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
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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Peadawg
July 31st, 2012
9:13 am
“Oy vey, Pea… not every post is about you.” – I never said they were…
You need an ID for many many many many many many things these days. I see the “studies” and “cases” as nothing more than excuses.
Jose
July 31st, 2012
9:14 am
keep
you answer the question
what is mitts fair share?
what is the 50% paying 0% fair share?
you are the fairness nazi…………..
Thomas Heyward Jr.
July 31st, 2012
9:17 am
“In 1962, we were laying down the foundations of prosperity.”
.
Actually, ya’ll layed down the foundation to rampert fatherless families, mass aborto-genocide, and general societal decay.
.
And LBJ’s grandchildren are happy to oblige.
Google Flash-mob looting in Chicongo……….and everywhere else in Amerika.
Peadawg
July 31st, 2012
9:20 am
“Democrats Move to Formally Back Gay Marriage”
Good for them. At least one party doesn’t campaign on being like your dog at the foot of your bed watching your every movement.
iggy
July 31st, 2012
9:20 am
ID required for:
Funny how the entitlement crowd is against photo ID, in order to keep entitlment bus/subway chuggin along. Seems their dishonesty outweighs their laziness.
kayaker 71
July 31st, 2012
9:21 am
Bozo’s collectivism is best illustrated by the following quote:
“it is necessary that the individual should come to realize that his own ego is of no importance in comparison with the existence is his nation: That the problem of the individual ego is conditioned only by the nation as a whole…… that above all the unity a nation’s spirit and will are worth far more than the freedom of the spirit and the will of the individual. This state of mind, which subordinates the interests of the ego to the conservation of the community is really the first premise for every truly human culture…… we understand only the individual’s capacity to make sacrifices for the community….. for this fellow man.
Adolph Hitler, 1933
Numbers-R-US
July 31st, 2012
9:22 am
Where is you indignation, liberals?
Last time I checked, it wasn’t Democrats demanding more tax cuts for the job creators you bemoan, kayaker.
stands for decibels
July 31st, 2012
9:23 am
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).’
I don’t doubt that the SS wage base will need to be adjusted to increase revenue at some point.
And while I accept the political realities that led the Obama administration to champion payroll tax cuts, I hated, and continue to hate those tax cuts, myself. Classic case of penny-wisdom/pound-foolishness. For the record.
/drive-by
Numbers-R-US
July 31st, 2012
9:24 am
That 9:21 sounds like the GOP party platform.
Up Up and Away
July 31st, 2012
9:24 am
Kyle
What percentage of the increase in spending is due to inflation and the aging of the population?
I’m sure those variables do not account for the entire increase, however they play a significant part to say the least.
Lord Help Us
July 31st, 2012
9:25 am
Overt racism at 9:17 followed by an Obama/Hitler screed at 9:21…
Do cons ever call this crap out?
Jose
July 31st, 2012
9:26 am
THE 50% NEED TO PAY THEIR FAIR SHARE
AT LEAST 15%
Finn McCool (The System isn't Broken; It's Fixed)
July 31st, 2012
9:26 am
So, Hitler said a lot of true things. Doesn’t take away the fact that he was evil to his core.
He is absolutely correct in that blind individualism doesn’t create a great culture/nation/country. It’s not just about “me”, it’s also about “we”.
If you don’t want to participate in society, why don’t you just move to a deserted island?
Pizzaman
July 31st, 2012
9:26 am
If I had to pay into it, Social Security, it’s not an entitlement! It’s my money but I can’t have it now. And since it was taxed in 1983 it’s going to take me longer to get it back. I was also forced off my Military insurance, that was supposed to be FREE for life when I retired, to Medicare B by a 1987 law. That raised my premium 6X . So I say again: If I have to pay into it or pay for it it’s not an entitlement so Ryan and the boys better not mess it up!!!!
Jose
July 31st, 2012
9:27 am
THE 49% SHOULD STOP CARRYING THE LOAD FOR THE 50%
Finn McCool (The System isn't Broken; It's Fixed)
July 31st, 2012
9:27 am
THE 50% NEED TO PAY THEIR FAIR SHARE
Yeah, cause 15% of $0 is better than nothing, correct?
You cons give me something to smile at every single day.
kayaker 71
July 31st, 2012
9:28 am
Lord Help Us, 9:25,
Overt racism, my achin’ real end!! This jerk is taking you for a ride….. you just don’t have the sense to realize it.
I Report (-: You Whine )-: mmm, mmmm, mmmmm! Just sayin...
July 31st, 2012
9:28 am
There’s not a Conservative on Earth that wants to keep an eye on what the dummycrats do in their beds.
ew
Slick Rick
July 31st, 2012
9:30 am
And…Kyle gets it all wrong. Not the first time. Nor the last, I might add.
Keller: 1
Kyle: 0
Finn McCool (The System isn't Broken; It's Fixed)
July 31st, 2012
9:31 am
Lies of the super-rich that cons have bought hook, line, and sinker:
1. Higher taxes on the rich will hurt small businesses and discourage job creators
A recent Treasury analysis found that only 2.5% of small businesses would face higher taxes from the expiration of the Bush tax cuts.
