Editors' note: this piece originally appeared on Advancing a Free Society.

In his State of the Union address, President Obama spoke about the pressing need to reduce the federal government’s budget deficit. Rep. Paul Ryan (R-WI), who gave the Republican response, joined in that chorus. But Americans under 50 did not hear what they needed to about the main sources of the runaway federal spending on the horizon: Social Security, Medicare, and Medicaid. There are unpleasant truths about the state of these programs that we all, but especially Gen X and Gen Y’ers, need to hear and then hear again. Because unless we slow the growth rate in federal spending, Gen X and Gen Y stand together in looking at a future of huge deficits, massive government debt, higher taxes, and anemic economic growth as private sector investment is crowded out by government borrowing.

So this is my take on what I wish the president and Rep. Ryan would have said to my and my son’s generations. In the interest of keeping this a reasonable length, I’m going to confine my comments to Social Security and Medicare, the programs that are funded and administered solely by the federal government.

The Facts

The bills for Social Security and Medicare are staggering. In 2009, the last year for which official government historical data is available, Social Security benefit payments totaled $678 billion. Medicare payments ran $499 billion. How does that $1.2 trillion in federal spending compare to federal revenue? Not well. For every dollar in government revenue (our tax payments make up about 96% of that) in 2009, 32 cents went to pay for Social Security benefits and 24 cents went to Medicare. If we continue under current law, each of these programs will cost, in nominal dollars, nearly twice as much by 2019 as they do today. We will also need to devote a growing share of our economic output to pay for these programs. Today, Social Security and Medicare spending is 8% of GDP. In a decade, they will be almost 10%. In other words, in nine years, one out of every ten dollars in the U.S. economy will go toward paying for these two social insurance programs for our parents and grandparents.

The projected spending growth in Social Security and Medicaid is not “unsustainable.”


Tammy Frisby

Tammy Frisby is a Research Fellow at the Hoover Institution. She also teaches in the Stanford University political science department and in the university's public policy program.