September 28, 2007

Clinton: Let's Add A $20 Billion Entitlement (Update & Bump - Context?)

Fresh off of pushing for an expansion of S-CHIP into the middle class and adding tens of billions of dollars on insurance subsidies, Hillary Clinton decided to create another entitlement program for her cradle-to-grave nanny state vision. In her address to the Congressional Black Caucus, Hillary said she'd like to spend $20 billion each year on checks to newborn infants:

Democratic presidential candidate Hillary Rodham Clinton said Friday that every child born in the United States should get a $5,000 "baby bond" from the government to help pay for future costs of college or buying a home.

Clinton, her party's front-runner in the 2008 race, made the suggestion during a forum hosted by the Congressional Black Caucus.

"I like the idea of giving every baby born in America a $5,000 account that will grow over time, so that when that young person turns 18 if they have finished high school they will be able to access it to go to college or maybe they will be able to make that downpayment on their first home," she said.

The New York senator did not offer any estimate of the total cost of such a program or how she would pay for it. Approximately 4 million babies are born each year in the United States.

The US has had over 4 million births per year since 2000. The calculation is easy. In 2004, with 4,121,000 births, that would mean $20,605,000,000 dollars ... for just one year.

Where does Hillary plan to get that money? It's easy to talk about writing checks, but the federal budget already runs in the red, especially on entitlements. If we talk about spending even more money that we don't have, why stop at $5,000? John McCain wondered aloud in his blogger conference call whether $100,000 wouldn't sound more compassionate, as long as we didn't talk about how we plan to pay for the program.

This represents pandering politics at its worst. Want to get votes for an election? Promise to buy people off with free money! It takes the worst instincts of Norman Hsu to suggest yet another entitlement Ponzi scheme to get elected to office. The company Hillary keeps has started to rub off on her. Read Philip Klein for more.

UPDATE & BUMP, 3:40 PM: Teresa in the comments claims that Clinton's remarks were taken out of context. "Clinton was responding to a program suggested by Time Magazine in which the gov't would set up this program, but kids could only withdraw the money IF they served in the military or some other national service organization first."

Unfortunately, to take advantage of the 18 years of compounded interest Hillary thinks will pay for a college education or a new home, the government has to buy the bonds at birth -- which means the money gets outlaid right from the start, and we're paying $20 billion a year for this entitlement. Either that, or the government has to calculate the compounded interest for 18 years at the point of that decision and write a check -- which makes this an unfunded mandate, a liability that won't even get accounting until the lump sums start getting paid. Either way, it's an irresponsible fiscal disaster.

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Comments (100)

Posted by Alberto Hurtado | September 28, 2007 1:42 PM

Rick Santorum had discussed a similar proposal in his book It Takes a Family. The funding of this is troubling, obviously, but if that problem were solved, would the idea then be so bad?

Posted by John Wilson | September 28, 2007 1:46 PM

If Satan is a lock for the nomination, why does she have to buy votes in such a craven fashion?

Posted by the fly-man/bong boy | September 28, 2007 1:50 PM

Pandering Politics? You mean like the President's plan to revamp Social Security? Why do you make such a big deal out of what the politicians describe as realistic policy goals? Did the President make all of his stump speeches turn into the real thing? Again, the GOP and it's defenders are sooo great at picking apart the opposition for it's details but when they had control to actually implement their own ideas they either didn't have the votes or the intestinal fortitude to vote against their own Party's leader. Honestly, I think with immigration the party gave him the pass but what about Social Security and smaller government? That was just flat out horrible leadership. It's pretty obvious that the GOP can't really thump their conservative chests anymore without looking like complicit buffoons to corruption, wasteful spending and horrible management of their OWN leader. Where's the clone of Ronald Reagan. I guess it's back to the ole Rush days, "The Way it ought to be". Vaccumesque pipe dreams being shouted to the players from worthless patronizing wannabes that couldn't get elected to hall supervisors, now that's elitist.

Posted by Ann | September 28, 2007 1:58 PM

Keep in mind too how this would encourage pregnant women to come here, have a kid, get the account, and either stay or return home.

Since Mrs. Clinton said it is for babies born in America and not for babies born to Americans, my guess is she does not make the illegal/legal distinction.

Posted by L88SS454 | September 28, 2007 2:01 PM

Do we need to call Hillary's latest plan "Babies for Bucks" or "Hsucial Security"?

Posted by gregdn | September 28, 2007 2:07 PM

Perhaps if we sent the check to Mexico they'd stay there...

