He discusses his book, the high cost of good intentions the history of the federal Entitlement Programs. Brian john cogan, author of the high cost of good intentions. When did you get interested in entitlements . John it goes back to my years in washington in the 1980s during the Ronald Reagan administration. I served for a few years at the office of management and budget. It was at that point i saw how these entitlements grew and how difficult they were to control. That was the origins of my interest. Brian how long were you there . John i was there for three years at omb. I served prior to that at the department of labor. I left omb in the mid1980s, and then returned in 1988 to serve as the deputy at omb and returned return to stanford. And then left again and returned to stanford. Brian what were the lessons that you learned working at the office of management and budget. John the main lesson was just how difficult it is to control spending. It seem like all of the forces in washington were towards war and more spending. And as you know, Ronald Reagan more than any other president made a comprehensive effort to rein in Government Spending. He was modestly successful. Having been part of that battle, i saw how powerful these forces were expanding Government Spending were. Brian my Biggest Surprise in your book was fdr. Tell that story. John most people think that the entitlement state began with fdr. That is in fact true. Social security. But the Franklin Roosevelt of 1935 was not like the Franklin Roosevelt of 1933. Franklin roosevelt, in 1933, managed to engineer the largest reduction in any Entitlement Program in american history. In his first year in office, he removed nearly 400,000, mostly world war i disabled veterans from the rolls. He reduced the veterans compensation rolls by 50 . An extraordinary change in the whole history of Entitlement Programs. What was interesting about it was the way that he went about it. When he entered office, we were in the midst of the great depression. The federal budget was in shambles. He had campaigned on a promise to get the federal finances under control and to do so by reining in Government Spending. The veterans programs accounted for about 25 of federal spending at the time. So we had to do something about veterans programs if it would control spending. Seven days after taking office, he asked congress for the authority to modify all veterans Entitlement Programs. And sent up to the hill a proposal that congress abolish all Entitlement Programs for veterans and give him the authority to write the regulations and benefit levels. 10 years later, Congress Passed the economy act which did so. Within the next year, the administration changed the benefit levels, changing eligibility rules, and the result was nearly 400,000 veterans were removed from the rolls. What was most interesting to me about roosevelts action was that beside the fact he took action right away when a president s strength is at its maximum right after an election, he was a brilliant politician. So to get the bill passed, he had to mollify to some extent the bonus marchers that had returned to washington. As you may recall, the year before, a group came in and were driven out of washington by u. S. Soldiers. Bonus marchers were world war i veterans who had been promised a bonus benefit in addition to their compensation. That promise had been made years earlier and payment was due about 1015 years down the road. They wanted that bonus payment now. They were suffering from the depression, said they wanted the bonus payment now. So, they marched to washington to demand their bonus payments in 1932. They gathered and set up tents. It was in anacostia. I think there were around 20,000 of these bonus marchers. The government was very worried about communist infiltration. Finally, General Macarthur ordered american troops to go drive out the bonus marchers. It was a very large scandal in american history. One group of american soldiers drove out a group of American Veterans from the nations capital. Brian anybody killed . John one individual i believed was killed during the action. So the bonus marchers then returned in 1933 to protest against the proposed reduction and to claim their promised benefits. Roosevelt was very different. Then herbert hoover. His solution was to send eleanor out to the camps and have her sing songs and listen to the veteran plate and sympathize with them. He also offered them jobs. 25,000 civilian conservation jobs would be set aside for veterans. With those two actions, the veterans went away peacefully. And he was able to go through with his regulatory changes. Brian the economy act of 1933 was what . What did that do . John it literally repealed all federal Entitlement Programs for veterans compensation programs. It repealed the entitlement of veterans had to world war i, disability benefits, rebellion benefits, spanishamerican war benefits. The only Entitlement Program that was exempted was the civil war Pension Program. But in addition, it allowed the president to set the new rules of eligibility and allowed to set new benefit levels. Brian you say the night before it was introduced he had his first fireside chat. This fireside chat, seems to me, because he had 30some, like twitter in those days. Here is an excerpt of fdr. President roosevelt i can assure you, my friends, that it is safer to keep your money in a reopened bank than it is to keep it under the mattress. The success of our whole National Program depends upon the cooperation of the public, on its intelligence support and on its use of a reliable system. [end video clip] brian what is he doing here . John during that speech he was tackling the main problem as he sought with the private financial system, which was the banking crisis. We have so many banks. That had failed. At that point, that evening he also to be opportunity to deal with the problem that he had with the congress, with respect to the economy act. He was worried about a Senate Filibuster of his bill. The house had passed the bill already. The next week it was coming up in the senate. Worried about a filibuster, he devised a strategy to prevent the senate from filibustering. He decided it was time for a beer, as he told his senior staff that night. He introduced a proposal that would allow for the sale of 3. 