Let’s put some numbers to it…

Last year, the US Treasury took in $5 trillion from all sources of taxation while having outlays of about $7 trillion. This is where our approximately $2 trillion budget deficit comes from. In 2024, government outlays are expected to rise to $7.3 trillion while tax receipts are not likely to grow materially, meaning that our deficit problem is getting significantly worse with each passing year.

Currently, 70% of the Federal budget is spent on wealth redistribution programs, and the two largest are Medicare and Social Security. In 2023, Medicare and Social Security cost the nation about $2.5 trillion between outlays for benefits and administrative expenses. That’s more than a third of all Federal spending, just to support these two programs.

Assuming no change to current taxes (you’d continue to pay payroll taxes at today’s rates), America without these two wealth redistribution programs would generate about half a trillion a year in budget surplus. So yes, Rick Scott’s claim that the budget would be balanced without Medicare and Social Security is indeed true. There is no way to return America to fiscal responsibility that doesn’t start with solving our entitlement issue.

As a side note, without Medicare, healthcare costs in the US would also likely stabilize…today, about half of every dollar Americans spend on healthcare is the result of government regulation, waste, fraud and abuse - and most of the power to drive these ridiculous expenses comes from Medicare’s enabling legislation. Few people realize it, but non-Medicare patients pay significantly more for healthcare so that Medicare patients can pay less. The difference is about another trillion dollars a year, on top of the $2.5 trillion paid out directly to beneficiaries.

Certainly, many Americans would scream like stuck pigs if their favorite entitlement programs were abruptly terminated, so there would need to be careful planning and realistic alternatives so as not to pull the rug out from under those who depend on these programs. Generally, these are political problems more than economic ones - GWB, for example, proposed a privatized alternative to Social Security that would cost less and pay beneficiaries more, but his political opponents weren’t about to give him a victory like that…instead of offering their own ideas, they ran TV ads showing Paul Ryan literally pushing Grandma off a cliff.

Of course, the problem is bigger than political squabbling. On today’s trajectory, we permit goverment to grow much faster than the rest of the economy grows. This means that government takes a larger and larger chunk of all that we produce in America, the national debt explodes, and at some point, our economy just can’t sustain it. Government devours the economy, and collapse is the result.

Again, to put numbers on it, since the Obama administration, government has grown at an annualized rate of about 6.5%, while GDP has grown less than 3% over this same timeframe. In 1900, all government spending accounted for 6% of GDP - today, it accounts for 37%. Our debt has exploded to the point where in 2023, we spent more on interest payments on the national debt than we did on the entire US military…let that sink in.

That’s bad enough, but on top of it, we see an endless stream of threats to implement new multi-trillion dollar spending programs, from taxpayer-funded healthcare and free college tuition to UBI programs and green energy subsidies.

The core point Mr. Scott makes is that Americans are suffering because of the massive government we’ve created. We have fewer jobs, less economic growth and ultimately less prosperity generally, simply because we chose to spend 37% of everything our nation produces on governing ourselves.

EDIT: November 2024

From some of the comments, it’s amazing to me how many people don’t understand what entitlements are, so rather than responding to all the misinformed commenters, let me post it here.

All government spending is either “entitlement” spending or “discretionary” spending. The difference really comes down to how the spending is approved.

Discretionary spending requires specific authorization by Congress. If we want to build a bridge or buy some new fighter aircraft for our military, Congress allocates money in the budget, passes a law authorizing that money to be sent, and if the President signs the legislation, the money is spent.

Entitlements are everything else. When you retire, Congress doesn’t hold a vote to say that Becky is to be paid Social Security or Medicare benefits. Instead, with entitlements, the law spells out the criteria that people have to meet and what they get in return when those criteria are met. If you meet the regulatory criteria for Social Security (or Medicare), you get your benefit as defined in the law…you are “entitled” to it because that’s what the law provides.

With me so far?

Now let’s get to the other popular misconception about Social Security and Medicare…

This is a common comment I see:

Social Security IS NOT an entitlement! We paid in and when retired, draw out what we put in!

Sorry to break it to you, but this is not at all true.

The money you put into the system was used to pay benefits to your parents and grandparents, just as their contributions were used to pay for prior generations. Any benefits you get are paid by future workers - their contributions are used to pay you in exactly this same way.

Of course, if you think about it for a moment, it’s common sense.

If your contributions were “yours”, then there would have been no money to pay the very first beneficiaries until they first worked a lifetime building up an account. History tells us that’s not what happened - the law enabling Social Security was signed by FDR and Americans began paying taxes in 1937. It began paying certain benefits almost immediately, and the monthly benefits we know today started in January of 1940.

If you’re confused, ask yourself where the money came from to pay these benefits.

Ida May Fuller happened to be the very first beneficiary. As it worked out, Ida May paid a grand total of $24.75 into the Social Security system, then she retired and applied for benefits. Beginning in January of 1940, she received what was the very first ever Social Security benefit check for $22.54, and she went on to receive monthly payments until her death many years later. At the time of her death, she had received a total of $22,888.92 in total payments from Social Security.

Clearly, Ida May wasn’t getting her own money back - there’s no way less than $25 in contributions becomes nearly $23,000 in benefits. No, what Ida was receiving was money contributed by younger working taxpayers who were all paying taxes to support people like Ms. Fuller.

And that’s been the approach ever since. Taxpayers contributions don’t go to the taxpayer who provides the payments - they go to current beneficiaries. You paid for your parents and grandparents, and future generations of workers will pay for you.

It is no different from any other type of taxation or wealth redistribution scheme. Government takes from some and gives to others it deems more worthy. In this case, it’s younger employed people giving to the elderly and disabled covered by Social Security.

In a legal sense, the Courts have already resolved this issue. FICA is a tax like any other, and benefits are purely up to Congress. As numerous Supreme Court rulings make clear, Congress is free to change the terms any time it likes, and you have no recourse. It is not your money, any more than the income taxes you pay that go to support our infrastructure and other government services is your money.

So yes, Social Security is an entitlement, and no, you are not receiving back your own money…I hope at least that much is clear, and we can stop with the nonsense comments to the contrary.