What is an Entitlement?

By Richard E Walrath and Patricia L Johnson

Speaker of the House, John Boehner (R-OH) made the following statement before the Economic Club of Washington when referring to the deficit super committee “when it comes to producing savings to reach its $1.5 trillion deficit-reduction target, the joint select committee has only one option: spending cuts and entitlement reform”.

During an interview with the Wall Street Journal, House Majority Leader Eric Cantor (R-VA) said he is ready and willing to slash entitlements like Medicare because Americans have to “come to grips with the fact that promises have been made that frankly are not going to be kept for many

When many Republicans talk about entitlements, it’s as if they’re referring to some sort of nasty give-away system that the Democrats have put in place for the sole purpose of spending taxpayer funds.

Democrats were asleep, as usual; when they let Republicans pound away, month after month, about the “deficit” problem. No, it’s a revenue problem–the lack, thereof, because of the Bush tax cuts. How many trillions of $$$$$ have they cost, so far?

“Entitlements” as they are referred to in the United States are simply government insurance programs that ‘we the people’ pay into. The reason we are ‘entitled’ to these benefits, i.e. Social Security, and Medicare is because we finance them through taxes.

Not only do we pay into them, the second highest source of revenue in the United States [for 2011] is from Social Insurance programs. FICA and SECA taxes contributed a total of 35.3 percent of total revenues for 2011. On a comparative basis, Corporate Income taxes represented 8.3 percent of total revenues for 2011.

You would have to collect more than four times as much in corporate income taxes to equal the amount paid into ‘entitlement’ programs by ‘we the people’.

The problem with entitlements exists right now due to the fact Medicare Part D was put into place, by the Bush Administration, without a provision for the Department of Health and Human Services to negotiate pharmaceutical costs. The solution is simply to change the negotiation rules on Part D and the entire problem will be solved by significantly lowering prescription costs. Veterans Affairs is allowed to negotiate their medication costs with the pharmaceutical industry resulting in significant savings to VA. The same would apply to Medicare if the rules were changed.

© 2011 Richard E Walrath and Patricia L Johnson

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