2 beer. It was prohibition at the time. This was wildly popular. Under the senate rules, in order to vote on the 3. 2 beer proposal, they had to first dispense with the economy act. Of course, they passed the economy act without a filibuster so that they could get to the 3. 2 beer bill. They did so, both bills passed and both became law. Brian as you say, 400,000 vets know longer get their pension benefits. Let me go to the whole point of your book. What is an entitlement . John that is a good question. The word entitlement has come to mean many Different Things to many different people. To some people, an entitlement is something that cannot be taken away. That people have an absolute and irrevocable right to. Other people regard pensions or entitlements as an unearned benefit, as something that can be taken away and something that is not really deserved and is distinguished from an earned right benefit, like Social Security. People in the latter group say Social Security is not an entitlement, they have earned their benefits whereas a food stamps benefit, they regard as an entitlement. In the simplest terms, in entitlement benefit, or Entitlement Program, originates with a law that says, if you meet some prespecified eligibility rule in law, then you will be guaranteed a benefit under the law. Brian how much has war in our history created the need for entitlements . John i would have to say, in the 19th century it was the primary driver behind entitlements. The first Entitlement Program was a program for revolutionary war veterans. The idea was to compensate them for the loss of life, or limb while in service to their country during the war of independence. That was the very first entitlement. Throughout the 19th century, during every war, we established a similar entitlement for veterans of those wars. Brian you are saying it was disability at first, but then it spread to people who just where were in the service, then you say the wives. Explain how that all happened. John this phenomenon that i am about to describe is common throughout 200 years of entitlement history. It is common among all Entitlement Programs. Basically i will describe in general. What happens when an Entitlement Program is created, the eligibility pool is a very narrow group of particularly worthy people that are usually deemed to be eligible for benefits. Then, over time, a group that is just outside that eligibility circle begins to clamor for benefits and Pressure Congress to be included among the receiving benefits. Eventually, congress acquiesces those individuals qualifying for benefits. That just starts the process all over again. Another group of people closer to the eligibility Boundary Line starts clamoring for benefits. Congress eventually acquiesces. Eligibility expands. We start always with a very small group and it spreads outwards. To a point where the original purposes of these entitlements is no longer recognizable. So for the civil war program, the original Entitlement Program for disabled revolutionary war veteran was confined just to members of the Continental Army and navy. They were a federal responsibility. But then 20 years later they wanted to include members of the state militia. Volunteers, these individuals were no less deserving of the systems as those in the Continental Army. Of assistance as those in the Continental Army. By the 1830s, congress had extended the program to include anyone who had served in a revolutionary war for at least nine months. The next Entitlement Program, large Entitlement Program was the Disability Program for Union Veterans during the civil war. That program followed almost exactly the same path. First then were confined to First Benefits were confined to those that had been disabled during wartime service. 30 or 40 years later, virtually all Union Veterans who have served their country in the civil war were made eligible for assistance. That has been the pattern that has driven entitlement in the modern era as well as during the 19th century. Brian in your introduction, you say 55 of all u. S. Households received cash or assistance from at least one major federal Entitlement Program, let me read on. Among all households of people headed by a person under 65, over 40 received title benefits. Entitlement program benefits. 85 of households led by a single mother received benefits and nearly six out of every 10 children receive benefits. 