What’s the biggest fiscal problem that our nation faces? Defense spending? Foreign aid? Obamacare? Nope. It’s entitlement programs. At least one member of Congress recognizes the need to deal with them, as reported in the Ft. Smith Times Record:
Mandatory spending, such as Medicare, Medicaid, Social Security and “entitlement” programs, is running the government dry, along with crippling debt, U.S. Rep. Steve Womack, R-Rogers, said Thursday during a Fort Smith town hall.
I’m not sure why the Times Record put “entitlement” in quotes. That’s what these programs are called. They have that name because as long as you meet certain eligibility requirements, you are entitled to receive them. Because of this, spending on these programs is largely on autopilot. Other government spending, such as funding for defense or NASA, must be approved by Congress and the president every year. Entitlement programs operate by formula, and will continue automatically unless changed by Congress and the president.
Rep. Womack is right to be concerned about the fiscal problems these programs will cause. Here’s how the Cato Institute’s Michael Tanner described the situation last year:
Social Security’s unfunded liabilities top $24.9 trillion. Add that to the $2.8 trillion needed to redeem the Trust Fund, and Social Security is running roughly $27.7 trillion in the red. That’s $1.8 trillion more than last year. It’s not getting any better, folks.
Yet Social Security’s finances actually look pretty good compared with Medicare’s. According to the trustees, Medicare’s Trust Fund will run a deficit this year as it has for the last six years. The program may briefly return to solvency next year, as a result of Obamacare tax hikes, but will be running deficits again by 2021.
Medicare’s Trust Fund will remain technically solvent until 2030, which represents a four-year improvement over last year’s projection. But, as we saw with the Social Security Trust Fund, this is a meaningless accounting measure that doesn’t affect the nation’s overall finances. The program’s total unfunded liabilities exceed $48.1 trillion, an increase of $5.2 trillion since last year’s report.
The looming fiscal crisis these programs will cause our nation is clear and undeniable. Unfortunately, there is little real desire in Congress to deal with the problem. To do so means changing programs that people use today in order to solve a problem that will take decades to fully reveal itself. Unfortunately, Members of Congress have rarely shown a willingness to put long-term interests ahead of short-term political gain.
Reform is necessary, but it may not even be all that painful — if it can be done soon. Block granting Medicaid, letting Social Security recipients use private retirement accounts, raising retirement ages, and other such modifications could be phased in over time. Waiting to change these programs, however, will mean much more disruption at a much higher cost.
Rep. Womack deserves credit for discussing this problem. Congress will act only when the public is convinced that there is a need to reform entitlement programs.