The Entitlement Monster

With each passing year since 1960 the portion of the federal budget consumed by entitlement spending has steadily grown larger. Whereas back in '60 entitlement spending accounted for only around twenty percent of the budget, it now takes up nearly sixty percent. On the current path entitlements will double with each passing decade, and in about thirty years entitlements will swallow up the entire federal budget, eliminating discretionary spending completely. This means no money for defense or any thing else. If we simply do nothing, than when that time comes congress will either have to raise taxes an average of $10, 000 dollars a family or severely cut benefits. Neither of these options is desirable, so we need to take action to shrink the entitlement monster now before it swallows up Washington and the nation.

President Bush at least in part understands this. In his budget he proposed a one percent cut in Medicaid, the medical care program for impoverished or low-income individuals. The one percent cut is not a cut in benefits however, but in the program's growth. Yet despite this, and the larger entitlement problem, the Senate voted yesterday to reject the president's proposal. This is astounding, and the Senate's inability to accept even modest cuts in entitlement growth illustrates one of the obstacles in shrinking the entitlement monster. If the Senate and the rest of congress don't get their act together than the next generation of Americans faces an age of back breaking taxes and recession.

The Medicaid program doesn't account for the whole entitlement problem, but it does account for a large chunk. Medicaid spending today exceeds over $300 billion, up more than fifty percent in the past five years. This is due in large part to congress lowering the eligibility requirements in '86. The problem with the program now is that while Washington sends out most of the money the states decide how that money is spent. Governors and state legislatures have no problem spending money that is not a part of the state budget, and in addition, much of that money is spent on trivial items such as antacid aspirin for example. Many states cover non-emergency ambulance rides, or brand-name prescription drugs when identical generic drugs would suffice. State governments are simply too liberal with the people's money.

There are several good ideas to address the Medicaid problem, two of which are from within the Bush family. The president has proposed converting Washington's contributions into block grants, where the federal government gives each state a specific amount of money each year, and the state has to make that money last for the year. This will force states to be much more stringent in how they spend that money, no longer having a virtual blank check from Washington.

Florida Governor Jeb Bush also has a plan for his state, and it resembles the president's proposed Personal Savings Accounts for Social Security. Under the governor's plan, the state would provide funds based on need, with the recipients than being able to choose from which insurance plan best suits them. The state would simply provide transparency and counsel on all private plans. This reform gives recipients more choice while introducing competition into Medicaid, something that is sure to lower costs.

It is measures such as these that are going to be necessary to shrink the entitlement monster before it consumes us. We need to take government out of the equation and promote an ownership society, which will shrink government's influence and obligation. This country was formed on the basis of limited government and self-determination, and it's time we shrink entitlements and move back in that direction. The costs of not doing so are simply too unbearable.

Hat Tip: David Gratzer, The Weekly Standard