58 percent are growing up in a family under an entitlement roles. How long has it taken us to get to 55 of all households receiving something . John about 70 years now. Most Entitlement Programs begin with good intentions. The intention there is to provide compensation for soldiers disabled during the war. You can hardly see a more honorable purpose for the program. The new deal of entitlements and Great Society of entitlements, they had very good intentions to provide a safety net of assistance against old age poverty, to provide protection against poverty for those who cannot provide for themselves. These are goals everyone in america shares. What we got today is described with those statistics from the book is a system that does not bear any resemblance to those basic goals. That is the nature of the growth of entitlements and that is why we have a problem today. Brian here is more from fdr, beautiful black and white done by the minneapolis pbs station. He is making fun of them republicans. Lets watch. [video clip] as we believe in Social Security, we believe and work for the unemployed, we believe in saving homes. Cross our hearts and hope to die. [laughter] we believe in all these things, but we do not like the way the administration is doing that. Just turn them over to us. We will do all of them. We will do more of them, we will do them better, and most importantly, the doing of them will not cost anybody anything. [applause] [end video clip] brian sounds a little familiar. John doesnt it . What a masterful politician. That has been the promise of those that got entitlement. Those that have proposed one Entitlement Program after another. You can have it, i will give it to you and it will not cost the country a dime. Brian so who has been better or worse at this over the years . Republicans or democrats . John i have to say this has truly been a bipartisan effort. As you go back to the 19th century, with the civil war Pension Program. It was during that era that the republicans used pensions to gain an electoral advantage. In fact, the Pension Program helped realign the public behind the republicans during the 1890s. He held the white house, the house and the senate for 14 consecutive years. I think largely because of tariffs and the Pension Program. The democrats were generally opposed to pensions until they caught on in the first decade of the 20th century. In the modern era we see the same phenomenon, except the parties flipped. The democrats have been the proposers of all the new entitlements and the republicans have stood in opposition, initially. Once they have gotten to power after an entitlement has been commuted, they have generally supported the expansion of those entitlements. Brian we have some video on both sides, but on the one hand, then several years later on the other hand. Lets start with harry reid. Let me just start with the dates. The first part is 2006, the second part is 2013. Here is harry reid. [video clip] today the senate is considering a bill to increase the nations debt by 781 billion. If adopted, it would be the fourth such increase in five years that this administration has been in office. I will be opposing this latest request and i hope that people on both sides of the aisle will do the same. It allows the United States to meet its obligation or it should be the standard. [end video clip] brian the first time george bush was in office, and the second time he was not. [laughter] brian before you comment on it, let me put these two together. Here is speaker of the house paul ryan. First is in 2011 and the second is in 2017. [video clip] if we fail to put our budget on a sustainable path, and we are choosing decline to world power. The unsustainable trajectory of Government Spending is accelerating the nation towards the most predictable economic crisis in american history. You are not prepared to say that you are insisting on revenueneutral taxing that does not add to the deficit . We want the economy growing that will get middle income taxpayers a tax cut. We want to keep american businesses in america. That is more important than anything else. [end video clip] brian what are we supposed to believe, who and when are we supposed to believe . John consistency has never been a hallmark of members of members of congress. It is a far larger problem than any Single Member of congress. It is a problem with the institution, it is a problem with the presidency. Like i said, it is a problem that for 200 years, these forces that are operating on our congress, on our elected official, just powerful forces for what you are seeing, what we saw with paul ryan, and what we saw it harry reid are just examples of how individuals react to those pressures, pressures to be reelected. Brian go back to your government experience. What were the first years that you are there . John 1981 and 1982. I was assistant secretary at the Labor Department. Brian what was your big take from that experience . John it was just how difficult it is to lay in these Entitlement Programs. To rein in these Entitlement Programs. 1981 and 1982 were years of a very, very deep economic recession as the Federal Reserve and administration tried to ring administration out of the economy. Inflation out of the economy. The recession that we had was a deep recession that we had had since the end of world war ii. So, immediately, that recession caused congress to start rethinking the wisdom of the initial reductions that it had made in the various Entitlement Programs. I saw this tremendous pressure coming from the hundreds of lobby groups that have been formed around these programs they gain their sustenance from these programs. From the general public for some relief from the hardship of the recession, but the pressures were just overwhelming. You may read call this was a cry for reagan to stay the course and that meant to keep those tax rate reductions that you had put in place