High cost of the best intentions

I just finished reading John Cogan's book, the High Cost if Good Intentions. This is a comprehensive work examining the history of entitlement programs, starting with pensions for Revolutionary War veterans. The work is fascinating and illuminating and has relevance to our current political and economic environment. The basic tenants of the book are rather simple. Entitlement programs throughout history start out similarly, based upon real needs to specific segments of the population. In the early periods of the Republic, all of these programs were pensions for war veterans; Revolutionary War, War of 1812, and Mexican Wars. They started out as small programs to assist veterans who were injured during their respective service obligations. In each case, the pensions were modified and expanded over time, over decades after the actual service. Furthermore, those deemed worthy of pensions morphed and expanded over time, first to veterans who were not injured during service, then to widows, then to dependents.

After the Civil War, the pool of potential recipients expanded markedly. The pool of pension eligible individuals grew over time with widows and dependent children added. While the original purpose of Civil War pensions was to compensate veterans whose function was impaired as a consequence of service-related injuries, over time criteria were changed which allowed for larger and larger numbers of veterans to qualify for benefits. The Grand Old Army was an extremely effective lobbying force after the Civil War.  Remarkably, there is still one child of a civil war veteran who is collecting pension benefits now.

Early in the republic there were attempts to forward fund pensions for navy veterans. Sailors on active duty could purchase insurance to protect them. Those who opted to participate funded a trust fund to pay for future pensions. However, the trust fund was almost immediately raided by Congress. Furthermore, the Federal government ended up providing pension benefits to sailors who did not opt into paying insurance premiums.

A similar story characterized the Social Security entitlement program. Early trust fund surpluses enticed the Congress to expand pension benefits. Payment increases were almost invariably t imes to happen during election years, often with big bumps in payments hitting October payments right before elections. Buy votes in the present and defer actual payment to later tax payers.

It does not appear to be politically possible to put scale back entitlement benefits once they are deployed and historical experience shows a consistent pattern of expansion with increased payments leveraged to optimize vote capture. The implications for our current political and fiscal environment are stark. Between Social Security, Medicare, and Medicaid, entitlements are growing faster than the economy. Entitlements make up 14% of GDP, dwarfing Defense spending (~3%) and non-defense discretionary spending (~2%).  By 2032 debt service and entitlement spending are projected to consume the entire Federal Budget.

How did this reality come to pass. At each step of the way, the parties lobbying for pensions or other payments were not totally undeserving. Limits set at the onset of any given program always leave some parties just outside the scope of the benefit. It serves as a huge incentive to push for modest expansion. However, the expansion always works as a one way valve, always expanding and always leaving some parties just on the wrong side of some line drawn in the sand.

That which cannot go on for ever won't. Barring some extraordinary change in economic growth, the Federal Government will not be able to meet it's promises. Entitlements are growing at a rate that outstrips overall growth of the economy (538). Pushing tax rates may buy some time, but equally possibly may accelerate the time line to Federal bankruptcy.

The current dysfunction in Washington regardign budgets is directly related to uncontrolled entitlement spending. It is only going to get worse as actual discretionary $'s get scarcer and scarcer; and they will.

System issues v. personal blame

I listen to the banter out of Washington, bickering about "blame" for current events. What it brings to mind are recent discussions within healthcare about blame. Much is dysfunctional about health care but one thing we are moving past is the concept of blame. Historically, when bad outcomes happened the reflex was to look for someone to blame, but the safety and quality movement have begun to change our perspective. We ahve come to realize that while specific individuals may play roles in specific bad outcomes in healthcare, often system issues dwarf the responsibilities of specific people.

I will not argue that specific people are acting in ways which aggravate current dysfunctions in Washington, not the least of which is our current A...hole in chief. However, he is not alone in being immature (although he takes it to new lows). I would argue that he is a problem but he is not THE major problem. Budget dysfunction predated him. 

I was thinking about this issue for the past few days and low and behold Peter Suderman wrote a spot on piece in the NYT today regarding just this (Suderman NYT). We are now experiencing the consequence of poorly conceived legislative process (40 years old) coupled with shrinking discretionary dollars which has created an increasingly partisan environment driving a culture of brinkmanship.

Blame games will get us nowhere except for a spiral downward.  We need to grasp and embrace an understanding that  no single person or party can be blamed for our current state. Congress, past and present is to blame. The Presidents, past and present are to blame. The American people, past and present are to blame. We elected everyone in Washington and embraced expectations of Washington that are unattainable.

We can change who represents us but that will not get us much meaningful change unless we fix system issues which are the primary drivers of dysfunction. 

Federal budget gridlock

Here we go again. Budget gridlock. Federal Shutdown. Finger pointing. Who is to blame for the current state of affairs?

