Tag Archives: entitlements

What happens when welfare (entitlement) and interest expenditures equal Federal government revenues? Stick around, we just may find out.

In a recent Foreign Affairs article Fareed Zakaria writes:

… the American right has to recognize that tax revenues will have to rise significantly in coming decades, the American left has to recognize that without significant reforms, entitlements may be the only thing even those increased tax revenues will cover.

A recent report by Third Way, a Washington-based think tank lobbying for entitlement reform, calculates that by 2029, Social Security, Medicare, Medicaid, and interest on the debt combined will amount to 18 percent of GDP. It just so happens that 18 percent of GDP is precisely what the government has averaged in tax collections over the last 40 years.

Now, do we believe this? Or rather do we even have a choice, — can we not believe it? I’ve heard this calculation any number of times, it’s a bit like 2+2=4. But I’ve never heard it from my representative in Congress. Why is that? Why do the members of Congress pretty much avoid the subject?

Are they even aware of what’s happening? That the cost of health care, and in particular Medicare is growing exponentially? And there will be money for nothing else if it continues to do so? They act as if it were enough for those on one side of the aisle to cut taxes and for those on the other side to grow entitlements, as if somehow doing both together were possible. It’s not, for in our world 2+2 still does equal 4.

Wouldn’t you think that our representatives in the Congress would want to keep us from reaching the kind of budget end that Third Way and so many others have spoken of, when the Federal budget would consist of pension and other welfare payments along with interest payments on the national debt?

Have you ever heard even one of the 535 representatives in Congress speak publicly of what’s coming if we don’t fundamentally restructure our way of governing, in particular cut down on any number of big ticket items like aircraft carriers and fighter bombers, as well as unaffordable medical care for the growing population of the elderly? I haven’t. Has any member of Congress ever admitted that Social Security, Medicaid, Medicare and interest payments on the debt would have to be substantially reduced if other government programs, including education, defense, energy, infrastructure and all the rest, were to be even continued, let alone expanded as new needs arose?

Why aren’t the members of Congress taking action?  The only explanation I come up with is that we have elected 535 individuals who have absolutely no interest in making tough decisions in respect to the costs of government programs that we can no longer afford, but who are acutely interested in being reelected to Congress. And furthermore they seem to know perfectly well that for this to happen, to be reelected, they must not go against the interests of the powerful constituencies that have put them there in the first place.