There’s no doubt that the federal government must make some changes in entitlement spending. But Byron York‘s latest Washington Examiner article challenges the conventional wisdom that runaway entitlement spending created the latest budget crisis.
There’s no doubt federal spending has exploded in recent years. In fiscal 2007, the last year before things went haywire, the government took in $2.568 trillion in revenues and spent $2.728 trillion, for a deficit of $160 billion. In 2011, according to Congressional Budget Office estimates, the government will take in $2.230 trillion and spend $3.629 trillion, for a deficit of $1.399 trillion.
That’s an increase of $901 billion in spending and a decrease of $338 billion in revenue in a very short time. Put them together, and that’s how you go from a $160 billion deficit to a $1.399 trillion deficit.
But how, precisely, did that happen? Was there a steep rise in entitlement spending? Did everyone suddenly turn 65 and begin collecting Social Security and using Medicare? No: The deficits are largely the result not of entitlements but of an explosion in spending related to the economic downturn and the rise of Democrats to power in Washington. While entitlements must be controlled in the long run, Washington’s current spending problem lies elsewhere.
A lot of the higher spending has stemmed directly from the downturn. There is, for example, spending on what is called “income security” — that is, for unemployment compensation, food stamps and related programs. In 2007, the government spent $365 billion on income security. In 2011, it’s estimated to spend $622 billion. That’s an increase of $257 billion.
Then there is Medicaid, the health care program for lower-income Americans. A lot of people had lower incomes due to the economic downturn, and federal expenditures on Medicaid — its costs are shared with the states — went from $190 billion in 2007 to an estimated $276 billion in 2011, an increase of $86 billion. Put that together with the $257 billion increase in income security spending, and you have $343 billion.
Add to that the $338 billion in decreased revenues, and you get $681 billion — which means nearly half of the current deficit can be clearly attributed to the downturn.
That’s a deficit increase that would have happened in an economic crisis whether Republicans or Democrats controlled Washington. But it was the specific spending excesses of President Obama and the Democrats that shot the deficit into the stratosphere.
