Chart Of The Day: Entitlements Or Growth

Tyler Durden's picture

From Bloomberg Briefs:

"Policy choices made in the near-term will affect the economy for years to come. If not addressed, current debt and spending dynamics will probably lead to a reduced growth path, placing at risk expenditures on vital social programs and, over time, crowding out private sector borrowing that funds the gross private domestic investment necessary to boost productivity and living standards. Dollars spent on entitlements dwarf those spent on discretionary items such as education, and tower over net fixed business investment, which is partially responsible for greater productivity, business expansion and rising living standards. Periods with greater investment as a share of GDP are highly correlated with both faster economic growth and rising living standards. One risk to the U.S. economy is that rising entitlement spending will require the government to borrow from the finite amount of capital held by private savers, thus squeezing out private firms that need the capital to expand businesses and increase productivity."

Who needs private business when you have infinite toner cartridge and politicians who need to be reelected with promises of, well, everything.

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fonzannoon's picture

The NFL refs are holding out for pensions. That's where things are at.

Lohn Jocke's picture

Long food stamps and short stripes.

distopiandreamboy's picture

It is my understanding that the refs have had a pension since the 70s and the NFL wants to convert it to a 401k and pay a lump sum to all current pension beneficiaries. The refs offered a comprise to continue to pay all past and current refs from the pension and all new refs will be in the 401k which the NFL refused.

GolfHatesMe's picture

Actuaries are not Football players.  They need to leave the room, so we can have at least one area of our lives that is not completly incompetent.

greyghost's picture

who writes this shit? entitlements vs other spending? does all the other spending include military spending? how about the $29 trillion created to keep the bankrupt banks afloat? this writer wants to insure there is enough money left for business to borrow! $29 trillion created just for the banks and yet they are still not lending!!!! anyone else find this article insulting on several levels?

p.s. just where is the tipping point from depression to total chaos on this cute chart when entitlement spending is cut? how deep do the cuts go? 25% of soc. sec. payments, 50% of soc. sec. payments...are those enough. i submit that every cent cut will cut exactly one cent from a fragile economy.

Thisson's picture

Well yes, cutting entitlements reduces GDP, but that's because GDP only measures the quantity of spending (including velocity), not the quality of spending.  In order to turn our economy around, we need to first stop driving it in the wrong direction, and slowing down is part of that process.

The only way an economy really grows is through the accumulation of capital that makes production more efficient (increasing output).  This requires savings and investment.  Money spent on consumption isn't saved and invested and doesn't increase output.  This is why our entire economy is in the doldrums now - government intervention has crushed the incentive to save and make productive investments. 

Nels's picture

I'm not fond of unions, but this kind of a pension conversion is always just a way to screw the employee.  Defined benefit pensions are backloaded, you don't have much vested until you are 20 or 25 years into the plan.  And what gets converted to the new plan is what is vested.  So, for folks with 15 years into the plan, it's like starting over on retirement savings.

It's all legal, AT&T did this and won the ensuing class action lawsuit. 

My guess is that the settlement has the NFL enriching the conversion calculatino for the refs, but in the end the refs end up with a plan that relieves the NFL of all inflation risk, which is the point of such conversions.

Thisson's picture

Hey, no problem, so long as the pension-receiving employees are only entitled to payouts equal to their expected longevity at time of hire.  Hmm,. I bet you still don't lilke that idea, do you?

But this is the issue - people are living much longer than expected, and company's are having to eat that cost in their pension provisions, which is making them uncompetitive with companies that don't have such costs.  Once again it's a situation of what cannot be paid, won't be paid - the pensions will either be restructured, or the companies will go bankrupt and discharge their pension obligations.

The employees are going to take the loss one way or the other, so they may as well take the choice that mitigates their losses.

In my opinion, the fair solution is to restructure the pension liabilities and issue the pensioners an equity interest in the restructured companies.

azzhatter's picture

NHL doesn't even have players at this point

hapless's picture

If you'd let Canada have the Stanley Cup once in awhile then Canadians would again have a reason to procreate.


GetZeeGold's picture



It's my me!


