Entitlements, the deficit, and spending caps.

Abstract

This article investigates three common perceptions about entitlement spending-that it is the primary cause of growing budget deficits, that nonmeans-tested entitlements (such as Social Security and Medicare) have grown faster than other entitlement programs, and that nonmeans-tested benefit programs are skewed toward the affluent. Drawing on data from the vast 30 years of federal spending and tabulations from the Current Population Survey, the article concludes that these perceptions are inaccurate. The article then examines recently proposed spending caps, finding that they would have had little impact on entitlement spending other than Medicare and Medicaid, but would have required very large cuts in those two programs. It discusses the mechanics of spending caps, their effect on the nature of entitlement benefits; and the feasibility of placing caps on cash versus in-kind entitlement benefits. It concludes that, while direct spending caps would in effect change entitlements into discretionary programs,...