The New York Times published an interesting analysis yesterday on entitlement spending in the United States. Since 1929, entitlements as a share of income rose from 1% to 18% in 2011. Despite some ups and downs, the overall trend line has been steadily rising over the decades. It began with FDR’s New Deal policies. It continued with President Johnson’s Great Society program. It was exacerbated by the Medicare Part D drug benefit program signed into law by President G.W. Bush. It has continued to accelerate under President Obama with a dramatic increase in food stamp participation, and the passage of nearly $1 billion in healthcare legislation that has done everything but decrease healthcare costs.
The costs of these entitlement programs threaten to overwhelm the budget. They consumed “nearly 66 cents of every dollar of federal and state revenues in 2010” with almost half of American households receiving some form of benefit. Social Security, Medicare, and Medicaid are responsible for the lion’s share of these costs, in that order. Furthermore, Medicare and Medicaid are the two programs whose costs are projected to rise the fastest.
Despite the left’s rhetoric about “fair share”, couples with low to average wages are projected to consume 10% more money than they put into Social Security, while couples with average to high wages will consume 11% less. Both groups are projected to consume more than their “fair share” of Medicare with poor to average income couples consuming 4.2x what they contributed in taxes, and average to high income couples consuming 2.4x.
57% of Americans think the Social Security system will not have enough money available to provide the benefits they expect for retirement. 56% believe Medicare will not have the money available they expect for retirement. Their perception of the dire situation in which the country finds itself seems to be a realistic one, and one on which both parties can forge a solution.
At least Americans are realistic. Unfortunately, the politicians they elect appear to be willing to sacrifice long-term fiscal sanity for short-term political gain.