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Social Security, Medicare, and Medicaid form the foundation of retirement. They have transformed the lives of millions of Americans, reducing the elderly poverty rate, covering medical expenses, and providing nursing home care. In total, entitlements account for just under half of all federal spending, and, with large budget deficits, there is pressure to cut these programs. This chapter reviews the accomplishments and failings of entitlement programs. Both Social Security and Medicare built up substantial trust funds, but these funds are now expected to be exhausted within years. No Congress or administration will let the programs collapse, but the budgetary problems point to the need for immediate actions to put these programs on a firmer footing. Policymakers of the past have taken steps to cut costs, and more cost saving is possible, but sustaining these foundational programs will also require raising contributions through the payroll tax. |
