From: sug6@usite-next.uchicago.edu (Patrick Sugent)
Subject: Re: Entitlements and the deficit? (Was: Setting some of Bush/Quayle's lies straight...)
Organization: University of Chicago
Distribution: na
Date: Tue, 1 Sep 1992 12:20:27 GMT

In article <1992Sep1.114100.19959@midway.uchicago.edu> sug6@usite-next.uchicago.edu (Patrick Sugent) writes:
>In article <1992Aug31.161314.3045@uunet!tellab5!odgate> mike@uunet!tellab5!odgate (Mike J. Kelly) writes:
>>sug6@usite-next.uchicago.edu (Patrick Sugent) writes:
>>
>>>  My main point is that Entitlements are the problem with the budget
>>>and the sorry fact is that any politician that tries to address this
>>>issue gets clobbered at election time.  Until the American public
>>>becomes aware that the budget will never be balanced until we get
>>>this under control and realizes the long-term harm we are doing to our economy
>>>by maintaining programs with incredible growth that tax those who are 
>>>(on average) less wealthy to give to those who are (on average) more wealthy,
>>>we are doomed to run large deficits.  Currently, less than 30%
>>>of our budget is "discretionary".
>>
>>Treating more of social security benefits as regular income, or at least as
>>pension income, for tax purposes probably makes sense.  However, it is
>>estimated by yesterday's New York Times that doing so would raise about
>>$24 billion in 1992; not small change, but hardly the cure for the budget
>>deficit.  Depending on how you define wealthy, about 63% of social security
>>recipients have household incomes of under $30,000.  About 85% have incomes
>>under $50,000.  And until social security and medicare/medicaid, the elderly
>>were disproportionately poor.  It is odd that some seem to want to return to
>>those days.
>
>  These programs certainly made sense back in those days.  However, these
>days the problems of poverty (before SS/Medicare/Medicaid) are with
>the young, not with the elderly.  Certainly, very few are suggesting
>that these programs be cut entirely.  However, they should be means
>tested.  Does it somehow make sense to enhance the poverty of the
>young to give to the elderly just because they are elderly?  This is
>what we have now.  The average income of those paying in to these
>programs is less than that of those receiving monies.  

  I just wanted to add some comments from _The Economist_ in this regard.

  "Poverty could be alleviated more cheaply through public transfers if
benefits were more selective.  But selective programmes risk
losing broad public support.  As it is, programmes aimed solely at
the poor are the system's most rigorous.  Almost all, Medicaid, food
stamps, and family support- are means-tested.  Yet means-tested
programmes account for just $140 billion a year, one-fifth of all
entitlement spending.  That is roughly equivalent to the
cost of Medicare alone, which is only marginally means-tested."

  "The biggest programmes are big precisely because much of their benefit
goes to the well-off, even if proportionately less of the cost is paid
by them.  Entitlements have clearly benefited the old.  Three-quarters
of those in retirement have consumption levels at least as great as
during their working years.  Up to one-third have levels that are 
130% higher, according to Mr. Haveman."

  "At what cost to the young have these benefits to the old been won?
Children under 18 are 50% more likely to live in poverty than the
rest of the nation.  They are only a tenth as likely as an old
person to receive the fruits of government money.  Spending on the old
rose, in current dollars, from $3,860 per person in 1965 to
$11,350 per person in 1990.  The outlay per child in 1990 was
$1,020.  Judged as investments, these priorities look odd."


Pat


-- 
Patrick Sugent				"Cry 'Havoc!' and let slip   
sug6@usite-next.uchicago.edu		 the Hogs of Peace."
(708) 447-1771				 --P.J. O'Rourke
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