Aging Baby Boomers Are Only a Part of the Entitlement Problem

Right From the Start

Last weekend, reporter Russ Wiles of the Arizona Republic, authored a lengthy piece concerning entitlement spending. It was both enlightening and misleading although I am not sure the latter was by intent. In the aftermath of the sequestration – a virtual non-event for anybody not living off the government – Mr. Wiles wrote:

“To succeed, an effort to get spending more in line with revenue must get even more aggressive and painful. It must address the costs of popular programs that help sustain the elderly and the poor.

“More than $6 of every $10 the federal governments spends now goes to Social Security benefits, Medicare for the elderly, Medicaid for the poor and other entitlement programs to aid individuals.”

That defines the scope of the problem. Sixty percent of government spending is on entitlement programs that increase annually. Most of these programs now greatly exceed the original intent of Congress both as to eligibility and benefits. The expansion of these benefits can be said to be singularly responsible for the increase in the national debt.

Now, here is the misleading part. Mr. Wiles continues:

“Social security remains the biggest expenditure, but the bulk of the spending growth [for all entitlement programs] today is driven by Medicare and Medicaid which didn’t exist 50 years ago. With more Baby Boomers retiring over the nest two decades, changing demographics could force the government to devote an even larger share of the budget to entitlements.” [Bracketed words added]

I recognize that being sixty-eight, I might be a little paranoid about whether the elderly are truly to blame for the increase in entitlement spending. Some of this comes from an experience last year when my wife and I went to the Social Security office to obtain new Medicare cards – mine dissolved when I forgot to take my wallet our of my swim suit before jumping in. After entering through their security apparatus, we were assigned a number and we dutifully took our seat in a rather large and almost completely full waiting room. I did not bring a book to read so I spent my time gazing around the room and soon realized that my wife and I were the only two people in the room that were over sixty-five.

The rest were disability income recipients – the vast majority of them under the age of sixty-five. I recalled an article published by AARP regarding the growing trend is social security disability benefits. Don’t get me wrong. I recognize that the AARP is tightly aligned with the national Democrat party and, therefore, whose reports should be taken with a grain of salt. And this report was no exception – not the facts, but the spin on the facts. Inadvertently, the AARP report described the history of all social welfare programs:

“Social Security pays benefits to the vast majority of elderly Americans. It also pays benefits to millions of disabled workers and their dependent family members who are severely limited in their ability to work because of a disabling illness or injury. Social Security Disability Insurance (SSDI) was added to Social Security in 1956. At first it was limited to workers age 50 and above, providing a pathway to early retirement for workers in poor health. In short order (in 1960), benefits were extended to younger workers, and in 1972, SSDI beneficiaries became entitled (after a twenty-four month waiting period) to health insurance coverage under Medicare.”

That in a nutshell is the history of social welfare programs. Most begin in controversy as to whether it is a legitimate role of government and whether the government can afford such a program. In order to quiet concern assurances are given that the program is drawn tightly and the costs are limited and will never increase. But once enacted they are invariably expanded step-by-step to include beneficiaries and benefits never considered by the original legislation.

But that is not the only reason such programs increase at a rate much faster than revenues. As noted by AARP in its report:

“SSDI has a very strict disability standard. Workers are eligible for benefits only if they are insured by DI (they have a significant and recent work history) and they have long lasting or permanent disability that makes it impossible to work and earn more than a very modest amount.”

That may be the statutory standard but, as applied, that is total bat guano. Well over half of the men in that room could have bench-pressed me without breaking a sweat. Many of the women were under forty-five trailing small children and of apparent stout health and physique. And scattered throughout the group were many bearing scars of alcohol and drug abuse. If you don’t ask or investigate, the ranks of recipients swell with those not truly entitled.

Those observations are validated in the growth of these “entitlement programs.” First, according to AARP, seventeen percent of the total social security spending is for those receiving disability benefits. As of 2008, there were 7.8 Million people receiving disability payments under Social Security along with an additional 1.85 Million children and spouses. By January of 2013, according to the Social Security Administration, that percentage had grown to 19.1 percent of all benefit payments and encompassed 8.8 Million people with an additional 2.07 Million children and spouses. That represents a growth rate of 12.6 percent. During the same period of time the number of recipients of the elderly receiving traditional social security benefits increased from about 41.5 Million to 46 Million – a rate of about 10.8 percent.

Mr. Wiles provides additional information in his article. He notes that while Social Security payments (including the increase to disability recipients) increased by 35.2 percent from 2002 to 2012, Medicaid increased by 46.5 percent, welfare payments to the poor increased by 31.3 percent and food stamps increased by 136.5 percent.

The thrust of Mr. Wiles’ article was to suggest that aging baby boomers are responsible for stressing the entitlements system. However, the figures suggest otherwise. It is general welfare payments coupled with an increase in benefits to those not considered elderly that are accounting for a greater rate of increase than the “aging baby boomers.”

Unless there is entitlement reform, and unless that entitlement reform encompasses all the forms of the welfare system, America will sink under the extraordinary financial burden. It is simply not possible for an increasingly smaller percentage of the population who pay taxes to support an increasingly larger percentage of people who do not pay taxes. Tuesday’ headlines were all about the stock market having reached an all time high – fully recovered from the downturn attendant to the Bush/Obama recession. While it may have been President Bush who was responsible by inaction for the recession, it is most certainly Mr. Obama who is responsible for its recovery. Mr. Obama’s supporters on Wall Street have faired very well under Mr. Obama’s presidency but there are still over 20 Million people who either unemployed or under employed. The money changers are making money but America’s vast small business and working classes are still stuck in the recession. And thus far Mr. Obama’s singular solution is to continue to demand more tax increases. It may make for great politics as President Barack Obama has demonstrated but it is economic calamity drawing nearer and nearer.