and keep those budgets savings that you have put in place. Do not give up on them. I think reagan was very, very strong and not giving into those pressures that were operating at the time. Brian who was your secretary of labor . John it was a wonderful man, raymond j. Donovan a terrific young man. Actually, a middleaged man who is treated very, very badly by washington. As you may recall, ray, after serving for almost four years as secretary of labor and undergoing an enormous number of investigations, including special prosecutor, all of which had shown that the charges that had been made against him were completely made out of whole cloth. The District Attorney of the new york indicted him on the same charges and he had to resign from office. Truly a sad, sad washington story. Brian i am not sure this is the exact quote, but my memory was, he said, where do i get my good name back . John that is right. Brian you have watched a lot of governments since then. Is it too big a risk today to come to government because of what happens once youre in it . John there is a risk. The important thing about ray donovan was that he was exonerated of all charges and walked out of the courthouse to make that famous, famous comment. I would say this, yes there are Republic Services in washington, dass yes, there are risks associated with Public Service in washington, but i would say do not allow that risk to deter you from service. From my own standpoint, Public Service is one of the most enjoyable, one of the most interesting, one of the most rewarding periods of my entire life. I do believe that young people should experience the same, and do the same and try to do something good for their country. Brian what was the second time you are in government . John i moved from the Labor Department to omb and i was at omb for 3. 5 years. I had most of the Entitlement Programs under me. Then i left washington and came back in 1988 as a deputy. Brian so you were in the Ronald Reagan administration. If you came in 1980 and was still Ronald Reagan. And if you came back in 1988, it was still Ronald Reagan. When did you leave government forever . John i left in the spring of 1989. Brian did you have any impact on reducing the entitlements when you were the deputy, or even before that . John very, very little. Very little. Brian is this society of a mind that, it should not just be 55 , maybe it should be 75 of entitlements. John yes. Yes, yes. There were some successes. Entitlement spending under the Reagan Administration was not cut by normal accounting. What we did was slow the growth. The growth was slowed by about 50 over the eight years. So, there was an accomplishment there. But the programs remained in place when Ronald Reagan left office, then, since then they have grown back. The reduction, if you will, and the growth spending was really just a temporary reduction. Brian we hear that all the time. Isnt that just a gimmick politicians use about the growth . Let me ask you this. Dick cheney said, who cares about the debt . So are we just going to keep jacking up the debt to 20 trillion as we have it now . John history teaches us that excessive debt will eventually cause a financial crisis. History does not provide us with much of a guys about which point a guide about at what point, how high that debt has to be before the crisis will hit. Brian when did it do it in history . John lets go back to germany. It is a very good example of where they had an enormous debt problem after world war i. They chose to deal with that debt problem with inflation and the german hyperinflation was one of the most extraordinary economic events of the 20th century. It practically ruined the economy and led to the rise of nazism. Some very severe consequences. History doesnt tell us too much about when precisely that debt crisis is going to occur but we do know its going to occur. We really cant say how severe it will be. The 2008, 2009 financial crisis should be a good lesson for people thinking about the consequences of Entitlement Programs. Government officials did not see the Great Recession of the great financial crisis coming in 2006, 2007. Wall street did not see it. Few people saw that crisis coming. All of a sudden it was upon us. That crisis was driven by excessive wall street debt. Brian the only people that lost worse savers. If you were in the market and stayed in the market it went from 5800 up to 23,000. People that do not make a lot of money cannot save a lot of money and even those that want to save money cannot make it dime. John the consequences of that economic crisis are present today. The low Interest Rates we have and the inability of people who have done the right things through their life and prepared for retirement, they are suffering from the consequences of that economic crisis. Think about it. The economic races was really that economic crisis was really generated by one sector of the economy. A public debt crisis thats brought on by the federal government is a far bigger crisis, with far bigger ramifications. Severe as 2008, 2009 recession was, the consequences of not dealing with entitlements are far more severe. Brian they want to help the middle class but people who have led a law but people cannot save a lot of money so they are punished in this process. They have been. Brian its like it doesnt exist. It is an extraordinary phenomenon. The last 10 years especially, middleclass wage earners have received very little in the form of wage increases. Retirees have been able to earn only returns on safe