ROANOKE TIMES
Copyright (c) 1995, Roanoke Times
DATE: Friday, December 29, 1995 TAG: 9512290116
SECTION: EDITORIAL PAGE: A9 EDITION: METRO
SOURCE: DAVID W. MIKULA
THERE IS a fierce debate, some would say an all-out battle, going on in Washington over the federal budget. Although it may take months, ultimately an agreement will be reached and a budget will be in place.
Important issues being debated by party leaders include: Which is a better timetable for balancing the budget, seven or 10 years? Whose financial calculations and assumptions are more realistic, the Congressional Budget Office's or the Office on Management and Budget's?
Debate is healthy to democracy. Since bringing America's budget into balance is critically important to the country's future economic vitality, an earnest debate should be taking place in Washington and in every city and town across the nation. But perhaps we are asking the wrong questions.
Reaching a compromise on the proper level of funding for the government's various agencies should be only the beginning of the debate.
The primary responsibility of our elected government, as a reflection of ourselves, is to be good caretakers of the nation's economy so that future generations have a chance at prosperity. The stark reality is that we - as a society, not just as Republicans or Democrats - are failing in that mission. If we proceed on a path to a balanced budget without addressing the underlying causes of 30 years of deficit spending, we are not making any real progress toward a better, healthier American economy.
The very heart of the problem is a mentality of entitlement that afflicts American society. A mammoth federal government has created scores of "entitlement" programs that foster and feed this mindset. An attitudinal change is as essential as budgetary change.
An "entitlement" by government standards is an open-ended program whose funding does not need to be reviewed and approved each year. Any citizen who meets the criteria for the program becomes "entitled" to receive something from the federal government.
While some entitlements that assist the poor, such as Aid to Families with Dependent Children, Medicaid and the Earned Income Tax Credit, are means-tested, many others are not. The two largest and best known entitlements, Social Security and Medicare, are not means-tested.
As long as entitlements, especially the two huge programs just mentioned, are available without limitation to middle-class and affluent Americans, the fiscal crisis of the country will only worsen. Thirty years ago, entitlement spending accounted for 29.6 percent of the federal budget. Today it accounts for just under 50 percent. When you add to entitlements the 14 percent spent on interest expense on the national debt and the 17 percent spent on defense, a whopping 81 percent of the federal budget is consumed before any discretionary spending can take place.
Without reforms, it is projected to get much worse as the enormous baby-boom generation nears retirement age. If interest expenses and defense spending levels remain fairly constant, by the year 2003, nearly 90 percent of the budget will be required just to satisfy these few line items. That leaves precious little for infrastructure, education, law enforcement and national parks.
There is a common misconception that Social Security and Medicare contributions that employees and employers make every pay period are deposited into a trust fund that will be there when workers retire. Nothing could be further from the truth. The trust fund is nothing more than an accounting entry. The money goes directly into the general fund and is spent as readily as the money collected from income taxes.
It is folly to try to rationalize that these or any other entitlements are separate from the federal budget because they are funded by a trust fund.
Because entitlements use up nearly half of today's budget, with Social Security and Medicare alone counting for approximately a third, they are too big to ignore. The largest segments of society are the beneficiaries of these programs - the middle class and affluent.
Redefining and reforming entitlements, especially those that reach people who are not in need, will form the nation's most important debate in the coming months and years.
David W. Mikula is a Roanoke businessman and a member of The Concord Coalition.
LENGTH: Medium: 79 lines ILLUSTRATION: GRAPHIC: BOB NEWMAN Newsdayby CNB