The Entitlement Squeeze
by Milton Ezrati
For all the promises made by politicians on both sides of the aisle, budget math makes clear how little room exists for new government spending. The federal budget is on autopilot. Spending for entitlements will soon crowd out most of what Washington does. Any new initiative that requires major financing is suspect.
The underlying budget realities are stark. Some 70 percent of all federal spending goes to entitlements—Social Security, Medicare, Medicaid, unemployment insurance, and the still relatively small (for now) costs of the Affordable Care Act (ACA). These spending flows continue to grow automatically; Congress doesn’t even debate them. Legislative discretion does come into play regarding the next-largest budget item—defense, at about 17 percent of the total—but even here, little room for maneuver exists, given past cuts and today’s deteriorating geopolitical situation. Interest obligations on outstanding federal debt eat up another 6.5 percent of the total. That leaves barely 6.5 percent of the budget for everything else Washington does— including education, infrastructure spending, and all the other things that the political class discusses and about which it makes its most lavish promises.
And entitlement spending promises to narrow the choices still further. For decades, through both Republican and Democratic Congresses and presidential administrations, entitlement-spending growth has outstripped the growth of the rest of the budget, steadily enlarging its share of the total. The rate of gain has slowed from time to time, but it has never paused for long, let alone declined. In five years, entitlement spending could command three-quarters of the federal budget. The swelling ranks of retiring baby boomers and the new spending obligations imposed by the ACA could push that percentage even higher.
For all the promises made by politicians on both sides of the aisle, budget math makes clear how little room exists for new government spending. The federal budget is on autopilot. Spending for entitlements will soon crowd out most of what Washington does. Any new initiative that requires major financing is suspect.
The underlying budget realities are stark. Some 70 percent of all federal spending goes to entitlements—Social Security, Medicare, Medicaid, unemployment insurance, and the still relatively small (for now) costs of the Affordable Care Act (ACA). These spending flows continue to grow automatically; Congress doesn’t even debate them. Legislative discretion does come into play regarding the next-largest budget item—defense, at about 17 percent of the total—but even here, little room for maneuver exists, given past cuts and today’s deteriorating geopolitical situation. Interest obligations on outstanding federal debt eat up another 6.5 percent of the total. That leaves barely 6.5 percent of the budget for everything else Washington does— including education, infrastructure spending, and all the other things that the political class discusses and about which it makes its most lavish promises.
And entitlement spending promises to narrow the choices still further. For decades, through both Republican and Democratic Congresses and presidential administrations, entitlement-spending growth has outstripped the growth of the rest of the budget, steadily enlarging its share of the total. The rate of gain has slowed from time to time, but it has never paused for long, let alone declined. In five years, entitlement spending could command three-quarters of the federal budget. The swelling ranks of retiring baby boomers and the new spending obligations imposed by the ACA could push that percentage even higher.
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