As the deadline for the budget approaches, discussions surrounding entitlement programs have begun to take center stage. There is debate over the definition of entitlement, with some viewing it as a handout and others considering it as earned benefits that cannot be taken away. At the heart of these discussions is the question of what exactly qualifies as an entitlement and how it relates to one’s money.
In terms of government spending, entitlements are benefits that are guaranteed by law, separate from discretionary spending. Entitlement spending is not subject to annual appropriation and remains consistent, with adjustments made based on the number of benefit recipients or inflation. Social Security and Medicare are among the most popular entitlement programs in the U.S, funded by taxes on wages and self-employment income.
Social Security taxes are subject to a wage cap, while Medicare taxes apply to all wages. Contributions made towards these programs are essential for funding the benefits that individuals will receive in the future. However, there are concerns about the financial sustainability of these programs as expenses exceed income, leading to questions about the future viability of Social Security and Medicare.
To address these financial challenges, changes will need to be made to ensure the solvency of the trust funds for Social Security and Medicare. Possible solutions include raising payroll taxes, adjusting eligibility ages, and taxing benefits. Despite calls to reduce spending on entitlement programs, Congress recently passed a bipartisan bill in the House of Representatives that would expand Social Security benefits by repealing provisions that reduce benefits for individuals receiving other benefits.
The new bill, H.R. 82, is expected to add $196 billion to deficits over the next decade by eliminating certain provisions that were initially put in place to prevent overpayment of benefits. The bill is now set to move to the Senate for further consideration, with expectations that it will pass. This move by Congress to expand Social Security benefits comes at a time when the financial sustainability of entitlement programs is under scrutiny, raising concerns about the long-term impact on the federal budget.
