I was reviewing some of my Milton Friedman videos on YouTube this week when I came across one from 1979. In the video, Friedman, on the Phil Donahue show was discussing inflation. He said the reason that the American people are experiencing inflation is because they want it. It's not that they want inflation, but the behaviors they are practicing are causing inflation.
Then it hit me, the true reason why we have such mammoth deficits and an unamanageable mounting debt is because we want it. We're not willing to come out and say that we want trillions in debt on our grandchildren's balance sheets decades from now, but our attitude about entitlements should show what we want.
Entitlement Revenues and Spending
According to the BEA, we bring in shortly under one trillion dollars in entitlement based revenue per year. This revenue is mainly in the form of Social Security and Medicare taxes. That sounds like enough money, right? Unfortunately, we spend over two trillion dollars per year on those same programs!!! This accounts for more than 66% of our new debt each year.
Now, how many Americans out there would support doubling the entitlement taxes in order to fund the deficit?
In the same regard, who favors capping the expenditures to only what is taken in?
By now, you should get the picture. Many Americans are frustrated with the size of our debt, but few want to cut entitlement spending. They truly believe it's 'their money' and they deserve to be paid it. In the same token, they don't want to pay twice the taxes for the same benefits their parents and grandparents received.
Herein lies the problem with what entitlements create. A major contributory solution to our debt problems would be to either pay the tax needed to meet the entitlement expenditures or cut the benefits to only equal what is taken in. The choice is simple, but certainly not easy. How much easier will this decision become if we wait another ten, twenty, or thirty years?