Pulling on Liberal Heartstrings

Here's a new tactic in the quest for privatization of Social Security and reducing government spending generally. If we don't take care of the mounting fiscal problems, we won't be able to effectively wage the war on poverty. This is from Jim Kolbe, "the Republican chairman of the House Appropriations Subcommittee on Foreign Operations, which is responsible for US foreign aid":

Baby-boomers threaten the war on global poverty, by Jim Kolbe, Financial Times: Opponents of global poverty have reason to celebrate. The recent approval by the US Food and Drug Administration of a new, once-a-day pill against Aids could revolutionise health in developing countries. The news follows approval earlier this year of a cervical cancer vaccine, which may save more than 200,000 lives each year in poor nations.

In the US, these breakthroughs have coincided with unprecedented political support for the funding that pays for such medicines. Last year the House of Representatives passed its foreign aid bill with 393 votes, the highest tally in more than two decades. Over the past six years, the US has increased six-fold the money it spends to fight scourges such as Aids and tuberculosis abroad.

But the heights America has reached in such spending may represent the peak of foreign aid, leaving only a hard fall ahead. As the baby-boomer generation ages and begins to draw on Social Security and Medicare, the healthcare system for the over-65s, the funding needs for those programmes will skyrocket. Something else in the budget will have to make way – and America’s foreign aid programme is one of the likeliest candidates for cuts. ...

As entitlements have grown in the past two decades, the share of America’s economy going to foreign aid has been halved. Even the share devoted to national defence has declined by more than 40 per cent. It may seem strange that entitlement programmes should impede the war against global poverty, even the war against terror. But that is exactly what is happening. The un­sustainable promises that successive governments have made, primarily to older Americans, could hobble US foreign policy for decades. ...

When the US spends money to fight ... suffering it boosts its international stature immeasurably. Nothing provides as much tangible evidence of America’s moral leadership as foreign aid. But that leadership may be jeopardised by a budget increasingly on autopilot, devoted to financing the lifestyles of retired Americans. Political support for the fight against global poverty may never be higher, but the best intentions will amount to little as America’s entitlement programmes consume more and more of US resources.

Other domestic programmes, themselves squeezed by entitlement spending, will also be competing with foreign aid for scarce dollars. Those who care about the world’s poor must ask themselves: will future US congresses cut cancer research while spending more to fight malaria in Africa? Will they deny improvements in veterans’ health care to improve literacy rates in the poorest countries? Not likely. ...

To govern, as the saying goes, is to choose. But with entitlement programmes, we do not choose. These programmes do the choosing for us. They are also making the choices in US foreign policy, determining the nation’s future role as a global leader. The US has had the good sense to make foreign assistance a key priority. Now it needs the courage to keep it there.

George W. Bush, US president, has shown crucial leadership on both entitlement reform and foreign aid, but we need to be more explicit about the links between them. Above all, he has to present Americans with the trade-offs that government is making, year for year. Far more people would confront the need to rein in entitlements if they understood how they are putting our foreign aid budget in a straitjacket.

The writer is the Republican chairman of the House Appropriations Subcommittee on Foreign Operations, which is responsible for US foreign aid.

For a party that has complained so much about spending on foreign aid in the past, this new concern for world poverty is encouraging. However, setting world poverty versus "financing the lifestyles of retired Americans" is a false and misleading tradeoff designed to achieve the political goal of reducing the size of government. I don't have time to deal with this properly, so hopefully comments or other bloggers can put this into it's proper place, but the amount of foreign aid we give relative to the size of the budget, spending on the war, and so on, is miniscule, low among developed countries on a per capita basis (this says 27 billion in 2004). We can handle the current 20 -30 billion we spend on foreign aid going forward.

Update: PGL at Angry Bear has more.
Update: William Polley also has a nice follow-up.

Comments

[James]

Ah, the crocodile cries such salty tears.

I believe the sentiments expressed by Mr. Kolbe every bit as much as I believe the compassion extended by right-wing economists when they decry the adverse effects that raising the minimum wage has on black teenagers. That, in turn, is matched by the right's high principle of "state's rights" which is adhered to precisely as often as it returns the desired result.

