VOL. 37 | NO. 19 | Friday, May 10, 2013
Entitlements' unimpeded growth is boon to seniors
WASHINGTON (AP) — With Congress increasingly unable to resolve budget disputes, federal programs on automatic pilot are consuming ever larger amounts of government resources. The trend helps older Americans, who receive the bulk of Social Security and Medicare benefits, at the expense of younger people.
This generational shift draws modest public debate. But it alarms some policy advocates, who say the United States is reducing vital investments in the future.
Because Democrats and Republicans can't reach a grand bargain on deficit spending — with mutually accepted spending cuts and revenue hikes — Social Security, Medicare and Medicaid keep growing, largely untouched. Steady expansions of these nondiscretionary "entitlement" programs require no congressional action, so they flourish in times of gridlock.
Meanwhile, many discretionary programs are suffering under Washington's decision-by-indecision habits, in which lawmakers lock themselves into questionable actions because they can't agree on alternatives.
The latest example is $80 billion in automatic budget cuts, which largely spare Medicare and Social Security. Growth in these costly but popular programs is virtually impossible to curb without bipartisan agreements.
Instead, the spending cuts are hitting the military and many domestic programs that benefit younger Americans. They include early education initiatives such as Head Start, and scientific and medical research.
This shift in public resources is dramatic and growing. While 14 cents of every federal dollar not going to interest was spent on entitlement programs in 1962, the amount is 47 cents today, and it will reach 61 cents by 2030, according to an analysis of government data by Third Way, a centrist-Democratic think tank.
"Entitlements are squeezing out public investments" in education, infrastructure, research and other fields that have nurtured future prosperity, the study said. "The only way for Democrats to save progressive priorities like NASA, highway funding and clean energy research is to reform entitlements."
But Democrats won't consider entitlement cuts until Republicans agree to increase taxes for the rich. And Republicans, who control the House, refuse to do that.
The Third Way study was written 10 months ago. Since then, partisan clashes that produced the "fiscal cliff" and the automatic cuts have made matters even worse, said the group's vice president, Jim Kessler.
"The foot is on the accelerator with entitlement programs, and it's on the brakes on investments," Kessler said. "And this country needs more investments."
Society must care for the elderly and needy, Kessler said, "but we can't do that at the expense of young people and new ideas."
With baby boomers retiring in huge numbers, total benefits for seniors are bound to grow. "But over the course of decades, Medicare and Social Security spending generally grow faster than inflation, per beneficiary," Kessler said. That squeezes nearly everything else.
According to White House budget records, discretionary spending comprised two-thirds of total federal outlays in 1968 and mandatory spending made up 27.5 percent. The estimate for 2018 has those shares nearly reversed: discretionary programs will consume 27.5 percent of total federal spending, mandatory programs will consume 62 percent and interest on the debt will take about 10 percent.
"Costs linked to the retirement of the baby boom generation," the nonpartisan Congressional Research Service said in a recent report, "are a major cause of rising mandatory spending." The current trajectory of federal health care spending, the report said, "appears unsustainable and could place heavy fiscal burdens on younger generations and generations not yet born."
Congress set the sequester cuts into motion as a self-imposed prod in 2011, when the parties deadlocked on how to address deficit spending. The across-the-board cuts were supposed to be so distasteful that both parties would reach a budgetary compromise to avoid them.
It didn't happen, and the cuts began taking effect last March.
They include a $1.6 billion reduction in the $30 billion budget for the National Institutes of Health, the world's largest supporter of biomedical research. NIH Director Francis Collins said the cuts will delay the start of hundreds of medical research projects.
Those paying the price, Collins said, are "ultimately patients and families who are counting on us to find those next promising cures and treatments."
Robert Blendon of the Harvard School of Public Health said medical research is popular. He said Congress eventually may find targeted ways to fund it while continuing to cut funds for other important types of research.
The bigger problem, Blendon said, is the gridlock caused by congressional Republicans' refusal to raise taxes and Democrats' refusal to consider entitlement changes without new revenues.
"This is not going to be solved before the 2014 elections," Blendon said, when all 435 House seats and a third of the Senate seats will be on the ballot.