Congress is spending us into a hole. We hear about the cost of earmarks and the Iraq war. But what about "entitlements"?
That's the government's ironic term for programs that transfer money from people who earned it to people who didn't.
Entitlement? How can you be entitled to someone else's money?
To finance "entitlement" programs, the government threatens force against the taxpayers who provide the money. Why are people who favor compulsion called humanitarians, while those who favor freedom are stigmatized as greedy?
But I digress. Today's big problem with entitlements is that their growth will soon eat everything in the federal budget.
Last month, the Congressional Budget Office (CBO) analyzed the growth of government spending and deficits for Rep. Paul Ryan (R.-Wis.), ranking member of the Budget Committee. The report estimated that spending on Medicare, Medicaid and Social Security, which in 2007 represented about 8 percent of GDP, would balloon to 14.5 percent in 2030 and 25.7 percent in 2082.
There is no way that can fly.
If you add in all other spending, including interest on the debt, federal spending under the CBO's scenario would eat up an astounding 75.4 percent of GDP in 2084.
If taxes don't keep pace, the CBO says the "additional spending will eventually cause future budget deficits to become unsustainable ..."
And if taxes were to keep pace? The CBO says, "[T]ax rates would have to more than double."
One alternative to raising taxes would be to cut other spending. But at current spending-growth rates for Social Security, Medicare and Medicaid, all other spending would have to be reduced to zero in 2045. How likely is that?
Rep. Ryan is understandably alarmed. In The Wall Street Journal May 21, he wrote about a bill he's proposing that would: give individuals tax credits with which to buy their own health insurance in a competitive national marketplace, let the states have flexibility in running Medicaid, give workers under 55 money to buy insurance rather than rely on Medicare when they retire, permit younger workers to invest up to a third of their Social Security taxes in private accounts, increase the retirement age and temper the growth in Social Security benefits .
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