Entitlements Still Much of the Problem

I've repeatedly shown that the skyrocketing Federal budget deficit mostly is driven by so called "mandatory spending" on entitlements. The OMB calls entitlements "human resources" (see Table 3-1) and defines it to include "Education, Training, Employment, and Social Services, Health, Medicare, Income Security, Social Security and Veterans Benefits and Services." Vets benefits were less than half a percent of total "human resource" spending in 2010--the category is dominated by Social Security, Medicare and Medicaid plus income security (the later includes unemployment benefits, subsidized housing and food stamps, see Table 3-2).

J.E. Dyer at Hot Air disagrees somewhat:

Entitlements are not the problem for the federal debt in 2011.

Now, calm down. Entitlements are a debt problem. But they are not the reason the federal debt has increased 35% under Obama. I’ll say that again. Entitlements are not the reason the federal debt has increased 35% under Obama.

Obama has not added so dramatically to our national debt by putting new money into Social Security and Medicare. His multi-trillion-dollar deficit-fest has not pumped cash into Social Security and Medicare. Do I need to put this in three or four more ways in order to get the point across? Entitlements are a systemic, long-term debt problem, but they are not what has caused the national debt to spiral from 2009 to 2011.

It’s all the Obama spending on other things -- not on the two user-contribution entitlement programs that America’s seniors now rely on -- that has caused the debt to skyrocket.

Dyer is right to fault Obama's increased "discretionary spending" such as the failed stimulus package. But the rising deficit also is driven by shrinking tax revenues beginning with the 2007 credit crunch--as Ed Morrissey says, "we have a recession problem." Contrary to the New York Times, the Bush tax cuts didn't cause the deficit--Federal receipts jumped after the cuts until the recession.

Dyer cites no data--though page 8 of this CBO presentation is somewhat supportive. Here are two charts that challenge Dyer's view:


source: Heritage Foundation



source: NOfP chart via OMB data


As can be seen, entitlements are killing the budget--though they have been for some time. Discretionary spending (including defense) started climbing under Bush, and increased under Obama--which contributes but doesn't necessarily drive the problem.

To be fair, Dyer distinguishes between short-term and long-term budget problem--and favors tackling both. Indeed, cuts in discretionary spending are essential to offset projected growth in entitlements.

Dyer's strongest point is that Hill Republicans shouldn't let Dems define the deficit debate solely as cuts to entitlements. Agreed; Republican prospects in the 2012 election depend on communicating that concept to voters.

(via reader Warren)