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. In some basic respects—its scale, its preoccupations, even many of its purposes—the U.S. government today would be scarcely recognizable to Franklin D. Roosevelt, much less to Abraham Lincoln or Thomas Jefferson.
Since 1960, entitlement programs have come to dominate the federal budget. Worse, says Nicholas Eberstadt in a conversation with WSJ’s Gary Rosen, they have undermined our national character.
What is monumentally new about the American state today is the vast empire of entitlement payments that it protects, manages and finances. Within living memory, the federal government has become an entitlements machine. As a day-to-day operation, it devotes more attention and resources to the public transfer of money, goods and services to individual citizens than to any other objective, spending more than for all other ends combined.
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.
Our national character ‘may be sacrificed long before the credibility of the U.S. economy,’ says Nicholas Eberstadt
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.
Government data on public transfers can be used to divide entitlement spending into six baskets: income maintenance, Medicaid, Medicare, Social Security, unemployment insurance and all the others. Broadly speaking, the first two baskets concern entitlements based on poverty or income status; the second two, entitlements attendant on aging or old-age status; and the next, entitlements based on employment status. These entitlements account for about 90% of total government transfers to individuals, and the first four categories comprise about five-sixths of all such spending. These four bear closest consideration.
Poverty- or income-related entitlements—transfers of money, goods or services, including health-care services—accounted for over $650 billion in government outlays in 2010. Between 1960 and 2010, inflation-adjusted transfers for these objectives increased by over 30-fold, or by over 7% a year. Significantly, however, income and benefit transfers associated with traditional safety-net programs comprised only about a third of entitlements granted on income status, with two-thirds of those allocations absorbed by the health-care guarantees offered through the Medicaid program.
For their part, entitlements for older Americans—Medicare, Social Security and other pension payments—worked out to even more by 2010, 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. From a purely statistical standpoint, the growth of entitlement spending over the past half-century has been distinctly greater under Republican administrations than Democratic ones. Between 1960 and 2010, the growth of entitlement spending was exponential, but in any given year, it was on the whole roughly 8% higher if the president happened to be a Republican rather than a Democrat.
This is in keeping with the basic facts of the time: Notwithstanding the criticisms of “big government” that emanated from their Oval Offices from time to time, the administrations of Richard Nixon, Gerald Ford and George W. Bush presided over especially lavish expansions of the American entitlement state. 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 proud self-reliance that struck Alexis de Tocqueville in his visit to the U.S. in the early 1830s extended to personal finances. The American “individualism” about which he wrote did not exclude social cooperation—the young nation was a hotbed of civic associations and voluntary organizations. But in an environment bursting with opportunity, American men and women viewed themselves as accountable for their own situation through their own achievements—a novel outlook at that time, markedly different from the prevailing attitudes of the Old World (or at least the Continent).
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. People who subsisted on public resources were known as “paupers,” and provision for them was a local undertaking. Neither beneficiaries nor recipients held the condition of pauperism in high regard.
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.
A version of this article appeared September 1, 2012, on page C1 in the U.S. edition of The Wall Street Journal, with the headline: American Character Is at Stake.
4 Replies to “American Character Is at Stake by Nicholas Eberstadt”
One might conclude that this is all a sign of a mature country, literally and figuratively.
US Population: 1960 = approx. 180 million; 2010 = approx. 308 million
US Population age 65 and older: 1960 = approx. 17 million; 2010 = approx 40 million
Average life expectancy: 1960 = approx. 69 years; 2010 = approx. 79 years
Americans value personal independence. Seniors want to care for themselves after retirement and/or they don’t want to be a burden to their families. For many, the only way to do this is through the three largest entitlements noted – Social Security, Medicare, and Medicaid. These seniors worked and fought hard to make America what it was in the 90’s and 00’s before they retired. They paid their share into the government kitty. Is it wrong that they now expect to get something back for it? This entitlement mindset and behavior is a result of the promises they paid into. Policy has shifted over time to increase these entitlements. Could that shift be correlated to the growth in the number of retirees and the fact they are living longer? There is no doubt that the voting power and political influence of this block has significantly increased over the past 40 years.
The Population Reference Bureau estimates that by 2050 there will be over 89 million people in the US age 60 or older. Right now if you reach age 60 you can count on living another 19 years, on average. That figure 20 years from now will be determined by how the country sorts out the entitlements issue. Will average quality of life continue to rise and consequently the average expected lifespan, or will both decrease? How much of this is a pure economic fix and how much requires culture change? Are you financially prepared for your retirement? And what will happen to you when you are no longer able to work? Difficult questions that need to be tackled together by everyone and not just left to the politicians.
Roger: your thoughts hold true for a segment of the entitlement population but not all. True, this was paid into, but leadership has failed to make the hard calls in adjusting the system. When SS was set up, the average life span was 63… SS paid out at 65. Average lifespan is now…what? Something like 83? Have we adjusted? As a nation, we saw this coming a long time ago…no one wanted to make the call…now we are forced to deal with it, but how?
Strong points my friend, but I don’t see how we are going to keep up without some less than popular decisions, who out there is going to make those? One way or another…we need to pay for it, if we decide this is the direction we want to continue on…no? I could be totally wrong…it happens often.
Bill, I am with you. Things must change, and some unpopular decisions and actions must be taken.
It’s interesting that when comparing the lifespans of the EU & NA countries shown in the link you provided, the US has the lowest. Apparently, as shown by the financial problems of the EU, creating a better life for everyone has a limit as well. Would be good if that point of diminishing returns could be found quickly so governments could sort this out.