investments. They have been able to go into the stock market at great risk and earn something there, but by and large the great part of the middle class has been paying for the bad economics that we followed in the Great Recession and the period leading up to the Great Recession. Brian you are talking that politicians that make the decisions on entitlements have good intentions, but you also say it is an electoral decision, a political decision. So how do you mesh those two . I am doing this for the people and i have good intentions, but i am also doing it to get reelected . John Entitlement Programs stem from a basic human desire to help someone who is in need of assistance. It is just common. All of us have it in us. For politicians it is a little easier. Of course, it is somebody elses money. But they still have that same basic desire that you and i do. They also have this desire to be reelected. Once that entitlement is put in place, then the game has changed. Interest groups form around protecting that entitlement, pressing for more assistance. Money starts flowing to politicians who protect those benefits, and the game changes. It is that desire for reelection that drives a lot of entitlements. Brian but how difficult is that for somebody to give someone elses money away . John it is pretty easy. That is why they do it. Brian and then they get praise and voted back in from their constituents. We are in this period now, and this was recorded before any decision was made on the tax bill, where you got to keep your eye very closely on what is going on. John you absolutely do. I would say this about the tax bill if i could. The way i think about the entitlement problem is we have to reform these entitlements clearly to make them affordable. But if we can get Economic Growth stronger, faster, we will increase the amount of resources that are available to financing those entitlements. It will lighten the burden of financing those entitlements a little bit. So when people think about solving the entitlement problem or our debt problem, i think Economic Growth the lungs very Economic Growth belongs very importantly in that equation. Brian what if you dont get it . John we are in real trouble. Brian mick mulvaney, who is the office of management at director, was very much against not paying off the debt, and now he is in charge. Lets watch this. [video clip] i do want a balanced budget. We have got to start balancing budgets. We owe 19 trillion and we have to start paying it down. These people are starting about balancing budgets 35 years from now. We can do it, believe me, much quicker. We can do it quickly. He even made a pledge to get rid of the debt in eight years. We wont be able to balance the budget this year but we are trying to get it balanced within the 10 year windows. So the goal is to have a balanced budget within 10 years, but basically that means you will add to the debt every single year in the next 10 years. Brian why is it that in every political campaign, promises are made and they never, ever do what they are promised to do when it comes to the debt . John it is really sad, isnt it . Brian what are we supposed to do as voters . John the Political Climate right now is really not at all conducive to any kind of change in Government Spending. I dont think we have any good sense of how to get it done. I think washington really needs to step back and take a long look at how they have handled entitlements and Government Spending. It is really a very unfortunate circumstance, and quite honestly you go back and look at history, it really doesnt give you much reason for optimism. Brian you say in your book it is going to take a crisis. John i think it probably will take a crisis. Hopefully we can begin to address the problem before we get to that crisis point. Brian here is Richard Nixon back in 1968 talking about the public and what they really want to feel when it comes to money and whether they want entitlements or not. [video clip] pres. Nixon government can do a lot of things for men. It can provide him food and a house. It can provide him clothing. But it cant provide him dignity. It cant provide him pride. It cant provide himself respect. Brian is that still true . John i dont think people should look to government for pride and self respect. I dont think people should look to government for benefits. I think we need to look at ourselves for our pride, for our dignity. I think we need to rely on our own initiative, for our food and for our shelter and for our children. Brian what did that president do for entitlements . John most people think of Richard Nixon as being a conservative. I argued in the book that Richard Nixon was every bit as expansionary when it came to domestic spending in particular entitlements as his predecessor, lbj. I labeled a chapter on Richard Nixons presidency as Great Society two. Lyndon johnsons Great Society, we saw the enactment of medicare and the medicaid program, two very large Entitlement Programs. But mostly the Great Society was increasing what we think of as discretionary programs. Programs for education, training, a large number of social services, where the money went directly to cities and Interest Groups in the cities. Richard nixon was a little different. Richard nixon did not expand programs that much for education and social services, but he did expand Entitlement Programs tremendously. And that, he created a federal Unemployment Insurance program. In a nationalized the food stamp program, which was a very Small Program when he took office. He created