Entitlement Programs and Their Role in the Federal Budget

Entitlement Programs and Their Role in the Federal Budget

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The federal budget process divides federal spending into two areas: mandatory and discretionary. Discretionary spending is spending that is reviewed each year by Congress and is subject to annual decisions made during the appropriations process. Mandatory spending consists of entitlement programs (and a few smaller things).

What is an entitlement program? It is a program that establishes certain eligibility criteria and anyone fitting that criteria may receive its benefits. Medicare and Social Security are the two largest entitlement programs. Anyone meeting the eligibility requirements may receive benefits from these two programs.

The cost of entitlement programs is soaring as members of the Baby Boom generation retire. Many people say that the programs are on "automatic pilot" because it is extremely difficult to cut their cost. The only way that Congress can decrease the cost of such programs is to change the eligibility rules or the benefits that are included under the programs.

Politically, Congress has not liked to change the eligibility rules and tell voters that they no longer can receive the benefits they once were entitled to receive. Yet entitlement programs are the most expensive portion of the federal budget and are a major factor in the national debt.