In the midst of all the recent international news, you might have missed President Obama’s new budget proposal. Even though we haven’t passed a budget in about five years, it’s still important because it is the clearest view of the administration’s priorities for the future.
It has some good ideas, but avoids an incredibly important challenge — the most pressing long-term budget decision we have to make. What should we do about the bill that takes up two thirds of our annual budget?
That challenge is entitlements.
Look at the coming fiscal year, the government is set to lay out $3.8 trillion — 70% of which is for mandatory spending programs. Mainly Social Security, Medicare and Medicaid.
Now, put aside the partisanship. This is just basic math.
The nonpartisan Congressional Budget Office projects that each year, for the next 25 years running, our government programs will cost more than our government takes in.
And unsurprisingly, the CBO also projects that our debt to GDP ratio will only continue to grow steadily over the next two decades, with the ratio reaching peaks that the U.S. hasn’t seen since World War II — where our debt dwarfs the size of our entire economy!
The primary driving force behind these huge increases is entitlements.
Again, back to the numbers: Social Security spending will jump from about 5% to 6% as a percentage of GDP.
It’s even worse for health programs, like Medicare and Medicaid, which almost double from 4.6 to 8%! Over the next 25 years these programs will grow from about 7% of our economy to more than 14%.
As a matter of public policy, this debate is not just about what programs are “good,” it’s about what programs and budgets are sustainable and affordable.
I’ve been arguing that we should address this gap sooner rather than later. We should do it fairly, for today’s retirees, and realistically for tomorrow’s, including my generation.
But, for some people, even talking about reform means you’re automatically “anti-social security” or “against the elderly.” Now, that rhetoric might work for campaigning, or for the special interest groups, and I get that. But it doesn’t do much for the people who count on these programs — or for those like me who wonder whether or not they’re sustainable enough to last another 50 years in their current form.
So it was no surprise that after my recent commentary on these budgeting issues, I got a number of — let’s call them “passionate responses” — suggesting I was misleading and misinforming millennials about the realities of these programs.