the supplemental security income program, which establishes a federal floor on income for the disabled and the poor elderly. He was a very big entitlement expander. In fact, he moved on farther or try to go farther but congress would not go along. The proposed the National Health Insurance Plan very similar to the Affordable Care act, and he proposed federalization of the entire welfare system, which congress did not go along with. So Richard Nixon ranks right up there along the top entitlement expanders of any president s in modern american history. Brian originally when medicare was passed, what did they expect to happen, and where were the republicans when that vote was taken . John the republicans had imposed the enactment of medicare all the way through the 1950s and the early 1960s, as did the southern democrats who controlled the relevant committees in congress. And then with Lyndon Johnsons sweeping victory in 1964, the southern democrats came along to support medicare, in particular wilbur mills, and a handful of republicans joined in support of an acting medicaid that ended up passing im sorry, medicare. After that initial opposition, however, the republicans have in the intervening years supported expansions of the medicare program, as have democrats. And that is really a very typical phenomenon during the postworld war ii era. Entitlements enacted by democratic administration, then republicans get in power and those entitlements are continued and opposition by republicans turns to support, and the entitlement grows. A good example of that would be the Prescription Drug benefit under president george w. Bush. Brian hold it there. Lets go to video of george w. Bush in 2003. A lot of people said this was in anticipation of the 2004 election. Lets watch. [video clip] pres. Bush in a few moments i will have the honor of signing an historic act of congress into law. I am pleased that all of you are here to witness the greatest advance in Health Care Coverage for americas seniors since the founding of medicare. [applause] brian how much did that help him in the next election . John hard to say. I honestly dont think it helped very much. I think they thought it would at the time. When that idea was originally developed, it was in 2001. In 2001 the budget was in large surplus. And of course, there is nothing to stimulate interest in expanding entitlement as much as a government surplus. So really the momentum for this Prescription Drug benefit got going in the early part of the administration, well before this. Brian you say in your book that when the surplus occurs, they spend. John that is exactly right. For people today who havent seen a Budget Surplus in 20 years, it doesnt seem relevant, but throughout history, whether the surplus is in the budget as a whole or the surplus is in a special account like a Social Security program or special trust fund, every time there is a surplus the pressures to expand entitlement gets magnified, and congress will eventually spend the surplus to expand entitlement. The problem is many of these surpluses are generated by an upswing in the business cycle. Economic times get good, revenues or into the treasury or Social Security system, and a surplus or a big balance builds up. But that balance or surplus is only temporary. Eventually the economy is going to go back down to normal and maybe into a recession. But congress has taken those surpluses and enacted a permanent expansion in entitlement in response to the surpluses. So it ends up being more of a permanent increase and you get deficits. Brian if i said i want to get a camera crew and you, and lets go show the public where the Social Security trust fund is, where the money is come where the certificates are, where would we go . John you would go to parkersburg, West Virginia. The story of the creation of the physical representation of the trust fund is a very interesting one. Throughout the 1980s and early 1990s, the Social Security system, because of the growing economy, developed about 1 trillion in surplus funds that was allegedly sitting in this account. Members of congress would go back to their districts for their town meetings and people would ask, if theres 1 trillion there and the Social Security trust fund, where is that trust fund . The members didnt know because there wasnt one. It was just a ledger in the Treasury Department book. So they came back to washington demanding that their leaders do something. There is a very ingenious congressman, a democrat from indiana, and he had the terrific idea to create a physical representation of the trust fund. He was andy jacobs. They passed a bill that would designate a public building as the location of the Social Security trust fund. Brian is this a joke . John no, this is the honest to god truth. In 1994 the bill passed, so they set aside a building in parkersburg, West Virginia as a bureau of the public debt building to house a file cabinet and a computer to be the trust fund. The computer would print out certificates that represented surplus revenue and interest came in, and some Government Official would sign it and stick it in the file cabinet. Brian where is the money . John the money was sitting in the United States treasury, ready to go out in the form of a payment to a defense contractor or a contractor in the education department. Government money is it comes into the treasury, goes out of the treasury. Brian what happened to the idea of creating a trust fund, keeping the money there, and spending it on retirees . John it was a grand