I believe a bit of historical context is needed. Between fiscal year 1977 and fiscal year 2015, Congress only passed all twelve regular appropriations bills on time in four years - fiscal years 1977, 1989, 1995, and 1997. Between 1976 and 2013, there were 18 times where funding was interrupted because of the inability to pass budgets or continuing resolutions. Government shutdowns occurred after 1980 as a consequence of rulings by then Attorney General Benjamin Civiletti subsequently requiring the Federal government to scale back services without actual appropriations (ref). The budgeting process is completely broken down. We may want to assign proximate blame for the most current shutdown but whatever argument is put forth, it is essentially meaningless in the larger sense.

The discretionary budget represents less than $0.30 on every dollar spent at the Federal level. Congress has essentially no control over more than 70% of Federal spending. While it may seem counter-intuitive, as the discretionary spending constricts, the incentives to play brinkmanship games appears to increase. With less money available to work out compromises, there are incentives to switch from win-win negotiations to winner takes all. And it is only going to get more pronounced as mandatory spending consumes more and more of the Federal Budget. By 2030, government shut downs will be meaningless since discretionary spending will be all be gone away. 

I am concerned that this shutdown may last a while precisely because no one seems to think it will and because Donald Trump is in a position to not back down. Furthermore, much of the government will continue to function (Vox). He does not really care if it blows up the Republican Party.  I will make a prediction. Like all predictions, it could be way off. I believe this will go on for weeks. The DACA issue and immigration were core stances for Trump. He will cater to his base. He has no reason to back down. 

The complex and evolving relationship

I read the Op-Ed piece in the NYT by Daphne Merkin titled "We say #MeToo. Privately we have misgivings" (NYT). It got me thinking. One characteristic of humans is we really have to work hard to understand historical context and time frames. We have existed in social groups for perhaps 100,000 years, and in larger complex groups for perhaps not more than 10,000 years, since the dawn of agriculture. Our current organizational structures have essentially just appeared over the course of not more than 500 years.

The relationships of men and women have undergone marked changes in recent decades and most of us within the US have little or no concept of how men and women related throughout the overwhelming majority of the course of human history. This relationship is nuanced and extraordinarily complex. Human societies have been grappling with this relationship since the dawn of human history. It cannot be boiled down to one idea or simple rules. However, the fate of humans depends upon how this relationship plays out. Men and women need to interact in a very personal, intimate, and vulnerable way or additional humans will not be made. Yes there are exceptions to this (in vitro fertilization and artificial insemination), but these are rare exceptions, not the rule and they have only been available for the equivalent of an historical blink of an eye.

The drives which motivate humans to mate are powerful and complex and have in some sense bedeviled societies for millennium. Rules were adopted with manage the risks. We look back upon many of these rules as being brutal, oppressive, and archaic, which they are given our present circumstances.  We need to remember that for most of human existence, our ancestors eked out their existence in a world of terrible violence driven by scarce resources. Mixed into this were sexual drives and competition for mates. Some rules worked better than other in terms of fostering success of social groups. It is reasonable to assume that the rules which made it to near contemporary times likely fostered additional social cohesiveness and moderated internal violence.

Fast forward to the past 100 years where there has been an extraordinary revolution in terms of the roles and status of women. No longer is there a huge advantage to size and aggressiveness of men. The industrial and communication revolutions have allowed women to compete for positions of leadership and authority on the basis of merit unlike any other time in history. However, we are still left with the legacy of who we are, complex social creatures whose procreation depends upon almost incomprehensible sexual motivations. Furthermore, sexual drives are to a great degree asymmetric and manifest differently in the two sexes. I understand there are overlapping distributions.

What this translates to is despite the changing roles and incredible changes in the overt trappings of society, we are left with the fate of humans being dependent upon the same personal, vulnerable, and private interactions our ancestors had to deal with. Intimate interactions still happen in private. The paths taken by couples to embark on the journey from casually meeting to intimate encounters has no single guidebook currently. (Older societies did simply this with mates being chosen by parents. We have for the most part discarded this convention). Each individual in the market for a mate needs to somehow successfully signal and then act when they believe they receive signals back. How people signal and what are acceptable signals is context, time, culture, and individual dependent. Some people can get away with certain approaches that others cannot.

This is not a topic handled by the formal educational system, something we should likely be grateful for. However, it leads to an almost infinite myriad of strategies which people use to attract partners. Which ones have historically been acceptable or are currently acceptable or will be acceptable is obviously evolving. No matter where these mores move toward, they will always need to address the reality that what drives these relationships are not rational and when they play out it places parties in vulnerable positions in private. There is no other realm of human existence that will provide a greater challenge to laws and social mores.

There is no EASY button. Beware of the hedgehogs who sell one simple approach.  Good systems will have failures.