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WASHINGTON, D.C. – In spite of the fact that entitlement programs account for almost half of the entire Federal budget, President Obama proclaimed in his inaugural address yesterday that Medicare, Medicaid and Social Security “free us to take the risks that make this country great.”
For the past several political cycles, the question of how to ensure the future of such programs while dealing with the mounting national debt has gone largely unanswered. And it doesn’t look like that’s going to change over the next four years.
President Obama said “we must make the hard choices to reduce the cost of health care and the size of our deficit” but then quickly added, “but we reject the belief that America must choose between caring for the generation that built this country and investing in the generation that will build its future for we remember the lessons of our past, when twilight years were spent in poverty and parents of a child with a disability had nowhere to turn. We do not believe that in this country, freedom is reserved for the lucky, or happiness for the few.”
According to the President, these entitlements are a source of national strength rather than a financial drain. “We recognize that no matter how responsibly we live our lives, any one of us, at any time, may face a job loss, or a sudden illness, or a home swept away in a terrible storm,” Obama continued. “The commitments we make to each other – through Medicare, and Medicaid, and Social Security – these things do not sap our initiative; they strengthen us. They do not make us a nation of takers; they free us to take the risks that make this country great.”
The Heritage Foundation, however, warns that Social Security, Medicare and Medicaid now make up 44 percent of all spending in the federal budget and continue to expand. Over the past 20 years federal entitlement spending has grown by 110 percent and at its current rate of growth will consume all tax revenue by fiscal year 2025.
A recent Heritage Foundation report noted: “All three programs are growing faster than inflation, and—when joined with $1.7 trillion in new Obamacare spending—will drain about 18.5 percent of the nation’s total economic output by mid-century.”
The non-partisan Congressional Budget Office reports similar warnings. A recent CBO report said, “Expenditures for each of the three largest entitlement programs were greater than in the same period last year. Outlays for Social Security benefits increased the most—by $12 billion (or 7 percent). Spending for Medicare rose by $6 billion (or 5 percent) and outlays for Medicaid rose by $5 billion (or 8 percent).”
Even the President’s own fiscal commission report in 2010 predicted, “By 2025 revenue will be able to finance only interest payments, Medicare, Medicaid, and Social Security. Every other federal government activity – from national defense and homeland security to transportation and energy – will have to be paid for with borrowed money. Under its extended-baseline scenario, CBO projects that federal health care spending for Medicare, Medicaid, the Children’s Health Insurance Program (CHIP), and the health insurance exchange subsidies will grow from nearly 6 percent of GDP in 2010 to about 10 percent in 2035, and continue to grow thereafter.”
Few Americans realize how entrenched the entitlement mentality is in their collective lives. We are living longer and producing less. The end result may feel like freedom when in fact the end result will prove to be something else indeed.
