Anonymous asked this question on 5/11/2000:
PLS explain to me the existence of "entitlement" programs.........how does this impact out fiscal budget decisions? Or the number of people that are "entitled"
And what about projects from previous a year that were not completed during that fiscal year? What is the difference between determining revenue projections by scientific method or by political process what does this mean? And which do we use in US?
JesseGordon gave this response on 5/11/2000:
"Entitlements" usually means Social Security, Medicare, & Medicaid payments, plus any other programs which are promised to people over many years. Generally, politicians won't mess with those programs, because just about everyone believes that the government should keep its promises.
But Congress CAN change what the entitlements are, and how much people get paid for them. For example, a couple of years ago, Sen. Pat Moynihan pushed to use a different method to calculate the annual increase in social security payments (using a more "scientific" lower inflation rate) which would have cut the entitlements by billions in future years.
SCALE OF ENTITLEMENTS:
Entitlements are BIG money: social security is about $400 billion a year; Medicare & Medicaid about $310. Those two alone account for 40% of the annual federal budget.
Medicare & Medicaid affect millions of people, but Social Security is the big one, because everyone pays into the system and (in theory) everyone is "entitled" to get money out of it.
The REAL reason that politicians don't mess with "entitlements" is because millions of people are counting on Social Security for their retirement. Moynihan could get away with suggesting a decrease because he wasn't planning to run for re-election. Normal Senators consider entitlements to be the "third rail" of politics -- touch it, and you kill your political future.
(Source for the figures: http://issues2000.org/Background_Budget_&_Economy.htm)
Sometimes Congress allocates money for a project for one year, and sometimes for the life of the project. Generally, when funding is allocated, it automatically goes into the next year's budget. Of course, that year's Congress can question it, and increase or decrease the funding level.
Big defense projects often fall into that category. You'll hear things like "Should we defund SDI?", which means the project has been going on for years, and Congress is deciding whether to continue it or not. If they don't do anything, the project gets continued. But they COULD change any project funding, any time.
The big topic in this category is again Social Security. That program will require trillions of dollars to fulfill the government's promise to pay for Baby Boomer's retirements. So there's a lot of debate about the "Trust Fund," which means a pot of money set aside for future retirement payments. But as above, Congress can change the Trust Fund any year they want to -- it's all politically determined.
SCIENCE VS. POLITICS
EVERYTHING you ask about is political -- the budget, entitlements, projections, everything. The politicians on each side CLAIM to use scientific methods (and usually, the science is pretty good), but WHICH science they use is politically determined.
For the best example this week, look at http://issues2000.org/George_W__Bush_Budget_&_Economy.htm, which compares Bush's budget projections ($586B) to Gore's ($164B). Both use "scientific" methods to determine the budget projection; the truth will probably be somewhere in the middle. I think, in this case, Gore's figures come from the Congressional Budget Office (CBO) which uses "economic science" to come up with their estimates. Bush's figures are equally valid, but happen to have different premises and hence different conclusions.
In conclusion, everything is politically determined -- but that is as it SHOULD be. If scientists predicted and determined the budget, there would be no political debate. And spending millions of people's tax dollars should be rife with debate!
A viewer asked this question on 3/25/2000:
Just a few years ago we were told the US has huge budget deficits because of the cost of "entitlements". well the entitlements are still there but now we're told we have a surplus !! What happened ? Is someone cooking the books ?
budgetanalyst gave this response on 3/26/2000:
No one is cooking the books for this case. The "entitlements" rhetoric had two sides to it: One is the Social Security issue, and the other is "welfare."
The Social Security issue is by far the overwhelmingly largest problem. It was also a budget problem until two things were done: (1) The Social Security taxes were raised (to the current levels), and (2) the age for full benefits was raised (in gradual steps). (The changes resulted from the recommendations of the Commission on Social Security, which issued its report in 1981.) These changes have resulted in large surpluses for Social Security accounts, which are in fact what most of the surplus is.
But this situation is temporary if you take a long enough view. By about 2030 or so Social Security will not have surpluses, and these "entitlements" will be a problem again. (You may hear President Clinton talk about fixing Social Security and paying down the debt to be ready; this is the problem he is talking about.)
Another part of what think of as "social security" and is an entitlement is Medicare, and there finances are not so good as for Social Security. But at this stage this is a smaller problem for the budget than Social Security was.
The second side to the issue, the "welfare" part, was a matter of political posturing. The welfare programs (mainly, aid to dependent children and Food Stamps, and including unemployment insurance) were never a very large part of the budget. And they are mostly still there, but not causing a problem - because they never were a problem. What the issue was is one of management and whether or not the programs should continue as they had been since the 1930's, when social conditions were different. The welfare reforms of the last few years have changed the way the programs are operated, so there is no longer a need for some politicians to talk about these programs as costing much money. After all, most of them voted for what is in place today. (Another factor involved in these programs is that the robust economy has made more jobs available, and there are fewer people on "welfare," so even less money is used.)
Hope this answers your question, and remember that experts like to have their work rated.
A viewer rated this answer:
So if I interpret your rather rambling answer correctly then they HAVE indeed cooked the books ?
budgetanalyst asked for clarification on 3/27/2000:
I don't think that the answer is rambling, but this is a matter of opinion. And no, the books have not been "cooked." The facts are clearly laid out in all the government accounts, and readily available to anyone who cares to give it some work and attention.
A viewer asked this question on 8/23/2000:
Can anyone define the phrase "Welfare Mentality"? I've heard it used loosely for years "She's got that welfare mentality", is there a REAL definition for it?
stevehaddock gave this response on 8/23/2000:
"Welfare Mentality", which is also known as "Entitlement" is what is often called in logic circles a "straw man" argument. Apparently, somewhere out there, there are people who feel they are "entitled" to welfare as some sort of right. Conservatives often point to families that have been on welfare for a few generations and where there are no families who have ever had a "steady job" or any kind of job at all for that matter. To put it succinctly, they feel that the government owes them a living. The term can also be thrown at liberals who are in favour of increases in direct government payments to people.
Of course, a "straw man" is an position set up to knock down, a position that no-one really holds. Almost everyone on welfare doesn't want to be on welfare. The statistics show:
- That 50% of the people on welfare have been on it for less than 12 months
- That the vast majority of people on welfare have, at some point in their life, been gainfully employed.
- That the overwhelming majority of persons who have been receiving welfare for more than 12 months are either permanently disabled or otherwise permanently unemployable.
- That this pattern applies to cities as diverse as Detroit and Boise.
- That welfare is effectively taxed at 100% (for every dollar of income you earn, you lose a dollar of welfare)
- That many people who get off welfare and get jobs have to go back on welfare because they lose other benefits (like subsidized housing and free medical treatment) that make it difficult to keep on a low income.
- That the United States has effectively full employment, but all the available jobs are above the skill level of the available labour pool (i.e. the unemployed).
- The average 65 year old going on social security will get 3 times more back in payments than they contributed to the plan, with interest.
In reality, people like Whoopie Goldberg and Sarah Jessica Parker are just a couple of examples of people who have been on welfare and gone on to succeed.
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