[johnchx]

This is spectacularly funny. A Republican U.S. Representative from Arizona of all places wants to cut Social Security so we can spend more on foreign aid. I didn't think I'd live to see the day.

Of course, he never says "cut." He wants to {mumble}{mumble}{mumble} Social Security. Which is a different kettle of fish, I suppose.

[anne]

http://www.pkarchive.org/column/122501.html

December 25, 2001

The Scrooge Syndrome
By Paul Krugman - New York Times

Bah, humbug!" cried the U.S. treasury secretary. O.K., Paul O'Neill didn't actually say "Bah." But last week he contemptuously dismissed proposals for increased aid to poor nations. And his justification — that he "would like to see evidence of what works before making new commitments" — was pure humbug.

For the truth is that we already know what works. Nobody expects foreign aid to perform miracles, to turn Mozambique into Sweden overnight. But more modest goals, such as saving millions of people a year from diseases like malaria and tuberculosis, are quite reachable, for quite modest sums of money.

That is the message of a commission report just released by the World Health Organization, which calls on advanced countries to provide resources for a plan to "scale up the access of the world's poor to essential health services." The program would provide very basic items that many poor nations simply cannot afford: antibiotics to treat tuberculosis, insecticide-treated nets to control malaria, and so on. The price tag would be about 0.1 percent of advanced countries' income. The payoff would be at least eight million lives each year.

This is not starry-eyed idealism. The report quotes Jeffrey Sachs, the Harvard professor who headed the commission: "I can be 'realistic' and `cynical' with the best of them — giving all the reasons why things are too hard to change." Mr. Sachs knows that it will be hard to persuade advanced countries to come up with the money — and that the United States, in particular, is likely to be highly unreceptive. But this is one of those cases in which leadership could make a tremendous difference.

Right now, the United States is the Scrooge of the Western world — the least generous rich nation on the planet. One of the tables in that W.H.O. report shows the share of G.N.P. given in foreign aid by advanced countries; the United States ranks dead last, well behind far poorer countries such as Portugal and Greece. The sums proposed by the W.H.O. would double our foreign aid budget, not because those sums are large, but because we start from so low a base — about a dime a day for each U.S. citizen.

Still, doubling our foreign aid budget sounds like an impossible dream. But is it? We may be a Scrooge nation, but we are not a nation of Scrooges. Not only are Americans often generous as individuals, they are — without knowing it — apparently willing to give substantially more foreign aid than the nation actually does. When asked how much of the federal budget should be devoted to foreign aid, Americans typically come up with a number around 10 percent — about 20 times what we currently spend.

Voters are, however, misinformed: they think that the share of foreign aid in federal spending should be cut to 10 percent. And they wonder why foreigners don't show more gratitude for all the money we give them....

[Cent21]

Another attempt to cut Social Security benefits, linked with Bush's ten year tax cut plan and the dynamic scoring report:

Here.

[anne]

http://economistsview.typepad.com/economistsview/2006/07/the_war_on_pove.html

[The American foreign aid budget is a mere rounding error in the defense budget or what we have spent and will spend on the tragic lunacy of Iraq. Which is why Easterly's complaint about too much aid is absurd, and why Sachs is right.]

[pgl]

Kolbe must be bucking for a job writing for the National Review. OK, I took up the task of offering a few comments over at Angrybear. I said the $27 billion per year represented about $4.50 per person given world population was around 6 billion, but Census is saying it's 6.5 billion. Or do this, Census has US population at 300 million so Kolbe is saying we Americans can't afford an extra $90 per person in taxes? Maybe the working poor and the elderly with little savings can't, but Bill Gates and Warren Buffet couldn't have (before they gave so much to their foundation)?

