Entitlements

An entitlement is a federal program that guarantees a certain level of benefits to persons or other entities that meet requirements set by law. Some examples of entitlements are Social Security, Medicare, unemployment benefits, and federal pensions. Congress cannot refuse to provide funding for these programs.

Since the 1970s, the largest component of federal spending has gone for programs that provide payments to individuals. Many of these programs have been established as entitlements. Congress has found it almost impossible to gather the political will to reduce spending for entitlement programs. Legislators would have to make significant policy changes to reduce the cost of these programs.

In 1990, Congress took a step toward curbing new entitlements when it enacted a pay-as-you-go requirement for mandatory spending on entitlements. The law required that any new entitlements or policy changes that would increase the cost of existing entitlements had to be matched by revenue increases to pay for the new programs.

In 1996, landmark welfare reform legislation was enacted, ending the federal government's sixty-one-year-old entitlement of cash aid to poor women and children. Direct federal payments to individuals were converted into block grants to the states, which determined new eligibility requirements.

President George W. Bush vowed to make major changes to the Medicare and Social Security programs by allowing more private entities to provide benefits. He proposed a fundamental change in Social Security under which individuals would have private savings accounts that would replace or supplement reduced benefits under that New Deal program. But under sharp Democratic criticism, Congress rebuffed his proposals. However, by 2007, even staunch defenders of entitlements were beginning to acknowledge that changes were needed in the programs to ensure their long-term solvency. This was especially true of the Medicare program that provided health care for senior citizens.

Some entitlements carry permanent appropriations, while others must go through the annual appropriations process. Programs without permanent appropriations also may require a supplemental appropriation to provide the required funds to program beneficiaries.