The 50 Year History of American Entitlements Growth

Entitlements spending in America, and much of the rest of the world as well, is unaffordable and out of control. In fact, much of its growth is due to what I'll call "creep." That means expanding benefits to those middle class recipients who could get by without them or even pay for them, but don't choose to do either.

For now, however, we'll defer that "creep" discussion until a later post when we review They're Part of the Civic Compact, written in response to the article quoted extensively hereinbelow.

So let's turn our attention to the past half century of entitlements spending growth in America and see what we're done to ourselves as a society.

 American Character Is At Stake says this about the history of entitlements growth in America:

"The American republic has endured for well over two centuries, but over the past 50 years, the apparatus of American governance has undergone a radical transformation. . . .

The growth of entitlement payments over the past half-century has been breathtaking. In 1960, U.S. government transfers to individuals totaled about $24 billion in current dollars, according to the Bureau of Economic Analysis. By 2010 that total was almost 100 times as large. Even after adjusting for inflation and population growth, entitlement transfers to individuals have grown 727% over the past half-century, rising at an average rate of about 4% a year.

In 2010 alone, government at all levels oversaw a transfer of over $2.2 trillion in money, goods and services. The burden of these entitlements came to slightly more than $7,200 for every person in America. Scaled against a notional family of four, the average entitlements burden for that year alone approached $29,000.

A half-century of unfettered expansion of entitlement outlays has completely inverted the priorities, structure and functions of federal administration as these were understood by all previous generations. Until 1960 the accepted task of the federal government, in keeping with its constitutional charge, was governing. The overwhelming share of federal expenditures was allocated to some limited public services and infrastructure investments and to defending the republic against enemies foreign and domestic.

In 1960, entitlement payments accounted for well under a third of the federal government's total outlays—about the same fraction as in 1940, when the Great Depression was still shaping American life. But over subsequent decades, entitlements as a percentage of total federal spending soared. By 2010 they accounted for just about two-thirds of all federal spending, with all other responsibilities of the federal government making up barely one-third. In a very real sense, entitlements have turned American governance upside-down. . . .

For their part, entitlements for older Americans—Medicare, Social Security and other pension payments—worked out to . . . about $1.2 trillion. In real terms, these transfers multiplied by a factor of about 12 over that period—or an average growth of more than 5% a year.

But in purely arithmetic terms, the most astonishing growth of entitlements has been for health-care guarantees based on claims of age (Medicare) or income (Medicaid). Until the mid-1960s, no such entitlements existed; by 2010, these two programs were absorbing more than $900 billion annually.

In current political discourse, it is common to think of the Democrats as the party of entitlements, but long-term trends seem to tell a somewhat different tale. . . .

Irrespective of the reputations and the rhetoric of the Democratic and Republican parties today, the empirical correspondence between Republican presidencies and turbocharged entitlement expenditures should underscore the unsettling truth that both political parties have, on the whole, been working together in an often unspoken consensus to fuel the explosion of entitlement spending.

From the founding of our nation until quite recently, the U.S. and its citizens were regarded, at home and abroad, as exceptional in a number of deep and important respects. One of these was their fierce and principled independence, which informed not only the design of the political experiment that is the U.S. Constitution but also their approach to everyday affairs. . . .

The corollaries of this American ethos were, on the one hand, an affinity for personal enterprise and industry and, on the other, a horror of dependency and contempt for anything that smacked of a mendicant mentality. Although many Americans in earlier times were poor, even people in fairly desperate circumstances were known to refuse help or handouts as an affront to their dignity and independence. . . .

Overcoming America's historic cultural resistance to government entitlements has been a long and formidable endeavor. But as we know today, this resistance did not ultimately prove an insurmountable obstacle to establishing mass public entitlements and normalizing the entitlement lifestyle. The U.S. is now on the verge of a symbolic threshold: the point at which more than half of all American households receive and accept transfer benefits from the government. From cradle to grave, a treasure chest of government-supplied benefits is there for the taking for every American citizen—and exercising one's legal rights to these many blandishments is now part of the American way of life.

As Americans opt to reward themselves ever more lavishly with entitlement benefits, the question of how to pay for these government transfers inescapably comes to the fore. Citizens have become ever more broad-minded about the propriety of tapping new sources of finance for supporting their appetite for more entitlements. The taker mentality has thus ineluctably gravitated toward taking from a pool of citizens who can offer no resistance to such schemes: the unborn descendants of today's entitlement-seeking population.

Among policy makers in Washington today, it is very close to received wisdom that America's national hunger for entitlement benefits has placed the country on a financially untenable trajectory, with the federal budget generating ultimately unbearable expenditures and levels of public debt. The bipartisan 2010 Bowles/Simpson Commission put this view plainly: "Our nation is on an unsustainable fiscal path."

The prospect of careening along an unsustainable economic road is deeply disturbing. But another possibility is even more frightening—namely, that the present course may in fact be sustainable for far longer than most people today might imagine.

The U.S. is a very wealthy society. If it so chooses, it has vast resources to squander. And internationally, the dollar is still the world's reserve currency; there remains great scope for financial abuse of that privilege.

Such devices might well postpone the day of fiscal judgment: not so the day of reckoning for American character, which may be sacrificed long before the credibility of the U.S. economy. Some would argue that it is an asset already wasting away before our very eyes."

Summing Up

What kind of people are we?

What will become of our society?

Will we pass on to future generations our antistatist tradition of limited government and individual self reliance or our collective debts?

The answer is unclear, but I'm betting on We the People to do the right thing when all the facts are on the table and given their due consideration.

Living within our means, acting responsibly and self reliantly as well, while extending a helping hand to take of others in need by offering a hand up -- and not a hand out -- has always been the American way, and it will continue to be.

First, however, we have to clean up our financial government knows best dependency act. So we will.

Thanks. Bob.