Wednesday, February 14

Robert Samuelson on the budget


The table shows the rise of the American welfare state. In 1956, defense dominated the budget; the Cold War buildup was in full swing. The welfare state, which is what "payments to individuals'' signifies, was modest. Now everything is reversed. Despite the war in Iraq, defense spending is only a fifth of the budget; so-called entitlement payments to individuals are almost 60 percent -- and rising. In fiscal 2006, the federal government spent almost $2.7 trillion. Social Security ($544 billion), Medicare ($374 billion) and Medicaid ($181 billion) dominated. There was $199 billion more for payments to the poor, including the earned-income tax credit and food stamps, among others.

Almost no one wants to slash these programs. They have huge constituencies; they're popular. Paradoxically, their invulnerability and size also protect much of the rest of the budget. Look again at the table. After payments to individuals, defense spending and interest on the debt (which must be paid), only about a seventh of the budget remains. Many of these remaining programs are widely supported. Does anyone really want to end the National Institutes of Health at $28 billion? Or how about the $41 billion we spend to support federal courts, prosecutors and police (the FBI, DEA, border patrol)?

...

Annual budget debates are sterile -- long on rhetoric, short on action -- because each side blames the other for a situation that neither chooses to change. To cut spending significantly, conservatives would have to go after popular welfare programs, including Social Security and Medicare. To raise taxes significantly, liberals would have to go after the upper-middle class, a constituency they covet (two-thirds of all federal taxes come from the richest fifth). Deficits persist, because neither side risks its popularity, and indeed, both sides pursue popularity with new spending programs and tax breaks.

It might help if Americans called welfare programs -- current benefits for select populations, paid for by current taxes -- by their proper name, rather than by the soothing (and misleading) labels of "entitlements'' and "social insurance.'' That way, we might ask ourselves who deserves welfare and why.

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