Why It’s So Hard to See Eye-to-Eye on Entitlement Spending

Via LearnVest By Alden Wicker ~

On New Year’s eve, we were set to buckle our seat belts and fly over the fiscal cliff.

So color us surprised when we were alerted (in between taking dignified sips of champagne) that our political leaders had come to a compromise–no one is really satisfied with it, of course–in the wee hours of 2013.

While the deal, which passed on Tuesday, includes higher taxes, it pushed off any spending cuts until the end of February.

This is not ideal.

Any permanent solution to the national debt has to address government spending–not just taxes. Any permanent solution to the national debt has to address government spending–not just taxes. Medicare, Medicaid and Social Security combined make up 41% of said spending. And the number of people receiving benefits is rising: 49.1% of the population now lives in a household that receives government benefits. In 2008, that figure was 44.4%. But in the early 1980s, it was just 30%.

And it will only get worse. The Congressional Budget Office estimates that spending on benefits will continue to climb at an even higher rate as the population ages and medical costs increase.

Obviously, something needs to be done. But why is it so hard for politicians to buck up and make a decision on what spending to trim?

The Conservative Conundrum

The Republican party is a devout believer in small government–and it has come out strongly in favor of cutting spending on entitlements from the Federal budget by raising the eligibility age for Medicare and impeding the cost-of-living increases for Social Security.

So the results of a December Pew poll are particularly surprising. It found that a majority of Americans have taken advantage of entitlements: 55%. Even more surprising: 57% of self-identifying conservatives say that they have benefitted from specific entitlement programs, compared to 53% of liberals.

Also, read >  7 Hands-on Ways to Teach Kids the Value of Money

But, wait … there’s more. When self-identifying Republicans (instead of conservatives) and Democrats (instead of liberals) were asked if they had used any of these government programs, Democrats were more likely to report that they’d benefitted from them than Republicans (60% versus 52%.) It isn’t clear whether this is because a “Republican” isn’t necessarily the same as a “conservative” or whether Republicans are more likely to misremember their use–but we’ll dive into this some more later.

What’s Really Going on Here? It’s a Question of Definition

One clue to this paradox can be found in the methodology of the Pew poll. Respondents were presented with the following wording:

“… whether you or anyone in your household has ever received any of the following government services and benefits: Social Security, Medicare, Medicaid, welfare, unemployment benefits, food stamps, college grants and loans, and veteran benefits.”

That tricky word, “entitlements,” was never used in the poll.

LearnVest is the leading lifestyle and personal finance website for women.



Looking for a personal loan? Let Supermoney help you find the best terms and rates on all kinds of loans!