Entitlements

This weeks topic is entitlements. According to Wildavsky spending for entitlements and other mandatory programs has doubled since 1988. Most of this money set aside for entitlements goes to social security about one-fourth. However as many of us are aware social security might not be available when our generation is set to retire, even though we have paid in and will continue for years to come. There are many reasons that social security is set to go bankrupt including: the large baby boomer population who are set to retire in the next 10 years, people are living longer, and the cost of living keeps escalating.

Medicaid is also quickly exhausting its resources. We are all aware of the cost of health care and when people get to a certain age and income level they are eligible for this type of health coverage. But with the rising cost of health care and the fact that more people are living longer and exhausting their own resources quickly, medicaid is having to pick up the tab. I recently experienced something interesting and I am not sure how I feel about it. The scenario goes like this:
Two people enter a nursing home
Person A has saved money for years and has built up a $500,000 savings account
Person B enters the nursing home with little to no money

Person A now has to pay $6000 a month or $72000 a year out of their savings account to stay in the nursing home, while Person B who had no money gets to stay for free or on the governments dime (entitlement).
Should the government reward people like Person B? Should the government take all the money from Person A?

In my personal opinion I think something needs to be done with entitlement spending. For the most part I believe this is where people take advantage of the federal government. I personally have seen people abuse the welfare system. I feel that social security, medicaid, and welfare are all worth while programs they need serious reform. Too many people rely on these entitlement programs to see them through life or end of life. We must as a country become more fiscally responsible about not only our own money but about the way our government is managing our money.

Perhaps you could provide your thoughts on the case above? What is your opinion of entitlement spending?

I have attached an article that goes well with our chapters reading. If you click the "Entitlements" heading you will be directed to the article.

Spending Freezes

This week’s reading focused on the politics behind the desire to balance budgets which is particularly relevant in the wake of this past week’s State of the Union Address and our current economy which faces a budget deficit in the trillions. One of the proposed solutions to combat the growing deficit is to implement a three-year spending freeze. How will this affect companies that rely on federal spending or contracts to keep their doors open during the recession?

The federal government historically has been one of the remaining spenders or buyers of goods during economic hardship. Many of the contractors I deal with in my job are still operating due to federal government contracts for equipment and services that support national defense and security. JLG Industries, which has local manufacturing plants in both Shippensburg and McConnellsburg, has faced economic uncertainties over the last several years. However, for the time being, they are able to continue to manufacture products because of Department of Defense contracts and continue to provide jobs in their communities.

While the administration’s intent is to not freeze spending for defense and national security, I would imagine that other industries that rely on federal agency contracts will be negatively affected by the proposed spending freeze. The freeze will also likely impact educational programs that are already underfunded at the state and local levels.

I’m certainly not an economist and I can’t claim to understand exactly how the proposed budget freeze will affect the economy. And I understand the public’s perception is that government spending is out of control. Maybe we will be able to look back and say that it was the best plan of action for the nation under the current circumstances. I suppose I just don’t understand how a spending freeze for certain federal agencies will make much of a difference when programs that depend on federal spending will be adversely affected. Especially when we consider that the entitlement spending will continue to increase in the coming years. There is still a need to reform Social Security and Medicare spending, but very little attention has been given to those issues lately.

Rule making and rule breaking.

I am not worried about the incremental approach that Wildavsky discusses. I worry more about the constant state of flux the rules of budgeting seems to be in. Rubin discusses the major changes in budgeting over the years. I find it very disturbing that the legislature is constantly reforming the rules to fit their situation. I understand the desires to curb deficits and the Gramm-Rudman-Hollings act. What I don't understand is why then, there is so much effort put into circumventing these rules. Then effort goes into reforming the rules. Now the budget is so large and complicated I wonder what the point is of actually spending time and money on making rules. It seems that all of the actors do what they want, regardless of what the rules are. Each committee and each congressman only pays attention to those aspects that affect them the most. It seems to me that when budgeting is so complicated that our elected representatives cannot follow rules and cannot read the legislation they are passing, then sweeping changes are needed.

Earmarking Discussion Comment

I believe earmarking is necessary if the need is reasonable. The example given in the book was Social Security because thousands of senior citizens depend on the payouts to support themselves after retirement. I cannot complain too much about this type of earmarking because I feel it protects a legitimate need in our society.

