Are Entitlements Programs Responsible for Rising Deficits?

Ben Key:

October 17, 2018

In the article McConnell Blames Entitlements, Not GOP, for Rising Deficits, it is revealed that Senate Majority Leader Mitch McConnell recently “blamed rising federal deficits and debt on a bipartisan unwillingness to contain spending on Medicare, Medicaid and Social Security.”

Does his claim hold water, or is he lying?

Evidence

I Googled for “do entitlements programs contribute to debt” and “money borrowed from social security.” The following is a summary of what I found.

From these articles we can conclude that Social Security is not a major contributing factor in rising deficits. Medicaid apparently is a major contributing factor but it is not due to a flaw in Medicaid itself. It is because the American healthcare system is broken!

The following articles discuss the reasons why the American healthcare system is so expensive.

The following is a meme this is often shared in response to discussions about Social Security being a major contributing factor in the deficit.

An often shared meme
An often shared meme

The above meme makes the following claim. Next time a Republican tells you that ‘Social Security is broke,’ remind them that Pres. Bush ‘borrowed’ $1.37 trillion of Social Security surplus revenue to pay for his tax cuts for the rich and his war in Iraq and never paid it back.

The article Did George W. Bush ‘borrow’ from Social Security to fund the war in Iraq and tax cuts? ranks this claim as mostly false.

The following quotes are relevant.

For about 50 years, Social Security was a “pay-as-you-go” system, meaning annual payroll taxes pretty much covered that year’s benefits checks. Then in 1982, President Ronald Reagan enacted a payroll tax hike to prepare for the impending surge of retiring baby boomers, and a surplus began to build.

By law, the U.S. Treasury is required to take the surplus and, in exchange, issue interest-accruing bonds to the Social Security trust funds. The Treasury, meanwhile, uses the cash to fund government expenses, though it has to repay the bonds whenever the Social Security commissioner wants to redeem them.

Experts told us there’s no question that the Treasury will repay the Social Security surplus (including what was accumulated during the Bush years) when the trust fund starts redeeming the bonds in 2020.

Thus, this is not a contributing factor.

Final analysis

I rank the claim made by Mitch McConnell as liar, liar, pants vaporized.

While Medicare does contribute to the deficit, it is because of larger problems related to the cost of healthcare. Simply requiring greater healthcare price transparency and allowing the United States government greater control over the cost of drugs would deal with much of that.

As for Social Security, there are numerous less drastic options for addressing the long-range solvency problem that do not involve cutting benefits. Some of these options are as follows.

A more detailed discussion of suggested reforms to Social Security can be found in the following locations.