The Unabridged And Illustrated Federal Budget For Dummies - Part 4: Entitlements By Tyler Durden Created 05/04/2012 - 00:10 Submitted by Tyler Durden on 05/04/2012 00:10 -0400 Afghanistan Medicare Obamacare In this final part of the four-part series from The Heritage Foundation , we look at the scale of the entitlement society we live in relative to the Federal Budget. Medicare, Medicaid, and Social Security spending is set to explode, placing enormous pressure on other priorities such as defense and the rest of the budget. Entitlement Spending Will Nearly Double by 2050 Spending on Medicare, Medicaid, Social Security, and the Obamacare subsidies will soar as 78 million baby boomers retire and health care costs climb. Total spending on federal health care programs will more than double. Future generations will be left with an untenable debt burden. Tax Revenues Devoured By Medicare, Medicaid, and Social Security in 2045 Spending on Medicare, Medicaid, the Obamacare subsidies, and Social Security will devour all revenues by 2045. Entitlement spending is already crowding out vital constitutional functions, such as defense. Medicare Adding to Federal Deficits Faster than Other Government Spending Programs Entitlement spending is the main cause of long-term runaway federal deficits. Medicare is the fastest-growing program due to retiring baby boomers, the effects of an aging population, and rising healthcare costs. Social Security Deficits are Permanent and Growing Social Security began running deficits in 2010, paying out $48.9 billion more in benefits than it received through payroll taxes. Nor will these deficits ever end, meaning that without reforms, Social Security will continue to add billions to the deficit and debt each year. Without Entitlement Reform, Federal Spending Will Exceed 40 Percent of the Economy by 2050 The major entitlements— Medicare, Medicaid, the Obamacare subsidies, and Social Security—are pushing spending to unsustainable levels. These programs must be restructured to prevent crippling debt or tax burdens on future generations. Discretionary Spending Cuts Alone Will Not Balance the Budget Annual spending on entitlement programs is massive compared to other federal spending priorities. Cutting discretionary spending is necessary, but cuts to foreign aid alone or pulling out of Afghanistan will not close the deficit. Entitlement programs must be reformed. Even Eliminating Defense Spending Completely Would Not Balance the Budget Unsustainable entitlement spending is the key driver of future deficits. Rather than tackle them directly, some would cut defense. But even if spending on this crucial national priority was eliminated completely, entitlements would continue to drive deficits to unmanageable levels. Letting Tax Cuts Expire Will Not Balance the Budget Some call for letting all 2001 and 2003 tax cuts expire, including subjecting the middle class to the alternative minimum tax, in order to balance the budget. Under this scenario, unaffordable spending would still rise, and economic growth and job creation would suffer. Balancing the Budget Without Cutting Spending Would Cause Taxes to Skyrocket America is running massive deficits, and a balanced budget requirement is often considered a way to rein in red ink. Without serious entitlement and spending reforms, the level of taxes required to balance the budget would reach economically stagnating levels. Hiking Taxes to Balance the Budget Would Require Doubling Tax Rates The costs of Medicare, Medicaid, and Social Security are rising substantially. Paying for this spending solely through federal income tax increases would require more than a two-fold increase of current tax rates, even for the lowest tax bracket. Taxing the Wealthy to Balance the Budget Will Not Work Some argue for taxing the wealthy to reduce federal deficits. However, hiking taxes on taxpayers in the two highest brackets would increase their tax rates to mathematically impossible levels. To close the 2035 deficit, the top two tax rates would increase to 159 percent and 166 percent, and in 2050 they would reach 236 percent and 246 percent. Government Policy Reform Needed to Keep Spending Low and End Deficits Without Raising Taxes Bold, transformational reforms are needed to solve America's spending and debt crises. The Heritage plan, Saving the American Dream , solves these crises through spending, entitlement, and tax reforms. It reduces the size of government, encourages personal fiscal responsibility, and fosters economic growth. It balances the federal budget by 2021 and does not raise taxes. Source: The Heritage Foundation Tweet Similar Articles You Might Enjoy: The Unabridged And Illustrated Federal Budget For Dummies - Part 1: Spending The Unabridged And Illustrated Federal Budget For Dummies - Part 2: Revenues The Unabridged And Illustrated Federal Budget For Dummies - Part 3: Debt Deficits
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