Posted by the fly-man/bong boy | September 28, 2007 2:11 PM

Here is an entitlement program created by our Foreign policy in action. Quote:"The cost of providing disability benefits and medical care, even under the most optimistic scenario that no additional troops are deployed and the claims pattern is only that of the previous Gulf War, would suggest that at a minimum the cost of providing lifetime disability benefits and medical care is $350 billion. If the number of unique troops increases by another 200,000 to 500,000 over a period of years, this number may rise to as high as nearly $700bn. (See Table 5) The funding needs for veterans' benefits thus comprise an additional major entitlement program along with Medicare and Social Security that will need to be financed through borrowing if the US remains in deficit. This will in turn place further pressure on all discretionary spending including that for additional veterans' medical care."

This is already happening, not some plan. What's 20 Billion if we ignore 350 that we basically have already spent? Well?
Here's my source:

SOLDIERS RETURNING FROM IRAQ AND AFGHANISTAN:
The Long-term Costs of Providing Veterans Medical Care and
Disability Benefits

Linda Bilmes
Kennedy School of Government
Harvard University
http://www.epsusa.org/events/aea2007papers/bilmes.htm

Posted by GarandFan | September 28, 2007 2:27 PM

" What's 20 Billion if we ignore 350 that we basically have already spent? Well?"

Hey Bong Boy, the time to shoot down a stupid idea is at the beginning. And if it wasn't pandering, what do you call it?

Kennedy School of Government - yeah, that's an impartial organization. Just read the 1st 3 paragraphs.

Posted by Nate | September 28, 2007 2:31 PM

This New Deal is getting so old.

Posted by Dan S | September 28, 2007 2:46 PM

If this program comes about, I predict a sharp decline in the number of abortions, and a parallel increase in child mortality.

Simple economics.

Posted by rbj | September 28, 2007 2:58 PM

Heck, why not just give everyone $1 million. We can all be millionaires! Yay!

Posted by Mary Jo | September 28, 2007 3:15 PM

The Kennedy School of Government? What's their motto? "We'll cross that bridge when we come to it"?

Posted by Teresa | September 28, 2007 3:16 PM

Once again, the right pulls things completely out of context. Clinton was responding to a program suggested by Time Magazine in which the gov't would set up this program, but kids could only withdraw the money IF they served in the military or some other national service organization first. And then, only if the money is spent of education, buying a home or starting a business.

Essentially a modern day version of the GI bill.

Posted by Teresa | September 28, 2007 3:21 PM

Oh, sorry, I forgot that CONTEXT is only available to Rush Limbaugh and Bill O'Reilly and is never supposed to be extended to a Democrat.

Posted by PersonFromPorlock | September 28, 2007 3:23 PM

Since Mrs. Clinton said it is for babies born in America and not for babies born to Americans, my guess is she does not make the illegal/legal distinction.

Indeed, she can't: a child born here is a citizen and you can't give federal money to one citizen for getting born and not give it to another. Basic Fourteenth Amendment stuff.

More amusing is the brouhaha that'll break out when someone realizes that five thousand is a powerful incentive not to have an abortion. Shortly thereafter, 'Choice' activists will insist that government neutrality on abortion requires five thousand per abortion, too.

Posted by old white guy | September 28, 2007 3:28 PM

ya a little more government in your lives. won't that be great.

Posted by Captain Ed | September 28, 2007 3:36 PM

Teresa,

It still requires the initial outlay in the birth year. The entire intent was to generate enough interest from the $5000 bond to ensure that they could pay for college or a new home. You can't do that without generating the interest -- or by replacing it from government coffers, in essence creating an unfunded entitlement.

It's a disaster.

Posted by Michael Smith | September 28, 2007 3:40 PM

fly-man/bong boy:

That $350 billion is the present value of the next 40 years or so of expected payments, meaning that the annual cost is a lot less than Clinton's latest scheme for the looting and plundering of the taxpayers.

Besides, supporting the troops that are sent out to defend us IS a legitimate taxpayer expense. Child care is not.

Posted by CheckSum | September 28, 2007 3:46 PM

Posted by Teresa

Oh, sorry, I forgot that CONTEXT is only available to Rush Limbaugh and Bill O'Reilly and is never supposed to be extended to a Democrat.


I have to take from that comment that you agree that Rush's statement was taken out of ''CONTEXT'' too. Funny, didn't see your post to that on the Rush thread.

Posted by Loren | September 28, 2007 3:51 PM

Wonder if any politicians can do math?

