Right On: Entitlement programs, Congress and budget disasters

October 18, 2017 Utah Channel 3

OPINION — All federal entitlement programs were enacted with noble intent. Almost all have been irresponsibly expanded by Congress. Budget Armageddon is coming.

Unlike traditional federal expenditures, entitlement program funding is open-ended. Any individual or entity meeting certain qualifications is “entitled” to receive prescribed federal benefits.

The major entitlement programs are familiar: Social Security, disability insurance, Medicare, Medicaid, college student loans and grants, food stamps, unemployment insurance, Obamacare. The list goes on to more specialized entitlements: farm subsidies, the Export-Import Bank, veterans’ services and many others.

Each program targets citizens or entities worthy of our help. With the notable exception of Obamacare, each was popular when enacted and most continue to enjoy widespread support.

Popular or not, autopilot spending on these open-ended programs plus interest on the national debt totals about two-thirds of the federal budget and continues to grow in both dollars and as a percentage.

Hoping to curry favor with voters, Congress has expanded these programs over the years far beyond their original scope. The upshot: entitlement spending is out of control.

Congress catered to senior voters by increasing Social Security benefits 135 percent between 1965 and 1975 while the Consumer Price Index increased only 67 percent. Your parents and grandparents made out like bandits, receiving benefits far in excess of what they contributed.

In those days, Social Security receipts exceeded expenditures: There were about four workers per retiree. Today there are only about 2 ½ workers per retiree. As baby boomers retire, receipts will no longer cover benefits.

An insurance company that failed to foresee this coming would be out of business today. The congressmen who got re-elected by irresponsibly increasing benefits are dead and gone, leaving you, me and our children holding the bag.

Don’t take any comfort in the $3 trillion Social Security trust fund mirage. Like all federal trust funds, it contains nothing but federal government IOUs. There is no bucket of cash being held to pay future benefits, only promises to tax future workers as needed.

Obama acknowledged this fact in 2011 when he correctly stated that the government would be unable to mail Social Security checks unless Republicans increased the national debt ceiling. The Social Security trust fund couldn’t redeem its IOUs unless the federal government had cash in hand, in that case by borrowing more money.

But isn’t Social Security a contract with those who contribute? No, it’s a pay-as-you-go welfare program as the Supreme Court ruled in 1960.

Social Security’s Disability Insurance is in no better shape. Congress has increased benefits well beyond workers’ contributions. Further, abuse is rampant as cooperative doctors certify work-capable patients as disabled. In the 1970s, 2.2 percent of the population qualified; today 4.4 percent do.

Medicare is in even worse shape. Its Supplemental Medical Insurance costs are expected to grow from 2.1 percent of gross domestic product to 3.4 percent by 2037. This runaway freight train will consume impossible amounts of our federal budget unless benefits are reduced, but reductions are a political death wish.

Medicaid, free medical care for the poor, enrolled about 20 million recipients for 15 years from 1975 to 1990. Congress loosened eligibility requirements several times since then and enrollment has grown to over 73 million today.

Medicaid is politically popular; free stuff usually is. But of course, Medicaid isn’t free. Federal and state taxpayers spent over $553 billion on the program in 2016.

As expected, free services are abused, raising program costs. The state of Oregon audited its Medicaid recipients earlier this year only to find that nearly half no longer qualified.

Higher education entitlements – Pell grants and Hope tax credits – have grown from $19 billion in 2006 to over $50 billion today.

I have written previously about the ever-growing $1.4 trillion student loan entitlement disaster. Expect much of this total either to be forgiven by the federal government or never repaid. Guess whose holding the bag?

Like Ado Annie in the musical “Oklahoma,” politicians “cain’t say no.” All it seems to take is another heart-rending story about people in need of federal largesse. The next day a new entitlement bill is introduced in Congress and championed by the mainstream media.

Are the intended recipients needy? Yes. Is the anticipated cost forecast accurate? No. Will additional folks who miss the original entitlement cutoff be added later? Yes. Will the program grow seemingly without limit? Yes.

Perhaps the most important question is will any entitlement program ever be meaningfully restrained? It’s politically tough but it can be done. For example, Congress passed the bipartisan Social Security Reform Act of 1983. Politics were hyperpartisan then but both sides were willing to compromise.

We need a Congress that is once again willing to find a middle ground that preserves essential aspects of existing entitlement programs while reining in their open-ended drain on our budget. Meaningful steps to reduce fraud would be a good place to start.

The other half of the answer: No new entitlement programs, period. No matter how worthy or deserving the intended recipients appear.

We will always have societal problems; there will never be enough money to address them all. We need elected officials willing to set priorities and stick with them. And we need voters willing to support them.

Howard Sierer is an opinion columnist for St. George News. The opinions stated in this article are his own and may not be representative of St. George News.

Email: hsierer@stgeorgeutah.com

Twitter: @STGnews