However, I do feel that earmarking has a natural tendency to lead to abuse, especially when earmarked funds are for private businesses as opposed to non-profit entities. I think the lines can be blurred as to whether or not the funds are in the public’s best interest when given directly to private industry. Considering that the basic premise behind earmarking is the elimination of competition with other budget expenditures, it is very risky to have funds given to private industry without a serious inspection into how the earmarked funds are going to be spent.

It was mentioned later in the chapter that tax breaks are often not evaluated after the fact to determine if they are achieving the desired outcome or goal. I would imagine that the same is true of earmarking. If that is the case, how can adequate oversight of earmarked funds be accomplished?

Discussion week of Jan 17

Hello everyone, I wanted to comment on the upcoming weeks reading earlier but just got around to completing the reading. I thought it was interesting in the Rubin book to look at all the ways that federal, state, and local governments can tax people and businesses.

One thing in the chapter that caught my eye and that we discussed briefly last week in class was Earmarks. I found it interesting that Earmarking was considered more of a state practice than a federal one. Living close to West Virginia I always hear about Senator Byrd. He is affectionately refered to as "The King of Pork". Granted he is the oldest and I believe the longest serving member of Congress currently. He has received over $1 billion in Earmarks for his state. He has over 30 projects that feature his name such as the: Byrd Freeway, Byrd Highway, Byrd Cancer Research Center, and Byrd Institute just to name a few.

On the federal level Earmarks allow for money to be set aside for projects that don't have to compete with other items in the budget. Earmark money is a guarantee if you win it for your state. However are Earmarks really beneficial? Do you believe that everyone gets their fair share or do some states get overlooked while others (such as West Virginia) get too much? Should Earmarks even exist?

Hi everyone, great going on setting this up. I am impressed. I am just checking in quickly and will look through the postings more thoroughly on Wednesday. Just wanted to touch base. Well done.

I agree that partisan politics has a large impact on the practice of vetoing appropriations. I also agree that some decisions based purely on party affiliations do little to actually benefit the public as a whole. I think party decisions are more commonly seen when one party has majority control. The president is a Democrat and both the house and senate are controlled by Democrats. In the past year we have seen many major bills pushed through such as additional stimulus plans, bailouts, and the still undecided health care bill. In these cases Republicans argued against bills but Democrats stood along party lines to support their president. However not all Democrats supported these bills because they feared dim re-election chances if they supported the spending.
I will admit I pay very little attention to the happenings within the Pennsylvania state government. I am definitely more aware of what is taking place at the national level. I do feel that since Gov. Rendell is granted the authority to veto bills and line items he has a responsibility to the citizens of Pennsylvania to do what is in their best interest and to not be self serving. I feel an effective politician should work with all parties involved to reach an amicable agreement that best suits everyone not just their respected party. Budgets are very controversial and everyone is effected whether at the local, state or national level.

Sorry if it wasn't clearly shown before - I posted this as a comment to the original post on Saturday instead of a new post. I'm still figuring out how to use the blog.

After reading Chapter 3 in Rubin, I was particularly interested in the section on Budget Process and Power and how state governments are affected. I have to admit that I did not know off the top of my head which veto option Governor Rendell has at his disposal, but after a quick Google search I learned that he has the right to veto legislative bills as well as the power to line-item veto specific provisions of a bill. The argument behind this type of veto power in the book is that it provides a system of checks and balances between the executive and legislative branches, in this case of state government. Therefore, whenever members of the legislature are using the state budget to pursue self-seeking or partisan objectives, the governor will step in and “seek the public policy goal of balanced and efficient budgets, with the minimum of waste.”

I suppose my question for the group is whether or not we agree with the assertion that governors who are elected to act in the best interest of the entire state population are able to be non-partisan in their use of vetoes or line-item vetoes to remove unnecessary appropriations from proposed legislation. We can even go further with the topic and discuss Governor Rendell’s use of the line-item veto in Pennsylvania or we can keep the topic more general.

Personally, I have to agree with the authors, Glenn Abney and Thomas Lauth, referenced on pg. 85 in Rubin, who determined that governors are more likely to use veto power, specifically line-item vetoes when they face a majority of party opposites in their state legislature. Therefore, it seems obvious that partisan politics have a larger impact on the practice of vetoing appropriations than whether or not they are beneficial to the general population. While I am not saying that the only reason governors veto legislation or parts of legislation is to squash an opposing party’s agenda, I do think the use of such vetoes deserves a closer examination of the politics behind the decision.