idea, roosevelts original idea that Social Security should be selffunded. Social security should be a program whereby the individuals pay if the program and the funds are set aside and able to fund their retirement benefits. The reality is, in the 1930s, once that surplus started getting built up, congress realized, my gosh, it is a honeypot waiting to be ra waiting to be raided. And they moved to a system where you pay as you go. The benefits going out would be no greater in normal times than the revenues coming in. Brian as long as we are devout talking about West Virginia, what is the story of the coal miners and Robert C Byrd . John in 1969, it is a good example of how little infants can sometimes create a big little events can create big Entitlement Programs. There was a coal mine disaster in farmington, West Virginia. Several miners were killed in this accident, and it generated a response in washington to regulate the coal mines. I think it was a sensible law to regulate the coal mines. But in the process, mr. Byrd and other members of congress decided it would be a good idea to compensate coal miners for black lung disease that they might incur from their years of working in the coal mines. The opponents argued that this should be a Workers Compensation benefit to be handled by the states. Mr. Byrd and others argued, but there is none. We need a temporary program. So they enacted a temporary black lung benefit program that entitled coal miners to a monthly disability payment. It was only a temporary program. But of course, several years later when the authorization of that program was about to expire, congress looked around and no state had adopted a workers comp. Program for their coal miners, so they said, we need to continue this, and they then reauthorize the program. The program is still around today. It has achieved virtual immortality, in the words of Ronald Reagan. Brian we have been all over the place, but i want to ask you about this book. If somebody wants to read it, what will they learn that we are not talking about . John what they would learn is that the history of entitlements and the behavior of entitlements that they see today goes back a very long time, and that the forces that are at work on congress and on the executive to expand entitlements are forces that are very powerful. They need to be recognized. They need to be dealt with. And hopefully when leaders understand the nature of what drives these entitlements, we will all be in a better position to come up with some lasting and effective changes to make these Entitlement Programs more affordable. Brian is it possible . John i believe it is. Brian what gives you a sense that it is possible . John i tend to be an optimistic guy. I realize there are very few historical reasons for optimism, but america has faced all kinds of difficult problems in the past. There have been tremendous challenges that we as a country has faced. This entitlement problem is of a different sort that our problems in the past. But we have risen up in the past to solve them, and i think we would do so here. Brian what percentage of the budget is entitlement oriented . John right now it is 2 3 of the budget. Brian what would have been 150 years ago . John it would have been about 10 . But the civil war Pension Program, as we talked about, was one of the great Entitlement Programs of the 19th century. That drove entitlements up to 40 of the federal budget in the 1890s, 30 years after appomattox, and it eventually then died down as the soldiers of the civil war eventually passed on. Brian where would you put today in relationship to our 200 year plus history . John for the last 70 years since the new deal, entitlements have been growing and growing relative to the economy. A larger and larger fraction of our goods and services are being transformed into entitlement benefit that go from one group in society to another. Brian but isnt that good for the society, the people that are out in the United States now have more money than they had ever had if the entitlements have grown . John absolutely not. Entitlements come from one group in society and are given to another group. Brian but they are the privileged, the ones that make all the money have to give the other side some money. John now you are raising a good point. We think of entitlements as mainly programs to alleviate poverty. The reality is that a minority of the dollars we now spend through entitlements go to alleviating poverty. My calculations are only about 1 5 of the 2. 4 trillion of entitlement spending actually goes to alleviate poverty. Brian 1 5 of the 2. 4 trillion every year john go to alleviating poverty. The rest goes to people who were not in poverty to begin with or two people who have already been raised out of poverty by other Entitlement Programs. Brian but somebody is watching right now and saying, look him up i have paid into Social Security and medicare. Dont tell me i dont deserve that back. John and i would say to them, as far as Social Security goes, yes, you have paid into Social Security, and i can understand your desire to get your money back. But you have to remember that the reality is that money that you put in has already been spent. The money that is going to finance your benefits and you have in some sense earned them that money is coming from the pockets of workers in their 20s, 30s, and 40s. Brian but that is not their fault. John it is not their fault at all. It is just the reality. And it is something we need to keep in mind for retirees today. You may have earned