NCPA - National Center for Policy Analysis

Medicare and Social Security to Total 50 Percent of Budget by 2030

December 30, 2011

The annual share of the U.S. budget spent on programs benefiting senior citizens (i.e., those aged 65 and over) has increased rapidly in the past few decades.  More importantly (and alarmingly) is that these same programs under current law are expected to continue to increase rapidly in decades to come.  Data on Social Security and Medicare spending from the Congressional Budget Office is used to show the historical trends and projected share of the budget between 1970 and 2084, says Veronique de Rugy of the Mercatus Center.

  • In 1970, spending on Social Security and Medicare was one-fifth of the budget.
  • This portion has since grown to nearly 37 percent of the budget in 2010; this amounts to 8.4 percent of the country's gross domestic product.
  • The portion of the federal budget that is allotted to these two mandatory programs has begun to dwarf even the most traditional forms of government spending -- in 2010, they amounted to more than double defense spending.

Furthermore, this data underestimates the realities of federal spending for the old.  According to the Centers for Medicare and Medicaid Services in 2004, a substantial portion of Medicaid spending went to those older than age 65.  Thus, this amount must be added to the costs of Social Security and Medicare in order to establish a more accurate figure for the total budgetary burden of entitlement programs for the wealthy.

  • In 2004, 28 percent of Medicaid spending went to those older than 65.
  • If this figure held constant through 2010, then the original estimate of 37 percent for the elderly population's share of the federal budget rises to roughly 40 percent.
  • This moves forward the timetable for the growth of these programs in the projected future, with these three areas of spending constituting more than half of the federal budget sometime in the next decade.

The growing number of beneficiaries due to the aging of the baby-boom generation will cause scheduled spending to surge.  If current Social Security and Medicare policies continue without change, large deficits will undoubtedly emerge in the next decade and will grow even larger in subsequent decades. Undoubtedly, these trends are unsustainable, and current law cannot be allowed to stand if these entitlement programs are to remain solvent without bankrupting the federal government.

Source: Veronique de Rugy, "Spending Surge for Seniors: Medicare and Social Security Total 50 Percent of Budget by 2030," Mercatus Center, December 19, 2011.

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