Estimated Gross Federal Debt of the United States of America( 2025 to 2055)
Source: Congressional Budget Office( March 2025)
Veterans’ Pensions and the Entitlement Expansion Cycle
The first US federal entitlement programs consisted of pension plans for war veterans. Unlike modern pensions, veterans’ plans only provided benefits to disabled veterans. The first plan was created in 1789 when the newly formed federal government took over a plan established for Army veterans prior to the ratification of the US Constitution.
Over the next 80 years, the Revolutionary War pension plan followed a pattern of incremental expansion that would repeat with future veterans’ plans. Initially, such plans covered a specific set of conditions for a well-defined cohort of eligible participants. For example, the Revolutionary War plan restricted coverage to veterans who suffered disabilities stemming from wounds or illnesses acquired in the line of duty, as well as widows of eligible veterans. But over time, Congress steadily expanded benefits and loosened eligibility criteria. Expansions typically occurred around critical election years, especially when they coincided with a strong economy. In the case of the Revolutionary War pension, major benefit and
eligibility expansions occurred in 1806, 1818, 1832 and 1836. In combination, incremental expansions over multiple decades massively increased plan costs, placing unanticipated strain on federal budgets.
One key difference between veterans’ plans and modern entitlement programs, however, is that distributions inevitably declined as veterans passed away. In the case of the Revolutionary War plan, distributions ended when the last pensioner, Daniel T. Bakeman, passed away on April 5, 1869. Similar to veterans’ pensions established during the War of 1812, the Civil War and World War I, the aggregate costs of the Revolutionary War veterans’ pension far exceeded initial estimates. Even so, the costs would soon be dwarfed in the 20th century by entitlement programs that covered a much larger portion of the US population.
A New Deal for Entitlements
“ Security was attained in the earlier days through the interdependence of members of families upon each other and of the families within a small community upon each other. The complexities of great communities and of organized industry makes less real these simple means of security. Therefore, we are compelled to employ the active interest of the nation as a whole through government in order to encourage greater security for each individual who composes it.”
— President Franklin D. Roosevelt
The Great Depression was the worst economic catastrophe in US history. Real GDP contracted by nearly 30 % from 1929 to 1933, and unemployment averaged approximately 18 % for the entire decade. The misery of the 1930s was amplified by the transformation of the United States from an agrarian to industrial economy over the prior century. All else being equal, family and community bonds were weakened, leaving many vulnerable populations without a support network. Prior to the Depression, poverty and unemployment were largely handled by family members, private charities and local government. Looser family and community
www. MoAF. org | Spring 2025 | FINANCIAL HISTORY 23