7
and Medicaid (7.32%) comprised 38.35% of federal budget outlays. The Office of
Management and Budget projects that in 2019 Social Security (21.53%), Medicare
(16.45%), and Medicaid (8.83%) will account for 46.81% of total federal budget outlays.
21
To some extent, the same phenomena make both programs unfeasible. The U.S. has an
aging population – baby boomers started to collect Social Security in 2008 – and a
shrinking workforce with fewer people paying into the system. Those who oppose
Social Security allege it simply will cease to exist by the time the current generation
comes to collect, and as a result it constitutes “a Ponzi scheme.”
22
For Medicare, rising
health care costs as well as an aging population make it unsustainable. Instead, these
programs should be privatized or “personalized.” (And the same people who oppose
these existing government programs adamantly object to the 2010 Patient Protection and
Affordable Care Act, dubbed “Obamacare,” which increases projected spending.) In
general, opponents argue individuals (or the states) are better than the federal
government at providing for retirement and health care, and those who are unable to
care for themselves can rely on private charities and individual charitable giving.
Mandatory spending programs constitute the greatest source of the national
debt, and the budget deficit jeopardizes the nation’s economy and diminishes its
international status. In a report written for the Joint Economic Committee more than a
decade ago, two economists identified the optimal amount of government spending as
17.5% of GDP, at a time when it was actually between 20 and 22% with a balanced
budget.
23
(The last time government spending fell below 17.5% was before 1965 and the
Great Society programs.) Now the national debt exceeds 100% of GDP and constitutes
more than a total 14 trillion dollars. (The projected amount of debt to GDP ratio for 2012
is 106.9%. Countries with higher debt include Ireland, Italy, Greece, and Portugal.)
24
To
fund the national debt, the U.S. Treasury has been borrowing from Social Security and
literally writing out IOUs; whether they will ever be paid back remains uncertain.
Moreover, the other half of the debt comes from foreign countries, and at any time, those
nations could demand payment. (In particular, China might do so as its economy
becomes more consumer-oriented.) More likely, foreign countries will raise interest
rates, making it more difficult to borrow in the future. The national debt diminishes
21
Office of Management and Budget, Budget of the United States Government, Fiscal Year 2012,
Washington: Government Printing Office, 2011.
22
Ashley Parker, “Fresh Off Debate Debut, Perry Turns Down the Heat,” The New York Times,
Sept. 8, 2011. Accessed November 29, 2011, http://thecaucus.blogs.nytimes.com/2011/09/08/fresh-
off-debate-debut-perry-turns-down-the-heat/.
23
Richard K. Vedder and Lowell E. Gallaway, “Government Size and Economic Growth,”
prepared for Joint Economic Committee, December 1998, www.house.gov/jec.
24
Organization for Economic Co-Operation and Development, “Economic Outlook No. 89
Annual Projections for OECD Countries,” June 2011.