If you assume that a college would charge $10,000 per year, (which is pretty close to tuition at the U of MN/TC campus right now), and the bond is given at birth in the amount of $5000, and pays out 10,000 per year, for 4 years, starting in the 19th year; the bond would have to earn a (tax-free) return of about 10.75% compounded annually.

Now if Government issued bonds are paying 10.75%, what would mortgage backed bonds have to pay to attract investment $? What would the underlying mortgage have to charge?

And if colleges knew that every student that applied was getting $10,000/year, what effect would that have on the tuition they charge? (Hint: Pressure on price would be upward.)

Posted by Laura | September 28, 2007 3:56 PM

This idea was recently floated in CA:

Great California $500 Giveaway.

Hillary's just added another zero to the number...

Scary.

Best wishes,
Laura

Posted by Joe Marier | September 28, 2007 3:57 PM

I say, give 'em $42,000 and a slate of index/lifecycle funds to invest it in, say they can't spend it 'til 65... and kick them out of Social Security.

If they earn 5% after inflation, they'll all be millionaires in today's dollars, and won't miss it!

All for a mere 173 billion dollars a year, or 574 bucks a person.

Posted by Michael Smith | September 28, 2007 3:58 PM

Captain said:

It's a disaster.

It is also unjust and immoral.

It is unjust because it shifts the responsibility for one person's actions -- namely, the parents, who took the action of creating the child -- and transfers responsibility to others -- the taxpayers -- who had no part in the action, had no say so about it, were not consulted and never agreed to accept such responsiblity. Punishing one man for the consequences of another man's actions is the very essence of injustice.

It is immoral because it encourages people to bear children they cannot properly support, which violates a child's fundamental right to be raised and cared for by responsible parents and not be born into the world as an instantaneous ward of the state.

Like all welfare programs, it can only deliver $5,000 worth of good to one individual by doing more than $5,000 worth of harm to some other individual -- and it is nothing more than a pathetic, egregious attempt at vote buying by proposing still more looting of the country's most productive individuals.

Posted by the fly-man/bong boy | September 28, 2007 4:02 PM

Face it folks Dear Leader has single handedly created one of the country's largest entitlement programs. EVER. Do any of you care about how it will be funded? So why worry about what Mrs. Clinton is proposing? Seems like a drop in the bucket compared to Iraq and its' peripherals. Nasty ole Entitlements, they're evil for Liberals to propose them, but when Conservatives actually create them it sure gets quiet. I think the return on Mrs. Clinton's 20 Billion sure looks better than what we've garnered out of our Mission Accomplished debacle. Don't like my Harvard numbers, I'll gladly review anything you post, even if it comes from AEI or The Weekly Standard. See, I don't just discount sources, I read it all and then make my decsions.Sorry it's too dificult for you all to actually read something other than the scroll bar on Fox News.

Posted by unclesmrgol | September 28, 2007 4:03 PM

As if our college system didn't need further incentive to far outstrip the rate of inflation!

Posted by Nate | September 28, 2007 4:13 PM

Teresa said something about..

"CONTEXT" .. blah blah blah ...

That bit of context doesn't change a thing. It is socialism. Socialism is theft and therefore fundamentally immoral. Period.

All your blather to the contrary is just a liberal looking in the mirror congratulating herself for stealing from some people so she can feel good about giving it other people.

Posted by Joe Marier | September 28, 2007 4:16 PM

Uncle,

Exactly. That's why my plan (more money, but you can't spend it on college) is PERFECT.

Michael, I would disagree with you on the immorality of the idea. Children are a boon to the economy overall, so a little advance on their future earnings is fine with me.

Posted by Teresa | September 28, 2007 4:21 PM

I'm not sure it is a great idea, but Tony Blair (who I think a few of you love around here) instituted a similar program in Great Britain a while back. It would be interesting to look at how that program is structured.

At any rate, Hillary said it was an interesting idea, not a policy proposal. It may have been in response to a question from someone else and she was trying to be polite. I'd be interested in seeing the entire transcript from the event.

Posted by Christopher Taylor | September 28, 2007 4:24 PM

All these government youth service organizations are disturbing, they make me think of the Hitler Youth or the Soviet Young Pioneers.

Posted by Carol Herman | September 28, 2007 4:26 PM

Let me guess? Hillary still expects donations "packaged." And, while she gives out taxpayer funds, if she can. Where's her percentages? Because she does, in fact, see this as "her" income

Meanwhile, today's wacky academics have a lot on their hands. Because affirmativ