Apr 19, 2018

The Real Driver Behind Growing Deficits: Entitlement Spending

Post by Freedom Partners

America’s national deficit crisis is not going away, and as the Cato Institute’s Michael Tanner pointed out on National Review Online, entitlement spending is a major factor behind the impending deficit crisis. Critics have often deflected blame from entitlement spending and pointed to other sources of spending as main contributors to the growing deficit. However, as Tanner notes, entitlement spending is the “big driver” of the ballooning national deficit:

“Still, the big driver of federal spending remains entitlements, specifically Social Security (24 percent of federal spending), Medicare (17 percent), and Medicaid (9 percent). That’s half of all federal spending for just three programs. And the cost of all three programs is accelerating. A combination of an aging population and rising health-care costs means that Medicare is expected to grow by as much as 7 percent per year, while Medicaid increases at a rate of 5.5 percent annually. Meanwhile, Social Security is expected to increase from 4.9 percent of GDP to 6 percent within a decade.” 

In a letter to the editor published by The Washington Post, senior policy fellow at Americans for Prosperity Alison Winters remarked on this very issue, noting that critics are wrong to deflect blame from entitlement spending:

“Federal revenue increased in the 10-year periods following every major tax cut of the past 50 years, and yet deficits and debt soared. That’s prima facie evidence of a spending problem…” 

“Social Security has $15.4 trillion in unfunded benefits. Medicare’s exceed $30 trillion. We cannot tax ourselves out of that. In fact, increasing taxes would make solving the problem more difficult because it would depress economic growth and hurt the least fortunate (low-income, elderly and disabled) the most.”

Winters concluded that “any plan to reduce the deficit that doesn’t focus” on entitlement spending “is doomed to fail.”

Freedom Partners urges lawmakers in Washington to get serious on reducing the national deficit by reining in excessive spending and addressing meaningful entitlement program reform to lessen the growing national deficit crisis.