- Written By: Jacob Queen
- Edited By: Lauren Fritsky
- Last Modified Date: 14 March 2012
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2003-2012 Conjecture Corporation
An entitlement program can be defined as a governmental mechanism where public funds are given to people because they meet some kind of requirement. One commonly known American example of an entitlement program would be the federal food stamp program, which allows people without sufficient funds to buy food. Another well-known entitlement program is Medicare, although only certain parts of that program actually qualify as entitlements.
There are some common misconceptions related to the definition of an entitlement program. Many people believe that any program where the government gives people money is an entitlement program, but this is not the case. For example, people actually give money to the Social Security program during their years of work, so they are actually paying to gain access to that program, and it doesn’t necessarily qualify as an entitlement. Medicare is similar, although there are actually parts of both programs that could technically be called entitlement program elements.
An example of Medicare and Social Security being used as entitlement programs would be when someone is disabled and they can’t work. People in this situation are given access to Social Security funds, along with government medical insurance. These people don’t actually have to pay into the program to get a benefit, and this is what separates them from normal Medicare and Social Security recipients.
There has been a political firestorm over entitlement programs in the United States. Many people on the right-wing side of the political spectrum are strongly opposed to any kind of entitlement program. They believe that they ultimately cause people to become more reliant on government, and that could potentially harm society. People on the left-wing side of the political spectrum have the opposite view. They think that the government should be spending significantly more money on entitlement programs as a way to help the needy.
Some entitlement programs can be very expensive for a government to maintain in the long term. In order to keep entitlement programs going, governments are often forced to raise taxes and reduce spending in other areas such as military defense or scientific research. Once the government sets up some kind of entitlement program, it is usually politically very difficult to reduce spending on it, and it is often politically impossible to remove it. Those on both sides of the political spectrum often look for ways to reduce the price of these programs so that they can avoid increasing taxes, which is also politically unpopular.
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nony
Post 7 |
Can anybody tell me about entitlement programs in countries besides the US? I know that many countries have extensive healthcare and pension plans, but I'd like to learn more about what those plans are as well as how they compare to the entitlement programs in the US. Can anybody help out? |
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Mammmood
Post 6 |
@NathanG - Entitlements always come at a price. There is never a free lunch, and the payer is always the American taxpayer. However politicians find themselves in a vicious political circle.
Sometimes they can’t stomach the thought of cutting taxes because they think that it will reduce revenue (the opposite is true), yet the thought of raising taxes puts a scare in them because it’s rarely politically popular (in fact that is true).
Yet the only sensible thing if they want to keep entitlements going is to raise taxes in their view, or raid the Social Security slush fund until it goes dry. |
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NathanG
Post 5 |
@oasis11 - Every now and then I get a statement from the Social Security Administration showing me how much I have paid into the system. I understand from speaking with colleagues that I can choose to opt out of the system, in which case I will get all the money that I’ve put it into it, but would not collect from it at a future date.
It’s commonly said that Social Security will not be around when I am ready to retire, so I’ve actually given that a thought. I agree with you that Social Security should have been privatized to give it a fighting chance of living on, but there wasn’t the political will to do that. |
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oasis11
Post 4 |
@Subway11 - I agree and I also think that a lot of these programs are expensive. They say that if the Medicaid entitlement program is not changed it may become insolvent in the future. This is really scary because a lot of people depend on Medicaid and Medicare. They also say the same thing about Social Security.
I think that if the Social Security annuity could be placed in the stock market up to a few years before you begin to draw from it, you might have enough gains from the stock market to offset any dips in the Social Security fund. This idea always gets shot down, but it is one that should be reconsidered.
I heard some of the politicians even talk about raising the retirement age to begin drawing from Social Security, but as it is you have to be 67 to draw and the average life expectancy is in the mid 70’s, so they can’t push too far out. |
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subway11
Post 3 |
@Comfyshoes - It makes a lot of sense, but the problem is that homeownership is a big responsibility and it requires paying taxes and maintaining the home in addition to the mortgage payment.
There are government entitlement programs that only require a 3% down payment because the loan is backed by the federal government. FHA and Fannie Mae mortgages fall into this category. The problem that I see is that 3% down is not enough of a cushion when buying a property and most banks require private mortgage insurance if the down payment is less than 20% because statistically people that put less than 20% on a property have the highest probability of defaulting on the loan.
I think that these programs are well intentioned, but we may be setting people up for failure. |
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comfyshoes
Post 2 |
I think that government entitlement programs have positives and negatives. For example, offering a housing subsidy to needy people really helps them to get by but the problem is that some people become used to the help and do not move away from it because it is hard to do so. For example, if the market rent is $900 and the government subsidizes $700 of your rent you would be hard pressed to leave this program because the difference between what you pay and what the government pays is so great.
In addition, the government entitlement programs also include down payment assistance for needy families so that they too could own homes. I know that many of these entitlement programs offer up to $70,000 in grants that do not have to be paid back so that lower income families could own homes. It is also promoted because of the high amount of foreclosures in many communities that the government felt that having people live in these homes would also lower the crime rate and stabilize some of the neighborhoods with high foreclosure rates. |
