Leadership for America: Entitlements - The Heritage Foundation

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Introduction

American Leadership

Education

Energy and Environment

Entitlements

Entitlements are the greatest domestic challenge the nation faces.

These middle class retirement programs, Social Security, Medicaid and Medicare, will cause federal spending to jump by half, from twenty percent of the economy to thirty percent by 2035. This tsunami of spending is a major threat to limited government because it runs on auto-pilot with automatic increases locked in by each program’s governing laws. While other programs are constrained through annual budgets, entitlements get first call on resources. Other goals such as defense or national security must compete for an increasingly smaller share of what’s left. This “locked in” spending is steadily undermining the economic future of younger generations who face a debt burden of $175,000. The moral and ethical challenge from the entitlement tsunami is undermining our democratic system as more Americans become dependent on the government and other priorities are automatically preempted.

We must change how we see the future and incentives for action. This requires putting entitlements on a level playing field with other budget priorities through a long-term “discretionary” budget reviewed on a regular basis and automatic triggers which would keep spending within limits if Congress failed to act. Long-term costs of entitlement programs would be built into the annual budget process forcing Congress and the nation to consider whether younger generations can afford to pay for new benefits for retirees. Entitlements or social insurance, must be transformed away from subsidized benefits to everyone regardless of need, towards real insurance where the government spreads risk and protects people against unexpected and devastating occurrences. Individuals must also assume a greater role for their foreseeable retirement needs through personal savings and insurance. These urgent steps will ensure a fiscally sustainable future and better stewardship for younger generations.

Key Papers

Taking Back Our Fiscal Future

by Stuart Butler, Alison Fraser, and Other Authors
April 2008

Solutions to Our Long-Term Fiscal Challenges

by Stuart M. Butler, Ph.D.
January 31, 2007

Congress Should Reject New Taxes and Curb Exploding Entitlements

by Stuart M. Butler, Ph.D. and Alison Acosta Fraser
June 22, 2006

Related Heritage Research

Fiscal Wake-Up Tour

Federal Budget and Spending

Retirement Income and Social Security

Medicare

Medicaid

Experts

JD Foster

Norman B. Ture Senior Fellow in the Economics of Fiscal Policy, Thomas A. Roe Institute for Economic Policy Studies

David C. John

Senior Research Fellow, Thomas A. Roe Institute for Economic Policy Studies

Brian M. Riedl

Senior Policy Analyst and Grover Hermann Fellow in Federal Budgetary Affairs, Thomas A. Roe Institute for Economic Policy Studies

Alison Fraser

Director, Thomas A. Roe Institute for Economic Policy Studies

Rea S. Hederman, Jr.

Senior Policy Analyst, Center for Data Analysis

William W. Beach

Director, Center for Data Analysis

Robert E. Moffit, Ph.D.

Director, Center for Health Policy Studies

Stuart Butler, Ph.D.

Vice President, Domestic and Economic Policy Studies, Domestic Policy

Contact An Expert

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