DALLAS – This week’s Treasury Department numbers show that the budget deficit has skyrocketed 77 percent, in part because of increased Social Security spending and interest payments on the national debt. A new book says Congress must address the cost of the nation’s exploding entitlements and walk America back from the fiscal cliff.
Cost for the nation’s entitlement programs is about 75 percent of all federal revenue, according to a recent analysis by the Center for Budget and Policy Priorities. This level will only grow unless Congress takes steps recommended by a new book, “On the Edge: America Faces the Entitlements Cliff.”
“On the Edge” authors Merrill Matthews, Ph.D., and Mark E. Litow explain how Social Security, Medicare, and Medicaid, and some 80 more U.S. welfare programs are pushing the country to the precipice of an entitlements cliff. The authors identify the pattern employed by politicians both here and abroad: Identify a perceived social need, propose a new safety-net program, swear that the program is financially sustainable, pass the legislation, then keep expanding it until it becomes a drain on the economy, both now and for generations to come.
“Once entitlement programs are entrenched, politicians start trying to expand them, which costs more money,” write Matthews and Litow. “To address the funding shortfall, they usually either raise taxes or cut benefits, especially for higher-income people. Most often, they just try to ignore the problem so that future generations will have to deal with it.” In following this approach, the U.S. has spent trillions of taxpayer dollars on entitlement programs, created large amounts of debt, and faces trillions more in unfunded liabilities.
But for a Congress that will listen, “On the Edge” explains how the U.S. can move away from the crumbling patchwork of unsustainable government programs and easily address funding for healthcare, welfare, and retirement in a way that is financially sustainable long-term. The reforms proposed by the book grants working Americans the freedom to set aside their own money in their own accounts that invests in and grows with the economy.
Avoiding the entitlements cliff is not difficult, it just takes adopting actuarially sound programs, write Litow and Matthews. “We would see millions of Americans start the slow but steady climb toward financial independence as they begin creating wealth that belongs to them.”
“If Congress were to implement these changes, it would dramatically reduce the size of government and of its role in our finances and our lives,” write the authors. “And we would expect an economic explosion the likes of which the country has never seen, as trillions of dollars enter capital markets instead of government coffers.”
Copies of “On the Edge: America Faces the Entitlement Cliff” are available at ipi.org.
The Institute for Policy Innovation is an independent, nonprofit public policy organization based in Dallas. Copies of “On the Edge: America Faces the Entitlement Cliff,” are available at www.IPI.org. IPI resident scholar Dr. Merrill Matthews is available for interview by contacting Erin Humiston at (972) 874-5139, or erin@ipi.org.