of management which is a built in camouflage for corruption.

Lord Help Us

July 31st, 2012
9:10 am

Thanks for the link, sfd…per my comments, perhaps you yourself should read it. I suggest you start at this section:

‘The main purpose of the 1977 Amendments was to address the financing of the program. Shortly after passage of the 1972 legislation, it became apparent that Social Security faced a funding shortfall, both in the short-term and in the long-term. The short-term problem was caused by the bad economy, and the long-term problem by the demographics associated with the baby boom. By their 1975 report the Trustees said the Trust Funds would be exhausted by 1979. This financing shortfall was addressed by the 1977 Social Security Amendments. These amendments raised the payroll tax slightly (from 6.45% to the current 7.65%), increased the wage base; reduced benefits slightly; and “decoupled” the wage adjustment from the COLA adjustment. These fixes restored the long-term balance of the program for the next 50 years (but not the full 75 years used by the actuaries).’

joe

July 31st, 2012
9:10 am

Less government means more private sector growth, which means more jobs, which means fewer people needing entitlements. Government is not the solution, neither is more taxes…government, along with giving them more to spend…is the problem. Vote NO on TSPLOST and Obama.

kayaker 71

July 31st, 2012
9:13 am

I wouldn’t trust these South GA rednecks to run Lucy’s lemonade stand. Vote NO on TSPLOST.