Just take it out of the stash....if Mitt can't afford it I'll take some from Barry.



kaiserhoff's picture

Here's a conspiracy theory for ya.  Maybe Mittens has started reading ZH, and decided he doesn't want the fucking job.

LawsofPhysics's picture

maybe he never wanted the job to begin with...

one party, for the banks and financial houses, by the banks and financial houses.

hapless's picture

Exactly.  Mittens was sent in to throw the election just like McCain did.

GetZeeGold's picture



Mittens has started reading ZH


Could care less that he wants....put him in charge and have him send me my gold metal.

Vincent Vega's picture

I've had the same thought(s). It's like applying for the Captain position on the Titanic after it has hit the iceberg.

GetZeeGold's picture



Anyone that travels on a ship named the Titanic.....gets what they deserve.


kridkrid's picture

Same is true of the Hindenburg... People are so dumb. There is actually an interesting conspiracy theory around the titanic and the creation of the federal reserve. It would seem that a few of the most outspoken critics of the yet to be approved plan to create the fed didn't get the memo not to sail on ships named titanic. Not big Leo Dicaprio fans, I guess.

Cathartes Aura's picture

not the same as, but reminiscent of those Pentagon account-ants who got an emergency late night email to report for work early enough to be on the receiving end of . . . a big pointy flying thang. . . that killed 'em all with their "paperwork", after Rumsie leaked the story of a "missing 2Trill". . .

. . .well, all but one, who overslept, apparently. . .

KickIce's picture
From a 1984 Bloom County strip

"We need a new candidate"
"What sort of person should we look for?"
"Well, someone willing to forfeit all his dignity to a bitter presidential campaign..."
"And willing to risk personal and economic ruin."
"All so he can reach the white house and be immediately blamed for every problem in the universe."
"Gentlemen, we need a complete fool."

StychoKiller's picture

"Our so-called leaders speak,

but it's the rhetoric of failure..." -- The Police

krispkritter's picture

Bennies by BennyTM. "Buying another term for Barry, because America is Entitled to the best Leader money can buy!"

Taint Boil's picture



.........Leader money can buy!"

A good example of a republic vs a democracy?

LawsofPhysics's picture

Does the entitlement data include future corporate bailouts?  Burn this shit show down already so we can find out the true value of everyone's labor.  Fucking bring it.

Whoa Dammit's picture

Entitlements are a corporate bailout. Think Walmart, Target, apartment REITS, etc.

LawsofPhysics's picture

no shit sherlock, oh SNAP!

(hence, the burn it all down comment)

krispkritter's picture

And don't forgive the Ben-ificent JPM, provider of EBT! Just Printing Money...

kaiserhoff's picture

Lots of people would starve!     Ask me if I care.

Nobody For President's picture

Do you care?

Many years ago, working my way through college when that was still possible, I sure found out what going hungry was about. Given the obesity level in this country today, it seems we have enough food to go around. 

spanish inquisition's picture

We CAN have it all America! Home, work, vacations.... We just need to go out and borrow more money from banks. If you can't do that right now, just send a check to Ben's Kids. Show your financial institutions you love them.  Right now Ben is shouldering the burden, he is printing and giving money to the banks that you should be borrowing. Sadly, you are not getting the new phone, vacation or the new car, just the bill. Lets change that. Be more confident in the system and head to you big bank and say "Ben sent me!".  That's the attitude that made America great! By giving Ben  and his owners your help and business, we can do it again. (Cue Ben with tear ala Keep America Beautiful campaign without makeup maybe keep feathers)

exi1ed0ne's picture


. . . maybe keep feathers

Throw in some tar and you got yourself a deal.

Woodyg's picture

What the hell are people supposed to do when there Are No Jobs?

And the true "entitlements" are the the rich who whine and cry about not having enough when they have scammed the system to the point where 90% Of all new Incme goes to the 1%!

Funny but when the rich have sent all your Jobs overseas and engaged in reckless monetary behavior to enrich themselves at everyone else expense that people would want snap or other things to help them EAT!

