John F Cogan

The High Cost of Good Intentions

A History of U.S. Federal Entitlement Programs

• Gebundenes Buch

Produktbeschreibung

John F. Cogan is the Leonard and Shirley Ely Senior Fellow at the Hoover Institution and a faculty member in Stanford University's Public Policy Program.

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Produktdetails

• Verlag: Stanford University Press
• Seitenzahl: 512
• Erscheinungstermin: 26. September 2017
• Englisch
• Abmessung: 231mm x 163mm x 36mm
• Gewicht: 839g
• ISBN-13: 9781503603547
• ISBN-10: 1503603547
• Artikelnr.: 47772183

Autorenporträt

John F. Cogan is the Leonard and Shirley Ely Senior Fellow at the Hoover Institution and a faculty member in Stanford University's Public Policy Program.

Inhaltsangabe

Contents and Abstracts
1Introduction
chapter abstract
The book addresses the question of how and why federal entitlement programs
have grown so large and have become so far removed from the ideals on which
they were founded. It presents a history of major federal entitlement
programs from the beginning of the Republic to the present, showing how
they evolved and explaining the forces that caused their evolution. The
programs covered include Social Security, Medicare, Medicaid, food stamps,
other welfare programs, and nineteenth- and early twentieth-century
veterans' disability pensions. These programs have sprung from the noble
intention of providing assistance to people who are destitute through no
fault of their own. As well-meaning and beneficial as many entitlements may
be, they have come at a high cost, measured by lower national savings,
higher public debt, and slower economic growth. Today, entitlements present
the United States with a fiscal challenge unlike any other in the nation's
history.
2Creating Legislative Precedents: Revolutionary War Pensions
chapter abstract
Revolutionary War pensions were the nation's first entitlement program. The
program's evolution provides an early glimpse of Congress's tendency to
liberalize entitlements and the forces that drive Congress. The original
federal program limited annual pensions to Continental Army soldiers and
seamen who became impoverished as a result of disabling wartime injuries or
illness. Congress enlarged and expanded these benefits until, in the 1830s,
they covered virtually all Revolutionary War seamen and soldiers, including
volunteers and members of the state militia, and their widows, regardless
of disability or income. Each liberalization was justified on the grounds
that it was providing pensions to veterans who were no less worthy of
assistance than veterans who were already receiving pensions. Each
established a new base of benefits from which Congress considered
subsequent liberalizations. Each was a result of political pressures
generated by large federal budget surpluses.
3An Experiment with Government Trust Funds: Navy Pensions
chapter abstract
The navy pension fund program was the federal government's first trust
fund. It was financed by a single, dedicated source of revenue: prize money
from the sale of captured enemy and pirate ships and their contents,
commonly called "booty." The navy pension's early history provides a second
example of Congress's tendency to liberalize entitlement program
eligibility whenever surplus funds are available. However, in the case of
navy pensions, it was surpluses of prize money in the trust fund rather
than overall federal budget surpluses, that mattered. The trust fund's
insolvency in 1840, the direct result of an ill-considered benefit
expansion, serves as an early warning for Social Security and Medicare
trust funds.
4The First Great Entitlement: Civil War Pensions
chapter abstract
The Civil War pension program followed the same evolutionary path as
earlier veterans' pensions, except on a far grander scale. The program
evolved into a general disability and retirement program for virtually all
Union soldiers. At the program's peak in 1896, pensions were provided to
nearly 1 million Union soldiers and their survivors, and annual pension
expenditures reached an extraordinary 40 percent of federal budget
expenditures. The program's liberalizations were fueled by large federal
budget surpluses. In the late nineteenth century, the Republican Party used
generous Civil War pension benefits to gain electoral advantage. The
pensions played an important role in the realignment of the American
electorate behind the party in the 1890s. The pension program also spawned
America's first national, single-issue lobby: the Grand Army of the
Republic. The GAR exerted a powerful influence on pension legislation and
served as a forerunner to large twentieth-century lobbying organizations.
5Repeating Past Mistakes: World War I Veterans' Benefits
chapter abstract
Congress enacted World War I disability pension programs with the objective
of preventing a repeat of the Civil War pension program's excesses. The
novel programs were designed to alleviate future political pressures to
liberalize disability pensions as veterans aged. These programs proved to
be no match for claims for benefits by ineligible veterans and the
availability of large budget surpluses. Congress not only extended World
War I veterans' pensions as it had previous wartime pensions; it did so at
a much faster pace. Promises of benefits, called "bonus" payments, by a
1924 law spawned mass marches by veterans in cities throughout the country
demanding their promised entitlement benefit. The most memorable of these
was the 1932 Bonus Expeditionary Force march on Washington, D.C., which
ended when troops under General Douglas McArthur's command drove the
veterans from the city.
6Retrenchment: Roosevelt and the Veterans
chapter abstract
The first year of the Roosevelt administration witnessed the largest
reduction in an entitlement program in U.S. history. Franklin Roosevelt
terminated pensions for 450,000 veterans and reduced the amount of monthly
pensions for thousands of veterans who remained on the rolls. The story of
how he achieved this result provides lessons for future presidents. The
president made a strong moral and economic case for terminating veterans
and used the budget crisis created by the Great Depression to prod Congress
to give him the authority to cut pensions. Throughout the remainder of the
