Take the Money and Run: Entitlement Politics
As New York City’s mayoral campaign kicked into overdrive earlier this spring, the New York Times saw fit to question the viability of Republican candidate Joe Lhota, former chairman of the Metropolitan Transit Authority. With all the populist fervor it could muster, the Times asked readers, “Can New Yorkers learn to love someone who increased subway fares?”
The field of bidders this election cycle presents slim pickings for responsible, taxpaying Gotham residents. The ballot so far includes former New York City comptroller William C. Thompson, Jr., who, in the Times’ phrasing, resembles “A Dinkins for the 21st Century,” and Thompson’s successor from Queens, John Liu, whose campaign has been under investigation for corruption since he announced his intention to run. Assorted racial demagogues and Twitterholic Anthony Weiner threaten to enter. And what would New York’s mayoral race be without yet another self-made billionaire? This time supermarket magnate John Catsimitidis has mistaken his personal wealth for a public mandate for despotic nanny-state meddling the way his predecessor, Michael Bloomberg, has done for the last 12 years. The Democratic front runner, New York City Council speaker Christine Quinn, wears her lesbianism on her pantsuit sleeve while bragging that each of her brothers was named after a Kennedy.
How can a candidate who asks Gotham’s subway riders to pony up for the cost of the government services they consume expect to defeat these clowns?
Lhota’s dilemma resonates throughout all of America. Citizens have concluded that they are entitled to more than cheap subways: They deserve a certain standard of living. And if the nation’s finances don’t support what they consider their fair take, then our leaders will just have to fund it with debt and stick our grandchildren with the bill. Even though the last recession officially ended in 2009 (according to government statistics), the Supplemental Nutrition Assistance Program (SNAP), a.k.a. food stamps, has seen a 70-percent increase in enrollees since 2007. Dollar payments have more than doubled over that same period, rising from $30.4 billion to $75 billion. Whereas SNAP’s budget used to rise and fall with the overall economy, today it has morphed into yet another permanent part of the United States’ bankrupt entitlement edifice.
President Clinton’s 1996 welfare overhaul helped set SNAP in stone. Clinton’s legislation widened the pool of recipients when it permitted states to loosen asset- and income-testing requirements in order to qualify. Not one to be outdone by his Democratic predecessor, President Obama sweetened the pot shortly after taking office. Obama expanded the program to permit the entry of those with relatively higher savings and incomes, a group previously known as the “self-sufficient,” deepening the pool of recipients. In 2006, 18.7 percent of households applying to SNAP met the government’s definition of need; as a result of the new Obama standards, 65.8 percent of applicants qualified in 2011. North Carolina, responding to the incentives to pass SNAP charges back to the feds, made those earning as much as 200 percent of the federal poverty level eligible for benefits. Thanks to the Obama administration’s munificence, the federal government spent as much on SNAP in 2012 as it did on the Department of Homeland Security, the Justice Department, and the Department of the Interior—combined.
Like many other social programs, SNAP started off with the best of intentions. Government officials hoped to prevent those who had lost their jobs or suffered a temporary financial setback from burning through their savings or going hungry. And only the most cold-hearted scrooge would deny food assistance to those truly in need. But how exactly do we define need today? Is a family of four living on an income of 200 percent of the federal poverty level (roughly $47,000) needy? How should such a family prioritize its spending? Food, rent, transportation, and clothing are all necessary. But what about cellphones with internet connections, cable television, and dining out, not to mention tattoos and new cars? Now, thanks to SNAP, families of four living at 200 percent of the poverty level will not have to make such difficult decisions.
Unfortunately, the long-term consequences of these policies have come into focus recently, as the national debt skyrocketed past $17 trillion. What incentive does the family in our example have to give up the SNAP payment once it factors the extra income into its lifestyle? Why should the nouveau needy bring their spending into line with their earned income when such behavior would mean reining in their consumption? Most importantly, SNAP recipients like these will now have reason to vote for candidates who will continue such giveaways. Today, at 47.8 million Americans strong, SNAP recipients outnumber the 35.7 million AARP members who hold Congress by the short hairs and single-handedly determine what entitlements shall be theirs.
Indeed, President Obama’s 2014 budget set Life Alerts beeping in elderly households across America. In an effort to break the budgetary logjam with congressional Republicans, Obama recently floated the idea of slowing the rate of increase in Social Security, Medicare, and Medicaid payments by linking them to a tamer variant of the Consumer Price Index. Obama further tempted fate when he proposed $800 billion in cuts to these same programs on top of the proposed inflation-calculation change. Senate Democrats voted down Obama’s bold measure, but finally, after countless false starts and broken promises from every Democratic and Republican president since LBJ, a sitting president has jumped on the third rail—and lived.
We should expect Obama’s public constituency to fight him harder than his congressional teammates have. In early April, New Yorker writer Hendrik Hertzberg identified the “duelling vocabularies” of Democratic and Republican partisans that affect the substance of today’s political debate. Hertzberg took offense at the Republicans’ use of the word entitlements, which he argued should be referred to “more accurately and less tendentiously” as social insurance. He traced the word entitle back to the Declaration of Independence’s first sentence before accusing President Reagan of avoiding the one-syllable-longer social insurance by substituting entitlements instead. Looking to allay his fellow Obama cultists, Hertzberg reassured readers that the President never—not even in passing—mentioned the word entitlements during his Second Inaugural Address. Hertzberg should take heart, if not a complete victory lap. No matter what you prefer to call them, entitlements show no signs of decreasing. And their voting bloc continues to grow, ensuring their long-term existence.
Suppose we were to grant Hertzberg his wish. Let’s abolish the word entitlements and, as he prefers, use social insurance in its place. At present, Social Security transfers money to its recipients, regardless of their income or net worth. Does a retiree living in Boca Raton with a $20 million investment portfolio need social insurance? Does a family of four living on $47,000 deserve social insurance to protect it from spending down its savings by enrolling in SNAP, while its neighbors tighten their belts and live more frugally? And should a destitute elderly citizen expect social insurance to foot the bill for his nursing-home residency, when his two adult children—say, a surgeon and a hedge-fund manager—could sacrifice their family vacations to support a parent in need?
This change in nomenclature might help us understand the essence of this issue: Social insurance is not insurance when it benefits those who are not in need. These unworthy recipients could make a better argument that they are entitled to direct government payments because they paid into Social Security and Medicare over the course of their working lives. However, no reasonable person would claim these beneficiaries deserve such payments otherwise, especially when one considers their adverse effects on the economy, the deficit, and, ultimately, our national debt.
Mark G. Brennan is a professor of business ethics at New York University.