I'm with you though - burn the sucker down and hang the RICH. Who only got rich by destroying the economy. That's the true problem with the oligarchs today - in order to make a nickle they'll gladly destroy $100 of OUR wealth.

Making the rich the true Freeloaders and Parasites.

hapless's picture

For people who can't make busfare across town, it comes as a shock to learn that not everyone has to take life up the ass like the #Occupiers.  It's one of the benefits of not being an #HabitualUnderachiever.

By the time the matches are struck, the money will have long since been put out of reach.

Woodyg's picture

On a macro level there are simply Not Enough Jobs for the population.
And it became that way On Purpose - to force wages down and turn the economy into a robin hood forthe rich ponzi scheme.

Those people unfortunate enough to not have a job should just go die out of sight?

Just like it was "poor people's houses they couldn't afford" that crashed the world Econmy - never mind that TOTAL USA mortgages(prime and subprime) are less than 12 trillion and we've given the banksters well over 16 trillion - or over 25% more than needed to pay off Every Single Mortgage In America.

But it's still the poor people fault.
Long hanging nooses and petro lampposts!

hapless's picture

"Just like it was "poor people's houses they couldn't afford" that crashed the world Econmy - never mind that TOTAL USA mortgages(prime and subprime) are less than 12 trillion and we've given the banksters well over 16 trillion - or over 25% more than needed to pay off Every Single Mortgage In America."

So who elected the pols who installed a $1+ trillion deficit plus another $4trillion/year of unfunded liabilities? The 1%?

Shit doesn't Happen, Shit is Made.

Or in the immortal words of Otter:


Thisson's picture

Yep.  The 99% are the ones who sat by in disinterest while all these policies favoring the rich (including the bailouts) happened.  What's happening now isn't a suprirse that "nobody could have seen coming" - Ross Perot was on TV, on his own dime, educating anyone that wanted to listen -- complete with visual aids -- while there was still plenty of time to turn this train around!  But the 99% still voted for their democratic/republican banker puppet-stooge of choice. 

disabledvet's picture

Those aren't future bailout liabilities...those are CURRENT liabilities. The Government "pays" for the by destroying the value of the dollar and putting its status as a reserve currency at risk. Wall Street by definition is on the other side of that trade...they are PRODUCTION. If you and the Government can't find out how to pay for anything even though they're spending trillions...that's not a problem for New York and Wall Street. Hence "the bailouts were inevitable" especially given the hilariously predictable pattern of "political favoritism." I say no more. The Upper Midwest is on to the bullshit just as much as the US South has always been...time to pay the piper.

kridkrid's picture

Ummmm, whose forecast is that? I got some fake fiat money that says it is a little off.

billwilson's picture

Huh? The government won't borrow from private capital! Have you learned nothing yet from Bernanke? The government will simply print money.


The real challenge is how to get the newly printed money into the hands of real consumers and not stuck in bank depoist at the Fed or in the vaults at Applebank.


I say bring on the helicopters!!!!!

kridkrid's picture

Which was the commentary after the quote. Most financial writers have just enough exposure to traditional economic theory to write a story that seems to make sense to most people. It's a gigantic circle jerk.

insanelysane's picture

In the USSA, it's only a problem when they total up to 100% of GDP and even then it is just a minor problem.  Wile E Coyote never died falling off a cliff.

Lohn Jocke's picture

In Soviet America, you not borrow from Government, Government "borrow" from you!

insanelysane's picture

everything gets nationalized

Woodyg's picture

I think you mean Everything gets Corporatized.

Funny but the debt blew up when it came time to enrich the oligarchs at everyone else's expense.
The debt blew up when we turned the reinsof guv over to the corporate predators.
I'm Shocked!

GetZeeGold's picture



Oh crap......can I start over?


francis_sawyer's picture

  "One risk to the U.S. economy is that rising entitlement spending will require the government to borrow from the finite amount of capital held by private savers, thus squeezing out private firms that need the capital to expand businesses and increase productivity"...


Expand private business... Ha! That's a good one!

Schmuck Raker's picture

Obviously, the best method to expand private business would be for the government to nationalize and then manage those businesses.


[My MDB moment for the day]