president's first two terms, President Roosevelt used his veto power and
other powers of the office of the president to sustain the vast majority of
these reductions.
7The Birth of the Modern Entitlement State
chapter abstract
The New Deal marks the beginning of the modern entitlement system. Until
the New Deal, federal entitlements were restricted to people who had
performed a specific government service, mainly veterans. The New Deal
expanded federal entitlements to people in the population at large, state
governments, and private businesses. The landmark Social Security program
provided retirement benefits to industrial workers. New federal welfare
programs entitled state governments to matching payments for their welfare
programs. Unfortunately, important lessons from the government's experience
with wartime veterans' pensions went unheeded. The New Deal entitlements
also ushered in a new era for the federal courts. The Supreme Court allowed
the New Deal entitlements to pass constitutional muster under the "general
welfare" clause. Once federal entitlement rights had been granted, the
courts adjudicated the nature and extent of these legal rights, eventually
creating welfare entitlement rights where none had been legislated.
8The Consequences of Social Security Surpluses
chapter abstract
Congress again demonstrated its inability to withstand pressures to
increase entitlement benefits when surplus funds are available. The 1935
Social Security Act called for the program to build up a large reserve fund
during the program's early years that could be drawn on in later years to
finance benefits in lieu of higher payroll taxes. The "large reserve"
debate led congressional liberals and conservatives to join together in
1939 to use the surplus to raise benefit levels, add survivors' benefits,
and delay a previously scheduled payroll tax increase from taking place.
9A New Kind of Entitlement: The GI Bill
chapter abstract
The Servicemen's Readjustment Act of 1944, popularly known as the GI Bill,
introduced a new type of entitlement program: one that provided in-kind
benefits rather than unrestricted cash assistance. The law provided World
War II veterans with educational assistance and home, farm, and business
loan guarantees. The new type of entitlement bestowed a legal right to
reimbursement on persons and institutions that provide the benefits
prescribed by the law, in addition to those who receive their services. The
GI Bill was the forerunner of the numerous in-kind benefit entitlements
enacted in the 1960s and 1970s to provide health care, nutrition, and
social services for the elderly, the poor, and the disabled.
10Setting the Postwar Entitlement Agenda: 1946-1950
chapter abstract
At the war's end, the American entitlement state stood at a crucial policy
juncture. The New Deal had set the building blocks of the modern American
entitlement state firmly in place, but its future remained highly
uncertain. President Truman set the course that entitlements would follow
for the remainder of the twentieth century. Large Social Security
accounting surpluses provided President Truman and congressional Democrats
with the means to ensure that Social Security, instead of state old-age
programs, became the primary vehicle for delivering assistance to the
elderly. In 1950, Congress took a major step toward this end by sharply
increasing Social Security benefits and significantly expanding coverage in
the workforce. The benefit increase, timed to coincide with the 1950
congressional elections, demonstrated that Democrats had developed the
practice of using a major entitlement program to gain electoral advantage
into a finely honed skill. Republicans, after showing modest resistance,
acquiesced.
111951-1964: Establishing Social Insurance Dominance
chapter abstract
From 1950 to the Great Society, congressional Republicans and Democrats
joined together to ensure that Social Security replaced state-run old-age
assistance as the first line of defense against poverty among the elderly.
Monthly benefits were incrementally expanded, and coverage became nearly
universal. Large Social Security accounting surpluses fueled the increases
in the early 1950s despite the overall federal budget's often poor
condition. Congress's use of Social Security to gain electoral advantage
was raised to a fine art, as election-year benefit increases were
strategically timed. The only new major new entitlement of the 1950s was
the Social Security Disability Insurance program. Soon after it was
established, the program followed the familiar path that had been blazed by
nineteenth-century veterans' pensions, as eligibility was extended to
"equally worthy" groups that had been excluded from the original program.
12The Great Turn in Welfare Policy: 1951-1964
chapter abstract
While legislation during the years 1951 to 1964 incrementally expanded
federal funding for state welfare programs, major fissures emerged in the
New Deal's bedrock welfare policy principles of state autonomy and cash
assistance. Federal welfare officials used the threat of withholding
federal funds as a lever to limit state authority to set welfare
eligibility rules. The threats were a response to state and local
government actions, particularly those taken by southern state governments
with a history of discriminatory treatment of African Americans, to curtail
welfare eligibility. As tensions between the two levels of government
mounted, Congress stepped in with legislation to strengthen federal
authority. By the mid-1960s, the principle of state autonomy had been
greatly eroded. At the same time, welfare officials began to question the
wisdom of providing additional cash assistance to the poor and turned
increasingly to providing in-kind benefits in lieu of additional cash
assistance.
13The First Great Society
chapter abstract
The Great Society program in 1965 marks the beginning of a remarkable
ten-year period in which Congress expanded entitlements at a rapid rate
unprecedented in U.S. history. Under President Johnson, new health care
entitlement programs, Medicare and Medicaid, were created; Social Security
disability was expanded to temporarily disabled workers; two large general
increases in Social Security benefits were enacted; and the Aid for
