It is the sine qua non of conventional thinking that entitlement spending is the problem for government spending, and that that is where the big cuts have to be made to get control of spending. Wrong. Just look at the record, illustrated from government figures in the charts below. Entitlement spending as a fraction of government spending has actually fallen in the last 3 years, as overall spending has ballooned up.
Let’s look at some salient economic indicators, to wit: 1) Unemployment rate (Figure 1), 2) National debt (Figure 2), 3) Annual deficit (Figure 3) , and 4) Entitlement spending (Figure 4). Each of the indicators are presented as percentages, normalized to GDP (Figure 2) and to Annual Spending (Figures 3 & 4).
The judicious educated eyeball can jump from Figure 1 to 4 and glean the salient import, namely that starting in 2009 there has been a veritable hockey stick skein to the upside in all government spending but one, namely entitlement spending. But not every eye is so educated, so the 4 above indicators have been renormalized to each fall between 0 and 1 (corresponding to the low and high extreme values in each figure), and re-plotted on Figure 5, showing all 4 indicators, and providing emphatic illustration of the above trends.
From the politicians blather all we hear is that entitlement spending is the much maligned and unjustified bad boy in all the public wailing. But the truth is that it is NOT entitlement spending that has caused the spending skein upward the last 3 years, but rather other spending (stimulus, regulation, the wars, cash for clunkers, cash for failed green industry, etc.). So why is everyone endlessly attacking entitlement spending when talking about cutting? It is and egregious falsehood to blame entitlement, and it is the refuge of scoundrels, meaning those who want to continue their favorite spending spree, yet put the blame on Mame. Aged, over 65 Mame, that is.
The bulk of entitlement spending consists of Welfare, Health Care, and Pensions. Social security (except for 2010) has always had sufficient income to cover its recipients, though projections are that this trend will not continue for long. So the message is clear. Keepa da hands offa di entitlements, bubba. Entitlements are not the spending problem. Look again.
To say Economics is the dismal science is giving science a bad name. To see this all one has to do is consider what are called - "economic indicators". Whether it is so called "rear view" economic indicators (ISM, Jobless claims, trade deficit, inventory) or "leading" indicators (manufacturing hours, unemployment insurance claims, new orders, consumer index), a better term for these might be "economic obfuscators. Why? because the only thing that can be safely gleaned from the gobble-di-gook sanctimonious pontification of the experts who quote these "indicators", from Roubini to Stiglitz, and back again all the way to Soros and Jim Rogers is just one thing: nobody knows nuthin', and nobody understand anything, and you'd be a fool to risk your cash in the markets. The economic indicators are akin to the committee of blind men examining the elephant. Both methods are hopeless in reconstructing the nature of the animal, either by the touch of the blind, or by the parsing of the daily or monthly economic indicators by the herd of pundits. OK fine. Preserve your cash. But what about the economy? Don't we need to get a grip on the economy, despite the gobble-di-gook? Yes. The answer has to be yes to that.
And for economy, please read “unemployment”. Writ large here in North Hollywood, Sherman Oaks, and Valley Village, and all of California. Employment to population ratio 58.2%, black teen joblessness is 46.5%. The demonstrations in Israel, Egypt, Tunisia, Syria, Bahrain, Saudi Arabia, Greece, London, China, and soon to be elsewhere, including the US, are only a harbinger of worse things to come unless we right the badly listing economy.
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