Costs of Government Programs

Whenever a new government social welfare program is debated, the costs of that program should make up a significant portion of that debate. Government budgets are much like the family budget; choosing to spend money on one item means those funds aren’t available for something else. The tricky thing about government programs is that they tend to grow much larger and last longer than initially intended. We must be cognizant of this propensity for expansion when evaluating programs.

For example, after the Civil War, a veterans’ pension was set up to monetarily support veterans injured in the war as well as the widows and orphans of fallen soldiers. A noble goal, for certain. The program soon expanded to include any disabled veteran rather than just those with service-related injuries. Then old age was made the only qualification. In 1893 the pension payment was the largest expenditure ever made by the government, and in 1894 the pension made up almost 40 percent of the entire budget.

Unfortunately, program expansion wasn’t the only unexpected development. Many soon criticized the program, as a cottage industry of shady pension lawyers sprang up and fraud and waste tarnished the program’s reputation.

Rather than being a true charitable program, the Civil War pension became a sort of marketable asset, resulting in teenagers marrying 80-something-year-old Civil War veterans so they could inherit the monthly pension. The federal government was still paying Civil War pensions 140 years after the war’s end. Whatever cost projection may have been made at the program’s inception must have wildly missed the mark.

Which is the case with most federal programs, where initial projections generally underestimate the true costs. This history alone makes responsible citizens wary, but worse yet is that sometimes the total costs are purposely obscured. For example, historians have confirmed that President Lyndon Johnson suppressed the true costs of Medicare in order to assuage public concerns over the program and win enough votes for passage. Forty years later Medicare is our biggest federal budget albatross.

Each new government program must be viewed with a critical eye, with an eye to its future ongoing costs, and with the full understanding that the program will have unexpected growth.

 

Dig deeper:

News Article: Child of Civil War veteran is still receiving soldiers’ pension nearly 150 years after conflict ended

Brief: Civil War Pensions

Article: Government Schemes Cost More Than Promised

Radio Interview: Democrats could learn from LBJ’s Medicare push

Video: Corporatism and Medicare