As for job creation, it’s not coming from the people with money. Over 90% of the assets owned by millionaires are held in a combination of low-risk investments (bonds and cash), the stock market, real estate, and personal business accounts . Angel investing (capital provided by affluent individuals for business start-ups) accounted for less than 1% of the investable assets of high net worth individuals in North America in 2011. The Mendelsohn Affluent Survey agreed that the very rich spend less than two percent of their money on new business startups.
alternet.org
Jefferson
July 31st, 2012
9:31 am
Reform in the sense of raising the contributions on the younger workers who have so much already. Their lives have been much easier and conveinent with all the tech they live with, time to pay to keep it going.
Lord Help Us
July 31st, 2012
9:33 am
‘This jerk is taking you for a ride….. you just don’t have the sense to realize it.’
Then help me out, mate…which jerk is taking me for a ride and please, by all means, help me gain the wisdom to ‘have the sense to realize it.’
Jose
July 31st, 2012
9:33 am
single moms having to take food out of their hungry kids mouths to pay taxes so the the 50% can deduct their way to 0%
INJUSTICE
Normal Free...Pro Human Rights Thug...And liking it!
July 31st, 2012
9:34 am
kayaker 71
July 31st, 2012
9:28 am
As you don’t seem to realize that the GOP is taking you for a ride. You’re a hoot.
Keep Up the Good Fight!
July 31st, 2012
9:34 am
I see the “studies” and “cases” as nothing more than excuses.
Well let me know when you become a judge so we know when facts don’t matter and only your opinion.
Jose, the nazi card…. how silly. You’ve been watching too much Beck. No soup for you!
Normal Free...Pro Human Rights Thug...And liking it!
July 31st, 2012
9:35 am
“There’s not a Conservative on Earth that wants to keep an eye on what the dummycrats do in their beds. ”
Too bad, they might learn something good…
Finn McCool (The System isn't Broken; It's Fixed)
July 31st, 2012
9:37 am
Big Lie #3
3. A booming stock market is good for all of us
The news reports would have us believe that happy days are here again when the stock market goes up. But as the market rises, most Americans are getting a smaller slice of the pie. In a recent Newsweek article , author Daniel Gross gushed that “The stock market has doubled since March 2009, while corporate profits and exports have surged to records.” But the richest 10% of Americans own over 80% of the stock market. What Mr. Gross referred to as the “democratization of the stock market” is actually, as demonstrated by economist Edward Wolff , a distribution of financial wealth among just the richest 5% of Americans, those earning an average of $500,000 per year.
Thanks in good part to a meager 15% capital gains tax, the richest 400 taxpayers DOUBLED their income and nearly HALVED their tax rates in just seven years (2001-2007). So dramatic is the effect that anyone making more than $34,500 a year in salary and wages is taxed at a higher rate than an individual with millions in capital gains. There’s yet more to the madness. The stock market has grown much faster than the GDP over the past century, which means that this special tax rate is being given to people who already own most of the unearned income that keeps expanding faster than the productiveness of real workers.
alternet.org
JDW
July 31st, 2012
9:37 am
@Kyle…”free the economy from the burden of all excessive federal spending”
You left out the rest of the story…as usual. Of course social spending is higher as are taxes that directly support that spending. In 1962 Social Security/Medicare taxes were 3.0% of GDP… from 1985 to 2009, when rates were not adjusted they averaged 6.5% of GDP. So when you add the funds that should be spend EXPRESSLY for that purpose to 1962’s spending level you get an EXPECTED spend as a % of GDP of 21.1%. As for the rest…check that defense spending line and you will find it.
Now to the real problem…our elective officials, mainly Republican, have taken the money we have as a group contributed for a social safety net and repurposed it to income tax breaks…hummmm wonder what type of people benefited from that…cough.cough.Mitt.
In 1962 income taxes were 8% of GDP and corporate taxes were 3.6%. In 2011 they were 7.4% and 1.2% respectively…a net drop of 2.4%. Over the last several years our politicians have taken the money we have contributed in the form of Social Security/Medicare taxes and given it to the upper income individuals and corporations and now you want us to believe instead that the real problem in out of control social spending…..HORSE HOOEY.
Does social spending need to be adjusted to reflect demographic changes….sure. But the real problem is we need to stop spending the money that is contributed for that purpose on tax cuts for those that don’t need them.
@@
July 31st, 2012
9:37 am
One of my greatest disappointments was watching boomers within the Tea Party back away from entitlement reform when it came to SS and Medicare.
My husband, being a boomer, declared that promises should be kept. My response?
We’re talkin’ about the government here…not your best friend or co-worker. Our daughter deserves to know the truth. She needs to know that reliance on government will get her nowhere in life.
Anyhoo! I’m a fan of the Wyden-Ryan plan. I’m also keeping tabs on Dan Camp’s efforts to reform the tax code. Hope lies with the behind-the-scene operators.
Means testing recipients of Medicare AND Medicaid ranks high on my list of priorities. If it was included in Mr. Keller’s column, I missed it.
kayaker 71
July 31st, 2012
9:38 am
Leukovich’s cartoon today is from the pen of a mindless buffoon.
