PARTICIPANTS
George Shultz, Martin Schneider, Monika Piazzesi, John Taylor, John Gunn, Johannes Stroebel, Ken Scott, Michael Boskin, John Powers, John Raisian, Charles Johnson, John Shoven
ISSUES DISCUSSED
John Cogan discussed preliminary results from his analysis of the development of entitlement spending since 1795. He began by providing a time-series decomposition of government outlays into defense spending, discretionary spending and entitlement spending. He argued that an appreciation of the growth of entitlement spending was crucial to understanding recent debt dynamics.
Cogan showed that most expansions of entitlement spending occurred during periods of budget surplus. This was true for the expansion of the revolutionary war pensions, as well as for the introduction of the Universal Service Pension in 1832, the U.S.’s first retirement program, and the Arrears Act of 1879, which increased pensions of Union Civil War veterans. Cogan also discussed the failures of past trust-fund projects, in particular the Navy Trust Fund.
Cogan also addressed the few instances when entitlement programs were reduced, emphasizing the pivotal role of the president in forcing any such cutbacks. He focused particularly on the cutbacks of World War I pensions introduced by FDR. Cogan also discussed the impact of pension votes on presidential election outcomes, arguing that voting for increased entitlement spending contributed a significant amount to Republican electoral victories in the later 1800s and early 1900s.
