Why entitlements must be curbed - government entitlement programs - Editorial

Nation's Business, August, 1993

The chart on this page tracks the actual and projected growth of federal spending on entitlement programs. Their name is derived from the way they work: Those who meet eligibility standards are automatically entitled to benefits, and many categories of those benefits automatically increase each year by the rate of inflation. Total spending is determined by the sum of the claims, not by a preset cap. (The "other" component shown here includes such programs as welfare, retirement for federal retirees and military personnel, veterans' benefits, farm-price supports, and unemployment benefits.)

As a result of that open-ended policy, entitlement spending has soared, as the chart shows, from $32.3 billion in 1962 to $711.2 billion in 1992 and will reach a projected $1.36 trillion by 2002. From 30 percent of the federal budget in .1962, this spending is now just over half of all outlays and will approach 60 percent in just nine years. The Medicare/Medicaid outlays, nonexistent in 1962, totaled nearly $200 billion last year, and they will exceed $600 billion in 2002 if present trends are unchecked.

It is entitlement spending that is generating demands for higher taxes and/or borrowing. Congress and the administration must face up to what is undeniably the most difficult political challenge any officeholder could face-- disciplining programs that benefit so many constituents.

This is by no means a recommendation for wholesale abolition or meat-ax containment of all entitlement spending. But each of these programs should be analyzed from the perspective not only of those who receive the benefits--which has dominated the discussion thus far but also of those who pay the taxes that finance them.

Public officials really have no choice. If unaltered, the trend shown here will eventually wreck the national economy.