Quotation of the Day…

(Don Boudreaux)

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… is from pages 376-377 of John Cogan’s superb 2017 book, The High Cost of Good Intentions:

The emergence of federal budget surpluses from time to time has only served to magnify existing pressures to liberalize entitlements. The heightened pressures have been sufficiently powerful to invariably overcome reasoned concerns about the long-term fiscal consequences of liberalizations. All of the major nineteenth-century veterans’ pension liberalizations occurred during economic good times when the U.S. Treasury was temporarily flush with revenue…. Since then all of the major expansions in Social Security have occurred during times when the Social Security trust fund has been flush with large accounting surpluses and without regard for whether the federal budget overall was in surplus or deficit. The last of these expansions in 1972 put the trust fund on its own long road toward bankruptcy.

A second pattern of modern expansions emerged from the New Deal and Great Society after entitlements were created for the unemployed and the poor. During recessionary periods when general economic hardship has spread among the population, pressure has mounted on Congress to expand entitlement programs to meet the rising economic need. Congress has invariably responded with program liberalization. As a result, entitlements are expanded during recessions that bring hard times to the general population, as well as during economic good times when federal revenues are plentiful.

DBx: In short, political pressures compel Congress to expand so-called “entitlements” during both economic good times and bad. “We’ve currently got lots of tax revenues!” makes the case for buying votes with other-peoples’ money in the first case, while “We’ve currently got lots of people in need!” makes the case for buying votes with other-people’s money in the second case.

This political reality can be imagined away. It can be wished away. This political reality cannot, though, actually be made to go away. And so this reality reveals that calls for allowing American workers to purchase family leave by borrowing from their fictional Social Security accounts are both politically naive and historically uninformed. Such calls are also, therefore, fiscally imprudent (in addition to addressing a ‘problem’ that is wholly imaginary).