Our Unsustainable Entitlement Growth

Published August 1, 2011

As news of Washington’s debt ceiling clash flashed across the wires, a reader sent me a clipping this week from a column written by a Texas radio pastor in 1975. It decries the gargantuan size of President Gerald Ford’s proposed federal budget, which “constitutes a continuation of the spend, spend, spend philosophy” with enormous deficits passed on to the nation’s children.

The arguments are familiar, but the numbers are staggering. The total projected size of the deficit back then? $52 billion. The total size of the proposed budget? $349 billion.

Of course, there is inflation to consider. In today’s dollars, the Ford budget must be far more significant, right?

Wrong. A quick calculation shows the total proposed budget in 1975 equates to roughly $1.4 trillion in today’s dollars. This means the entire federal budget was far less than the amount that Senate Majority Leader Harry Reid (D-NV) now demands as a debt ceiling increase for just the coming year–and Reid says his $2.2 trillion mark is as low as he is willing to go.

As Sen. Tom Coburn (R-OK) commented this week, “Everybody’s talking about the symptoms of our problem instead of the real disease. The government’s twice the size it was 10 years ago. It’s 30 percent bigger than it was when [Barack] Obama became president.”

This comment brought the media fact-checkers out. Surely the Oklahoma senator had to be exaggerating for effect. Wrong again. The St. Petersburg Times’ Politifact found Coburn had underestimated the government’s growth. It has more than doubled during the Obama presidency.

It is difficult to wrap your mind around the sheer size of this unprecedented growth of government, but when stepping back to look at the mountain of debt and deficits, it becomes clear that entitlements are the biggest element.

The Commerce Department just reported U.S. gross domestic product rose at an annual seasonally adjusted rate of just 1.3 percent in the most recent quarter. Economists agree the economy cannot grow fast enough, or tax job-holders and job-creators high enough, to fund the entitlement structure created under President Lyndon Johnson.

In some respects this was inevitable. Originally designed as safety net promises for the poor and the aged, Medicaid and Medicare were not created to cover individuals for decades of extended lifespans and at ever-increasing income levels.

So if we must cut back on these entitlement promises, how do we do it? There are two clear paths.

On one path, we hand the matter over to bureaucrats through a top-down, Washington-based methodology. Under this approach, politicians shield themselves from the tough decisions, and experts are handpicked by the White House to select whose benefits will stay and whose will go. We see this mindset at work in Obama’s Independent Payment Advisory Board for health care, which would lower costs by force of law and underpay for medical services from the private sector.

On the other path, we can give people who make more money less in subsidies, and delay some expenditures by raising the retirement age by two or three years. Such funding cuts would come with more freedom and better health care services as a more open marketplace results in lower costs and more competition as informed consumers make decisions about their care and their lives.

House Minority Leader Nancy Pelosi (D-CA) was stark about the moment Washington faces in the context of the current deficit fight. “We’re trying to save life on this planet as we know it today,” she told reporters this week, somehow keeping a straight face.

Maybe Pelosi is right. But “life as we know it today” is an unsustainable illusion built on incredible growth in government and entitlements under Republicans and Democrats alike. The question moving forward is, who will decide the winners and losers in a new, more honest nation: unelected political bureaucrats, or free, empowered citizens?

Benjamin Domenech ([email protected]) is a research fellow at The Heartland Institute and managing editor of Health Care News.