[Dirk van Dijk]

Actually we spend more on increasing poverty in the 3rd world than we do on cutting it. How? Farm subsidies which allow our farmers to undercut the prices of the susistance farmers who make up the vast majority of the world's poor. The Doha round had great potential to alleviate global poverty, yet where did it flounder? On the rocks of farm subsidies in the US and Europe. The problem is that them poor forgieners don't vote, while US farmers do vote, and have disproportionate political power. After all 15% of the US population elect 50% of the US Senate, and a very large part of that 15% are farmers or are tied to the farm economy (ie work for a John Deere dealership).

[James Killus]

Uh, Dirk? "Subsistence farming" usually means farming that grows enough food to live on and little more. By its very nature, such farming means that its practitioners have very little participation in markets, so whatever Western farm subsidies do toward reducing the price of food in 3rd world cities doesn't change the lot of subsistence farmers much.

What you do get is a tilt of a national economy toward foreign trade, so there is often a disconnect between the urban and rural populations. Also, to whatever extent the local agricultural economies are distorted by this, you get a sort of "virtual colonialism" where the urban elite owns much of the countryside and demands exportable crops. But this isn't actually "subsistence farming," since real subsistence farming would actually protect against such distortions. But it would require that the farmers actually own their land and have the ability to make decisions about its use.

[Movie Guy]

Jim Kolbe - "Far more people would confront the need to rein in entitlements if they understood how they are putting our foreign aid budget in a straitjacket."

Total BS.

Americans will never buy into this nonsense.

Next.

[yartrebo]

Subsistance farmers do make some surplus, otherwise they could get thier tools, clothes, fuel, and other things that cannot be grown. Raising the price of agricultural goods by eliminating subsidies would drastically raise thier standard of living and income.

says...

US foreign probably does more harm than good anyway. The biggest recipient is Isreal, and it comes in the form of guns and bombs which are used to terrorise Palestine and more recently Lebanon. Much of the rest is military aid to other nasty regimes such as Columbia that use the aid for internal wars and to supress domestic revolt.

Even the civilian aid is often given with nasty conditions that often make it a net loss for the country to accept the aid. Medical aid is given under the condition that there is no family planning (and no, 'abstinance only' doesn't count as family planning in my book). Economic aid is given under the condition that the country opens itself to exploitation from multinationals.

I for one wouldn't mind if we stopped giving aid as long as everyone, including Isreal, is cut off. Giving 'good' aid would be best, but giving nothing is better than causing harm and having to pay for it.

[hj]

Jim Kolbe is a complete laugh as any kind of thinker. The only positive thing in his whole career was the day he admitted he was gay. The rest is zilch. I also think he is retiring. He wouldn't dare ask for cuts in entitlements if he were running again, not in Arizona.

[DJM]

....world poverty versus "financing the lifestyles of retired Americans" is a false and misleading tradeoff designed to achieve the political goal of reducing the size of government.
I agree that all the buzzwords/talking points of this administration are "false and misleading" . I also believe the talking points are used in another tricky way...they often sacrifice the obvious point they seem to be making ( here it is the trade off theory) to get a secondary talking point embedded more fully into the subconscious. Here we have at least two examples; the highlife of older Americans and the desire to reduce the size of government.

[Bruce Wilder]

. . . "a false and misleading tradeoff designed to achieve the political goal of reducing the size of government . . "

Why is it apparently so hard to correctly identify the "political goal" of the Republicans attempting to "reform" Social Security. Sure, Republicans say they want to reduce the size of government. But, are we practicing "he said, she said" politics to match the clarity of "he said, she said" journalism?

This is not motivated by an abstract concern with the "size of government". Republican Social Security "reform" is aimed at redistributing risk, income and wealth if favor of the wealthy.

Should I look forward to a "successful" privatization, followed after an indecent interval, by earnest handwringing over the mystery of increasing senior poverty?

[DJM]

Wouldn't it be nice to have a full and *HONEST* accounting of our aid spending (including domestic) in *PLAIN* language ....something not buried in huge annual budget lies or incomprehensible reports. (in my dreams)

I imagine if the average taxpayer had a better idea of how much and what type of military and weapons aid our country gives and to whom (!)it would open some eyes ....ahhh but most Americans don't really want those details, it would stain their white hats (we are the good guys you know).....

