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DEFICIT Caused by Medicare and Social Security; Not the Wars (Charts)

Posted by FactReal on April 1, 2011

58% of the budget goes to entitlements; 20% to defense spending.
Did you know that 58% of the 2010 budget went to entitlements (Social Security, Medicare, Medicaid, Unemployment) while only 20% was spent to defend this nation? (See graph 1) Defense spending is actually less than 5% of GDP; entitlement spending is almost 10% and rapidly increasing. (See graph 2)

Democrats and some Libertarians are incessantly trying to perpetuate the myth that defense spending (i.e., Iraq and Afghanistan wars) is the principal cause for the U.S. deficit. When talking about the budget, their first impulse is to cut the money we spend to defend this nation. But they are disregarding the facts:

EXPENSES VS. REVENUES (Fiscal Year 2010)
Entitlements are killing us; not defense. The U.S. spends more than what it receives: It spends $3.5 Trillion while it only receives $2.2 Trillion in revenues. Most of the expenses go to entitlement programs, not defense spending.
Graph 1:

Entitlements are killing us; not defense.

Pie on the left:REVENUES = $2.2 Trillion:
● Individual Income Tax = $899 Billions (41%)
● Social Insurance Tax = $865 Billions (40%)
● Other = $208 Billions (10%)
● Corporate Income Tax = $191 Billions (9%)
Pie on the right:EXPENSES = $3.5 Trillion:
Entitlements are the major expenses:
● Social Security = $707 Billion (20% of the nation’s total expenses)
● Medicare + Medicaid = $724 Billions (22%)
● Unemployment Insurance & Other = $553 Billion (16%)
Other expenses:
● Defense = $694 Billion (20%)
● Non-Defense Discretionary = $431 Billion (12%)
● Net interest payment = $196 Billion (6%)
● Discretionary One-Time Items = $152 Billion (4%)
Defense spending has declined. Entitlement spending has increased:
“Spending on national defense, a core constitutional function, has declined significantly over time, despite wars in Iraq and Afghanistan. Meanwhile, spending on the three major entitlements—Social Security, Medicare, and Medicaid—has more than tripled and is rapidly crowding out other programs.”

Graph 2:


Source: White House Office of Management and Budget.

They said that Medicare would cost $500 million a year.
But now Medicare’s unfunded liability is $89.3 Trillion!

Since the Great Depression, the U.S. has created various entitlement programs to provide a safety net for the poor.

But there are several problems:
1- These programs are not properly funded.
2- Millions of Americans have come to rely on them as primary source of income and benefits.
3- The U.S. cannot afford the Medicare and Social Security benefits that have been promised to future retirees.

Medicare, the government program that provides health insurance to the vast majority of America’s senior and disabled citizens, is collapsing under its own financial weight. Instead of being the health care panacea, Medicare has become our venom that is killing us softly but surely if we continue down this unsustainable path.

In 1965, liberals like Democrat President Lyndon B. Johnson and the New York Times lied promised to Americans that Medicare’s costs would be $500 million per year (approx. $3.5 billion in 2011 dollars.) They insisted that: “Federal appropriations of about $500 million a year from general tax revenues would be required” to pay for Medicare.

But according to 2009 calculations, Medicare has an unfunded liability of $89.3 TRILLION — that is, $89,300,000,000,000! “The unfunded liability is the difference between the benefits that have been promised to current and future retirees and what will be collected in dedicated taxes and Medicare premiums.” This means that government would have to set aside $89.3 trillion today to be able to pay future benefits for the three generations of Americans: retirees, workers, and children. This represents today a debt burden of $289,235 for every man, woman and child in the U.S. for Medicare alone. (According to the 2010 Census, the U.S. population consists of 308,745,538 people.)1

Social Security and Medicare are in trouble precisely because every dollar of payroll taxes is spent: “Nothing is saved, and nothing is invested. The payroll taxes contributed by today’s workers pay the benefits of today’s retirees.” And what about the Social Security and Medicare Trust Funds? They are “are little more than IOUs the government writes to itself.”

Conclusion: “The Social Security and Medicare deficits are on a course to engulf the entire federal budget. If our policymakers wait to address these growing debts until they are out of control, the solutions will be drastic and painful.”

But then we have the left-wing media claiming that we are not broke. Why? Because they want to leave us with only one option: Tax increases.

1 Source: http://2010.census.gov/2010census/data/apportionment-pop-text.php


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