Entitlement Mentality

So-called entitlement programs are the reason “America faces escalating deficit levels and debt burdens that could swamp our ship of state,” as Comptroller General David Walker put it in a recent speech. Social Security, Medicare, and Medicaid account for 40 percent of federal spending and are expected to consume 51 percent in a decade.

Right now Social Security makes the federal fiscal picture look better than it really is, since the program generates a surplus that masks the true size of the deficit. In fiscal year 2007, for example, the official budget deficit was $163 billion; excluding the Social Security surplus, it was more than twice as high.

Since the government spends the surplus on other programs, the Social Security “trust fund” consists entirely of federal bonds, and those IOUs will come due soon. The oldest baby boomers become eligible for early retirement in 2008. They will start drawing Medicare benefits in three years.

The result, said Walker, will be a “tsunami of spending” that “will never recede.” Under current law the estimated gap between the benefits retirees have been promised and revenue to fund them is $53 trillion, of which $34 trillion is due to Medicare.

Nearly one-quarter of that long-term Medicare deficit, $8 trillion, is attributable to the prescription drug benefit championed by President Bush and approved by a Republican-controlled Congress. “Incredibly,” Walker noted, “this number was not disclosed or discussed until after the Congress had voted on the bill and the president had signed it into law.” He said the bill’s passage “arguably represents government ‘truth’ and ‘transparency’ at its worst.”

Although it was presented as a solution to the dilemma of senior citizens forced to choose between eating and taking their medicine, the drug benefit is not means-tested. Like Social Security and Medicare generally, it transfers wealth from young workers to retirees who are often financially better off, buying the votes of older Americans with their grandchildren’s money.

Not that the Democrats, who criticized the drug benefit as insufficiently generous, are any better. If you believe a Democratic president would be more fiscally responsible than Bush, have a look at the campaign ad that presents “Universal Health Care,” “Alternative Energy,” “Middle Class Tax Breaks,” and “Universal Pre-K” as Christmas gifts lovingly wrapped by a beneficent Hillary Clinton. Unlike Charlie Rangel, at least Clinton wants to buy gifts for us, but she’s still using our money.

"Our government has made a whole lot of promises that, in the long run, it cannot possibly keep without huge tax increases,” Walker noted.