Federal Spending & The Budget

Swelling Entitlements

Despite reforms included in the Republican budget proposal, entitlements will continue to swell under the budget plans of either the president or Congress.

  • Spending on Social Security, which is nearly 20 times as large as Aid to Families with Dependent Children, is off the table by bipartisan consent.

  • Federal health benefits will grow so rapidly that even the Republican budget proposal would let Medicare and Medicaid double as a share of Gross Domestic Product (GDP) by 2020.

  • Under current law, federal entitlement outlays will climb from 10.9 percent of GDP in 1996 to 12.1 percent in 2002 and 14.6 percent in 2010.

  • Then as the number of aged beneficiaries swells, entitlement spending will shoot up to 22.5 percent of GDP by 2030 -- 21.0 percent of GDP under the president's proposal, 20.3 percent under the vetoed Republican plan.

By the mid-2020s, entitlement spending alone would consume all federal revenues, and without borrowing nothing would be available for national defense.

Thus the federal government would still become a giant check-writing machine, transferring a rising share of middle-class worker income to middle-class retirees.

Source: "Tweedledum and Tweedledee," Facing Facts, Vol. 2, N. 1, January 19, 1996, Concord Coalition, 1019 19th Street, N.W., Suite 810, Washington, DC 20036, (202) 467-6222.


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