Dependent Children program experienced its largest expansion in its
thirty-year history. Federal revenues from a rapidly expanding economy
provided the fuel for this legislative blitzkrieg. The revenue surge, as
with previous surges, made the desire to expand entitlement benefits
irresistible. The period, one of great social upheaval, witnessed a new
entitlement phenomenon: welfare mothers, urged on by government-funded
activists, organized and marched on federal, state, and local governments
to demand higher welfare benefits and fewer restrictions on eligibility.
14A Legal Right to Welfare
chapter abstract
This legal view that welfare benefits were a gratuity and not an
entitlement underwent a significant change in the mid-1960s and early
1970s. Three major Supreme Court decisions from 1969 to 1971 radically
expanded the legal rights of welfare recipients and claimants. The Court
(1) declared that long-standing state "suitable home" regulations violated
federal law, (2) struck down state residence requirements for welfare as a
violation of an individual's constitutional right to travel, and (3) ruled
that welfare benefits were akin to property and were therefore protected by
the Constitution's due process requirements. This last case established a
legal entitlement right to welfare benefits.
15The Second Great Society
chapter abstract
During Richard Nixon's presidency, the food stamp program was nationalized,
a permanent federal unemployment program was created, a new revenue-sharing
program that entitled states and local governments to a share of federal
revenue was established, and child nutrition programs were converted into
an entitlement to school districts. Presidential proposals for a federally
guaranteed annual income and national health insurance program failed.
Fueled by pressure from large accounting surpluses in the Social Security
trust fund, Congress raised Social Security benefits by 69 percent in four
years and indexed Social Security benefits to inflation. But the flawed
indexing formula set the program on a path to insolvency. The entitlement
liberalizations from 1969 to 1975 caused federal entitlement spending to
grow annually at a remarkable 10 percent inflation-adjusted rate. By 1975,
entitlements accounted for nearly half of all federal spending.
16First Inklings of Fiscal Limits: 1975-1980
chapter abstract
The years of Jimmy Carter's presidency, plagued by large federal budget
deficits from the prior dozen years of entitlement liberalizations,
witnessed a dramatically slower pace of entitlement expansions. No new
entitlements were written onto the federal statute books. Expansions were
mainly limited to the food stamp program in which stamps were made free of
charge. The major legislative action concerned Social Security. By 1977,
the flawed indexing formula that had been written into the statute books in
1972 had pushed Social Security toward imminent insolvency. Congress
responded by enacting a new wage replacement formula that, for the first
and only time in the program's history, significantly reduced benefits that
had been promised to workers. The reductions were not limited to people who
would retire decades later. They were also reduced for workers who were in
their late 50s at the time the law was enacted.
17A Temporary Slowdown: 1981-1989
chapter abstract
President Reagan was the first president in U.S. history to attempt to
comprehensively reduce entitlement spending. His efforts were part of a
larger package of economic policies designed to restore noninflationary
growth to the U.S. economy. The package produced a colossal battle with
Congress. The first two years of furious combat dominated the business of
Congress. Congress subjected almost every major entitlement program to at
least some retrenchment. Fiercely contested budget battles continued for
the next six years as Congress sought to return to its long-standing
practice of incrementally expanding entitlements. The administration's
implacable opposition and large budget deficits severely limited
entitlement liberalizations. The entitlement restraint from 1981 to 1989
reversed a thirty-year upward trend. Yet despite the Reagan
administration's achievements, the entitlement state in 1989 remained
largely intact. Its largest programs had defied retrenchment.
18Recognition and Denial: 1989-2014
chapter abstract
By the early 1990s, federal officials recognized the true magnitude of the
looming fiscal storm that entitlements had created. Yet the executive and
legislative branches of government ignored the warnings. Both branches of
government worked in concert to expand eligibility for Medicaid, the earned
income tax credit, and food stamps and to expand Medicare to prescription
drugs. These liberalizations mainly extended aid to "worthy" nonpoor
persons. Congress and President Obama capped off the period by extending
health insurance subsidies to people with incomes up to 400 percent of the
poverty line. Attempts to restrain federal spending proved fruitless. In
one striking departure from these legislative patterns, Congress enacted
reversed decades of federal welfare policy by eliminating an individual's
entitlement to AFDC benefits and transferring program policymaking
authority to the states.
19A Challenge Unlike Any Other in U.S. History
chapter abstract
Federal entitlements now distribute government aid on a scale that is
unprecedented in history. Over half of all U.S. households receive
entitlement assistance. Most entitlement spending serves purposes other
than reducing the degree of poverty among the poor. The soaring growth in
entitlement spending creates a unique fiscal challenge. History provides a
guide to meeting the challenge, but a fundamental restructuring is needed.
A restructuring must keep in mind that providing assistance to individuals
who are impoverished through no fault of their own is a hallmark of a
compassionate society. The book optimistically concludes by noting that the
main elements for a change in entitlement policy are coming into place.
There is widespread public skepticism that entitlements are delivering on
their promises and that the country can afford to deliver on future
promises. But mounting public pressure will ultimately force a change in
government policies.