your benefits, but a person that is now being asked to pay for that benefit is a person who is in their 30s or 40s and working a job, trying to build a family, save for their own future. That is who is paying for your benefits. Brian i remember a figure in your book you say a family of a husband and wife after 65 will collect as much as 1 million apiece and Social Security money. John just about. Brian to how many pay in that much . John the fact is that a typical married couple who reaches age 67 this year will receive in medicare and Social Security benefits, both combined, about 50,000 a year. That is almost equal to the Median Household Income in america today. So over the remainder of their lifetime, their benefits are going to grow with inflation or faster than inflation for medicare, and they will receive about 1 million in inflationadjusted dollars over the remaining lifetime. Brian who attached the inflation indicator to Social Security . It was a most extraordinary circumstance. In 1972 and the story of it is a very interesting one and illustrative of congress inability to grapple with these entitlement problems it began with Social Security benefits to compensate recipients of the inflation since the last benefit increase. At the time, Social Security benefits were not indexed to inflation. Congress would regularly increase compensation payments on an ad hoc basis. In the early 1970s, inflation came along and congress were considering a 10 increase in the spring of 1972. Four democrats were vying for the nomination of their party for president. Wilbur mills, george mcgovern, hubert humphrey, and edward muskie. Muskie proposed a 15 increase. Mills threw his hat in the ring with a 20 increase, and followed by mcgovern with a 20 increase. Hubert humphrey upped the ante, proposing a 25 increase. Eventually the senate started looking for a vehicle with which they could attach an increase to. Then frank church came along and said we can do it 20 increase on the debt ceiling bill. It was a bill is expected to be necessary by july 1. The debt ceiling was to expire on june 30. So the senate in the late evening of june 30 passed its version of the debt ceiling bill with a 20 increase in Social Security benefits on it. The bill went to the house just before midnight. The house had no other choice and passed the bill. Brian if they raise the tax rate at the same time on Social Security . John no. In fact, they changed the assumptions about Economic Growth to finance the higher benefits. The increase to the assumed growth rate, bringing more a rollback to revenues, and that would finance. So in the same bill, they put in a costofliving adjustment, a permanent costofliving adjustment. They wouldnt be every two years ad hoc increase. Turns out they made a grievous error and over indexed the inflation, which they eventually fixed. Here they were year in, year out passing benefit increases usually in an Election Year and usually more than enough to compensate for inflation. At the end they said, we are going to stop ourselves before we spend again with this automatic brian it seems like you are saying all of these gentlemen are gone. They are dead. They got this opportunity to say, i am going to increase it. They are gone, so when it all falls apart you can blame them, but they are gone. Thats right. Brian so the 30yearolds today are the ones that are going to pay the price. John that is exactly right. But i think todays politicians, we have to figure out a way to make sure those politicians begin to feel the heat through younger individuals that are not going to receive what their elders have. Brian how long have you been at the Hoover Institution . John i have been there except for my Washington Service since 1979 in stanford, california. Brian whats its goal and mission . Its goal is a set of ideas that define a free society. Brian where did you go to college . I went to ucla for my undergraduate and graduate, a phd in economics. My hometown is in california. Brian you have a family . John i have a beautiful wife and we have raised six children together. They are in their 30s and late 20s. We just had a wonderful event. Our youngest was married a month ago, and of the same day we had our first grandchild. To different kids involved here. A very fine day. Brian on that note, lets put the book cover on the screen. It is called the high cost of good intentions, the history of u. S. Entitlement programs. Our guest has been john f. Cogan. Thank you for joining us. John thank you very much. Appreciate it. [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. Visit ncicap. Org] [captions Copyright National cable satellite corp. 2017] announcer for free transcripts or to give us your comments about this program, visit us at qanda. Org. They are also available as cspan podcasts. If you enjoyed this weeks interview, here are some other programs you might like. The president of the committee for responsible budget talks about her expectations for congress and president trump. Dr. Mark mcclellan on his career at the centers for medicare and medicaid services. And david stockman, former director of the office of management and budget, talks about his book, the great deformation. You can search our entire Video Library at cspan. Org. Next, we are live with your calls and comments on washington journal. We will have a preview of a Supreme Court oral argument on whether a colorado bakery can refuse to provide a cake for a samesex wedding based on religious beliefs. 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