Entitlements Seen Taking Up Nearly All Taxes by 2012

A prestigious bipartisan group warned Monday that entitlement benefits such as Social Security, Medicare, Medicaid and civil service pensions are growing so rapidly that they will consume nearly all federal tax revenues by the year 2012, leaving the government with no money for anything else.

Democratic and Republican legislators on the Bipartisan Commission on Entitlement and Tax Reform put aside normal political wrangling to agree on a startling portrait of a world in which a handful of programs crowds out everything else. When entitlements plus interest on the national debt consume all revenues 18 years from now, said Sen. John C. Danforth (R-Mo.), co-chairman of the commission, “there will be no money for national defense, for law enforcement, for the environment, for highways--that is a very stark finding.”

Sen. Bob Kerrey (D-Neb.), the other co-chairman, predicted that “the people who will get hurt the most are young working families” who will suffer a huge and ever-rising tax burden “unless we have the courage and foresight” to slow the growth in spending.

The bipartisan commission was created last year as a concession by President Clinton to Kerrey, whose vote was needed desperately by the White House to win Senate passage of Clinton’s tax and budget program.

Sounding the alarm is just the first--and easiest--responsibility of the panel, cautioned one member, Rep. John D. Dingell (D-Mich.). “It is far easier to identify a problem than to solve it,” he said.

Although Social Security is often considered the third rail of politics--”touch it and you’re dead”--Kerrey and Danforth have pressed forward in formulating an apocalyptic definition of the problem of federal programs that grow automatically. The hardest part--offering solutions--has a deadline of Dec. 2, and Kerrey is determined to deliver strong proposals to the President. The commission will spend the next few months debating solutions, which could include suggestions for reducing benefits, increasing taxes or a combination of both. After the commission delivers its recommendations, it will be up to the President and Congress to act.

An entitlement, in the blunt language of Rep. Christopher Cox (R-Newport Beach), a commission member, is “a blank check for spending rather than a fixed dollar amount appropriated by Congress.”

The spending grows every year--an eligible person is “entitled” to receive the funds. The biggest current entitlements are Social Security, $335 billion; Medicare (for citizens over 65 and the disabled of all ages), $177 billion; Medicaid (health spending for the poor), $96 billion; and pensions for retired military and federal civilian workers, $65 billion.

Other entitlement programs included on a long list, are food stamps, price supports for farmers, veterans benefits and aid to families with dependent children--the basic welfare program.

Entitlements now consume about 47% of all federal spending. By 2012, unless policies are changed, “projected outlays for entitlements and interest on the national debt will consume all tax revenues collected by the federal government,” the commission said Monday in a report approved by a vote of 30 to 1, with one member not voting. “A bipartisan coalition of Congress, led by the President, must resolve the long-term imbalance between the government’s entitlement promises and the funds it will have available to pay for them,” the commission said.

Kerrey moved to reassure senior citizens’ groups, who have been fearful that the commission will tamper with Social Security. He pledged that there would be no erosion or cutbacks in the present level of benefits.

Currently, the Social Security system runs at a substantial surplus, collecting more revenues from 110 million workers than it pays to 41 million beneficiaries. The system will come under strain in the next century, going bankrupt in the year 2029, because of payments to the massive baby boom generation, according to this year’s trustees report. Medicare faces a more pressing crisis, with bankruptcy expected in 2001.

The lone dissenter at Monday’s vote was Richard L. Trumka, president of the United Mine Workers Union, who said that, “apart from health care,” entitlements are “not growing faster than the economy.”

Among the 32 people serving on the commission are 22 members of Congress--11 from each party--who are trying to balance the immense popularity of the entitlement programs against future fiscal strains.

Without Social Security, and Supplemental Security Income, a special program for needy aged, blind or disabled, “my area would be a disaster,” said another commission member, Rep. E. (Kika) de la Garza (D-Tex.). “We would see the equivalent of what we’re watching on television with Rwanda.”

In his agricultural district, “the day workers and the seasonal workers are at the mercy of what the government could do for them,” de la Garza said. But he also insisted that entitlement reform is essential for avoiding a crushing tax burden on his grandchildren, who, in the year 2030, will be 47, 44, 42 and 40. “Those are the ones we have to see won’t bear the burden,” he said.