[DJM]

I personally, as a member of the baby boom generation, am tired of being blamed for every present and future financial disaster too. The "strain" the baby boom put on the cost of everything (blamed all our lives) houses, schools, medicine,social security...you name it....we apparently never contributed anything to the economy so we are just this huge strain on it....ARGH!

[DJM]

Many of the older Americans that are living well in retirement now, were those who could cash in on the "strain" the baby boomers put on the housing market over the years and the added productivity we participated in.... The constant attacks on the Boomers is an attempt to create resentment so future cuts in social programs can be passed. Many will be taken in, and vote against their own best interests.

[Lord]

The spending on retirement benefits may put some pressure on other government spending (hopefully some on military adventures), but it will be a tremendous opportunity for all countries from the increasing consumption in the developed world. This is positive for emerging markets, not negative.

[anne]

Lord, quite an interesting thought :)

[anne]

DJM:

"The constant attacks on the Boomers is an attempt to create resentment so future cuts in social programs can be passed. Many will be taken in, and vote against their own best interests."

says...

Mark says we shouldn't have a problem carrying $30 billion forward. With a $4 trillion present value deficit in Social Security alone, that's just not true. We'll be clawing for every dollar out there. In fact, we already are: we're holding discretionary spending level in many programs and are STILL in deficit - what happens once we have to redeem all the trust fund bonds?

As for "Kolbe wouldn't dare ask for cuts in entitlements if he were running again, not in Arizona," sorry: he's been a leader on SS reform since the 90s, working with numerous Dems.

And finally: "The constant attacks on the Boomers is an attempt to create resentment so future cuts in social programs can be passed. Many will be taken in, and vote against their own best interests." Sure. . . because that's what people do, right? Vote against their own interests. Finally, an uncynical post to the article!

[Bruce Webb]

"what happens once we have to redeem all the trust fund bonds? "

What happens if we never have to redeem those bonds and only repay a fraction of the interest? Which is just as likely an outcome if not more.

Come 2011 the debate over Social Security is more likely to be over whether we should rebate the excess FICA tax or divert it to Medicare. Privatizers had a time slot to sell their snake oil but the window closed about 2002. Since then only a desperate manipulation of the numbers for the outyears has allowed them to maintain any sense of crisis.

Oddly enough a test of those numbers is scheduled for release on August 1. The Bureau of Economic Analysis will release the 2006 Annual Revision of the National Income and Product Accounts Particularly interesting will be the numbers for 2005 and especially 2005 Q4. Katrina or no Katrina it has always intrigued me that an economy that was growing over 4% in 2005 Q3, and roared back at well over 5% in 2006 Q1 just flatlined in 2005 Q4 - just in time to produce a year end GDP that supported a productivity number that was under Low Cost (i.e. fully funded), and a number that had an unprecedented and mysterious footnote explaining that: "Historical data are not available for the full year. Estimated values vary slightly by alternative and are shown for the intermediate alternative."

Well whatever this meant, presumedly historical data is now available for the whole year and we can check that 3.6% GDP number and perhaps use the Q1 2006 to see whether we are heading for 3.4% GDP (Intermediate Cost) or 3.8% (Low Cost) for 2006.

Because the next two years are make or break, the models begin to diverge in noticeable fashion in the 2008-2011 timeframe and it should be pretty clear which one is going to represent the more likely track going forward. I got my money on Low Cost, but either way we will not have to wait long to get the answer.

[Bruce Webb]

Well this is interesting, though maybe not putting me in the best light. The Report was released at 8:30 Eastern and shows pretty sharp downward revisions in GDP for 2002-2005. For example 2005 was revised down from 3.5% to 3.2%.

So Social Security may be in more trouble than I would have expected, on the other hand what does this say about the miracle of tax cuts, if these numbers hold up a whole heap of reported past production just got swept off the table.

http://nytimes.com/
Article and link to the PDF in the middle of the page.

While I still think Intermediate Cost is too pessimistic long term it might take a couple more years than I anticipated for it to clearly show in the graphs.