chAPTER ThiRTEEn • DomEsTic AnD Economic Policy 317
Collectively, programs such as Medicare, Medicaid,
Social Security, unemployment compensation,
and several others are known as entitlement
programs. They are called entitlements because if
you meet certain qualifications—of age or income,
for example—you are entitled to specified benefits.
The federal government can estimate how much
it will have to pay out in entitlements but can-
not set an exact figure in advance. In this way,
entitlement spending differs from other govern-
ment spending. When Congress decides what it
will give to the national park system, for example,
it allocates an exact sum, and the park system
cannot exceed that budget. Along with national
defense, entitlements make up by far the greatest
share of the federal budget. This fact led a Bush
administration staff member to joke, “It helps to
think of the government as an insurance company
with an army.”Why Should You Care? What happens to
entitlements will affect your life in two major ways.
Entitlement spending will largely determine how
much you pay in taxes throughout your working
lifetime. Entitlement policy will also determine how
much support you receive from the federal govern-
ment when you grow old. Because entitlements
make up such a large share of the federal budget, it
is not possible to address the issue of budget deficits
without considering entitlement spending. Further,
under current policies, spending on Medicare willmaking a difference
lEARning ABouT EnTiTlEmEnT REFoRm
rise in future years, placing ever-greater pressure on the
federal budget. Sooner or later, entitlement reform will be
impossible to avoid. However these programs are changed,
you will feel the effects in your pocketbook throughout
your life.What Can You Do? Should Medicare and Social
Security benefits be high, with the understanding that
taxes must therefore go up? Should these programs
be cut back in the hope of avoiding deficits and tax
increases? Do entitlements mean that the old are fleec-
ing the young—or is that argument irrelevant because
we will all grow old someday? Progressives and conser-
vatives disagree strongly about these questions. You
can develop your own opinions by learning more about
entitlement reform. The following organizations take a
conservative position on entitlements:- National Center for Policy Analysis. Find its Web page
on entitlement reform by entering “ncpa retirement”
into your favorite Internet search engine. - The Heritage Foundation. See what it has to say by
searching on “heritage entitlements.”
The following organizations take a liberal stand on
entitlements: - National Committee to Preserve Social Security and
Medicare. You can locate the home page of this orga-
nization by typing in “ncpssm.” - AARP (formerly the American Association of Retired
Persons). To learn this group’s position on entitle-
ments, enter “aarp work social.”
budget deficit 309
domestic policy 297
Federal Open Market
Committee 313
Federal Reserve System
(the Fed) 312
fiscal policy 309fracking 306
gross domestic product
(GDP) 298
individual mandate 301
inflation 308
Keynesian
economics 309loophole 315
Medicaid 299
Medicare 299
monetary policy 312
Patient Protection and
Affordable Care
Act 298progressive tax 315
public debt, or national
debt 310
recession 308
regressive tax 315
treasuries 310
unemployment 308keyterms
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