Entitlement Spending Increases
Peggy Noonan is shocked that President Bush is not fiscally responsible. As she still worships St. Ronald Reagan, Ms. Noonan is not about the blame the tax cuts:
This week’s column is a question, a brief one addressed with honest curiosity to Republicans. It is: When George W. Bush first came on the scene in 2000, did you understand him to be a liberal in terms of spending? The question has been on my mind since the summer of 2005 when, at a gathering of conservatives, the question of Mr. Bush and big spending was raised.
OK, we have been over this before so let’s turn to a USA Today article written by Dennis Cauchon on March 14 entitled Federal Aid Programs Expand at Record Rate, which Ms. Noonan quotes:
A USA Today analysis of 25 major government programs found that enrollment increased an average of 17% in the programs from 2000 to 2005. The nation’s population grew 5% during that time. It was the largest five year expansion of the federal safety net since the Great Society created programs such as Medicare and Medicaid in the 1960’s. Spending on these social programs was $1.3 trillion in 2005, up an inflation-adjusted 22% since 2000 and accounting for more than half of federal spending.
Ms. Noonan then notes:
The paper quoted a liberal think tanker saying the increase in the number of people on programs is due to a rise in the poverty rate. It quoted a conservative congressman countering that entitlement programs should not be growing when unemployment is near record lows. Arguments about the report and its numbers will ensue.
The Congressman is Gil Gutknecht from Minnesota.
Table 3.16 from the Bureau of Economic Analysis details government expenditures by functions and has annual data through 2004 (table’s figures are in billions of $). Over the four-year period, nominal expenditures have increased by 33.5%. Retirement benefits and health care benefits are by far the largest items. Expenditures on retirement benefits have increased only modestly considering the general increase in prices and the aging of the population. Expenditures on health care have increased dramatically in part because this Administration has done a poor job in terms of creating a more efficient health care system.
But let’s return to Congressman Gutknecht’s confusion as to the state of the labor market. Notice that unemployment benefits are a small part of entitlements. Also notice that unemployment benefits rose by 71% as the labor market was weaker in 2004 than it was in 2000. Transfer payments related to poverty are a more significant portion of the Federal budget than unemployment benefits. I trust Congressman Gutknecht understands that poverty has increased since 2000.
As far as Ms. Noonan’s awakening – see Brad DeLong.