Jose
July 31st, 2012
9:39 am
keep
actually i hate beck…………. he’s an apocolyptic gold selling nazi
as bad as a liberal occupyer
its time for the sensible middle to wrest control from the perps on the left and right who care more about power than solving problems and creating prosperity
John Galt
July 31st, 2012
9:42 am
“My husband, being a boomer, declared that promises should be kept. My response?”
The promises cannot be kept. Only the illusion that they may be kept is what we see.
And when the damage is done, we will be more concerned about survival than a broken promise.
Numbers-R-US
July 31st, 2012
9:43 am
One of my greatest disappointments was watching boomers within the Tea Party back away from entitlement reform when it came to SS and Medicare.
I loved that. It was like a temporary awakening when some of them actually realized what the GOP wanted to do to their livlihoods in order to fund another tax cut for the “job creators”.
GT
July 31st, 2012
9:45 am
TSPLOST is not an Obama thing. Local corruption is the people right here at home. Strengten your state and local government and the whole country benefits.
Jose
July 31st, 2012
9:46 am
tax reform
flat progressive income tax
flat progressive capital gains tax
no deductions
complete audits of all government programs and spending by the GAO
Lord Help Us
July 31st, 2012
9:47 am
‘One of my greatest disappointments was watching boomers within the Tea Party back away from entitlement reform when it came to SS and Medicare’
Don’t forget the irony of those on Medicare who are apocalyptic about the ACA and its ‘government takeover of healthcare.’
That one is my fave…
Jose
July 31st, 2012
9:47 am
TSPLOST – NO
they are using scare tactics to get it passed (if you dont’ vote yes……….. all jobs will leave atlanta and you will sit in traffic twice as long)
Finn McCool (The System isn't Broken; It's Fixed)
July 31st, 2012
9:47 am
Well said, JDW.
barking frog
July 31st, 2012
9:50 am
If default is needed, do the
Chinese not Americans. It
would be safer.
Finn McCool (The System isn't Broken; It's Fixed)
July 31st, 2012
9:51 am
My husband, being a boomer, declared that promises should be kept.
This is what the cons want to end.
When you enter a financial agreement with an employer – public or private – you agree to terms. If the employer promises to pay you so much a year AND contribute to your retirement, then they are making a contractual promise. If you, as a worker, keep up your end of the agreement and come to work, why shouldn’t the employer keep up their end?
You tell a soldier that if he/she puts his life on the line for so many years, you will provide them with certain benefits, then those benefits need to be honored. It’s called “supporting the troops.”
Get it, Cons? Ever heard that saying before? Support the troops.
kayaker 71
July 31st, 2012
9:55 am
Every once in awhile a solution comes along to solve a major problem….
Back off and let those men who want to marry men, marry men
And allow those women who want to marry women, marry women
Allow those who want to abort their babies, abort their babies,……
And in three generations, there will be no more liberals.
Damn, I love it when a good plan comes together.
Finn McCool (The System isn't Broken; It's Fixed)
July 31st, 2012
9:58 am
In Texas, Voter ID laws have limited the kind of ID that can be presented at polls, barring university IDs, to suppress student voting, but allowing gun permits.
Erwin's cat
July 31st, 2012
9:58 am
Keep – So how many entitlements must be cut to cover Mitt’s failure to pay his fair share of taxes?
Mitt paid what he was legally obligated to pay…I would call that his “fair share”
Don’t hate the player, hate the game
Finn McCool (The System isn't Broken; It's Fixed)
July 31st, 2012
9:59 am
Republicans know they can’t win unless they game the system. So sad.
And our country suffers due to their refusal to let Americans voice their opinions by, god forbid, voting.
Erwin's cat
July 31st, 2012
10:00 am
Finn – University ID’s are not state regulated and easily faked…gun permits are state sanctioned …
Finn McCool (The System isn't Broken; It's Fixed)
July 31st, 2012
10:01 am
You would think today’s Republicans would be more confident in their ideas, stand by them and trust the voters to decide.
Jose
July 31st, 2012
10:01 am
stop VOTING RIGHTS VIOLATIONS
repugnants are preventing DEAD people from voting by requiring them to show ID…………. how mean and cruel they are……….. DEAD people have a right to vote ……….. for democraps that is
Not Blind
July 31st, 2012
10:02 am
You boomer haters suck. The boomers have been the ones paying for all these entitlements, all the social programs, the space race, countless wars, the greed of the military industrial complex, etc. Since the 60’s we have been the ones building the country but now that it’s our turn to eat our portion of the pie there is this great outcry. Go to H.
Jose
July 31st, 2012
10:03 am
it FUNNY
LIBERALS cry that voters have to show a drivers license to VOTE
yet later this summer at the DEMOCRAT NATIONAL CONVENTION……….. in order to enter the facilities to partake in the election process all people will be required to PRESENT A STATE RECOGNIZED FORM OF ID
how IRONIC-MORONIC-HYPOCRITICAL
Erwin's cat
July 31st, 2012
10:04 am
TSPLOST – NO
voted “No” this AM