Entitlement Programs

The terms entitlement program, transfer program, and social insurance are largely synonymous, each referring to systems of public benefits, in cash or in kind, for which a person is legally eligible based on a condition such as age, disability, or poverty. In the United States, federal entitlement programs include the Old Age, Survivors, Disability Insurance, and Supplemental Security Income (SSI) programs of Social Security, as well as Medicare, Medicaid, Unemployment Compensation, Earned Entitlements for Railroad Employees, Trade Adjustment Assistance, Temporary Assistance for Needy Families, Social Services Block Grants, Food Stamps, and the Women, Infants and Children (WIC) Program. Some “means-tested” programs (such as Food Stamps and Medicaid) require an individual to show sufficiently low income to qualify for benefits. Others (such as unemployment insurance) require a minimum period before benefits can be collected, during which the individual or an employer makes premium contributions. Entitlement programs typically involve a subsidy whereby funds are transferred from one group, such as general taxpayers or current workers, to another such as the retired or disabled. Entitlement programs are an important item in public spending. For example, in the 2000 National Income and Product Accounts (available at the Web site of the U.S. Department of Commerce, Bureau of Economic Analysis), personal income was $8,406.6 billion, of which transfer payments were $1,070.3 billion. The rationale for entitlement programs is that they form a social “safety net” that protects individuals from risks for which private insurance may be too expensive. Critics argue that entitlement spending grows because each separate program creates a political constituency that favors it and because no one program is sufficiently large to arouse opposition from taxpayers.