by Henry Oliner

I have begun reading The High Cost of Good Intentions-  A History of U.S. Federal Entitlement Programs by John F. Cogan.  It is an impressive look at the problem.

Entitlements go back to the Revolutionary War. Limited pensions were made available to injured veteran, and then expanded to other illnesses. The problem became much worse with the Civil War Pensions which were expanded repeatedly. Reparations for injury became an entitlement for veterans and their widows. On the eve of WW I veterans’ pensions from the Civil War comprised 20% of Federal spending.

Surprisingly it was FDR who was the first to roll back what became the veterans pension entitlement. He eliminated all previous pension programs and replaced it with one that greatly scaled back qualification.  He was able to cut pension expense from WWI by 33%.

In his early years FDR was motivated by fiscal responsibility. John Maynard Keynes introduced the political wet dream of deficit spending and removed that constraint.

Pensions and our current entitlements followed a similar path.  A case is made to help a limited constituency. In the name of fairness, the eligibility is continuously expanded to another peripheral group who is also deserving.  Advocacy groups like American Legion and AARP become a lobbying business.  In good economic times benefits are expanded. In bad economic times they are never retrenched.  Help becomes entitlement.  Beneficiaries become politically influential and the politicians buy their votes with benefit expansion. Cost estimates are grossly underestimated.  Corruption and fraud becomes difficult to control.

The political difficulty of reducing the entitlements is so strong and requires such a drastic shift that only something like a balanced budget or a leader like FDR or Reagan  has a chance and that is only if the circumstances are so dire as to reduce resistance.

The first step it to totally reject the pandering and demagoguing that is brought into play whenever these entitlements are addressed.