The GOP Tax Bill: A Prelude to Entitlement Reform in Budget

Congress moves from tax battles to Budget, welfare and entitlement reforms.
Congress moves from tax battles to Budget, welfare and entitlement reforms.

In the wake of the 51-49 vote to move ahead with the biggest tax overhaul since the days of Ronald Reagan, a new target is now in sight, and it’s one that is likely to cause even more consternation.

Welfare and “Entitlement” programs are going to be on the table in the 2018 session, suggests House Speaker Paul Ryan. The President himself has stated that work needs to be done in this area. One of the most interesting moves comes from the Senate Finance Committee Chairman and Utah Senator, Orrin Hatch.  He has lashed out at programs that are “merely” welfare for life and suggested that it is a liberal mindset that is stopping people from getting ahead:

“Unfortunately the liberal philosophy has created millions of people that way who believe everything they are or ever hope to be depends on the federal government rather than the opportunities that this great country grants them,” said Hatch.

“I have a rough time wanting to spend billions and billions and trillions of dollars to help people who won’t help themselves, won’t lift a finger, and expect the federal government to do everything,” he continued. In fact, this is a defining view that delineates the left-leaning from the socially conservative.

While one side prefers that welfare programs are used only as a safety net, the other is happy for it to become a lifestyle choice. Conservatives try to make programs that will provide the tools and opportunities that allow the individual to succeed and have a stable future. The left tends to view people as victims who cannot look after their own interests. This is the source of the division in opinion on how welfare or entitlement programs should operate.

California Dem. Rep. Barbara Lee encapsulated this when she Tweeted:

“Make no mistake, the #GOPTaxScam is a Trojan Horse for Republicans to take an axe to public assistance, Medicare and Social Security. We can’t let them get away with this blatant theft from working families.”

Should people doubt Senator Hatch’s commitment to helping those who truly can’t help themselves, we only need to look at the original creators of CHIP (Children’s Health Insurance Program). Senator Hatch and the late Senator Ted Kennedy (D-Mass) teamed up to get it passed. Senator Hatch has since worked hard to ensure that it has always received the funding it needs.

Criticism of the Tax Reform says that it will cost $1 trillion to the economy, yet this figure operates only on current returns. It fails to take into account that a reduced tax liability ALWAYS leads to higher tax revenue collections. It also fails to acknowledge that the economy is on an unprecedented upswing right now that pundits failed to predict. In fact, many in the left-leaning media predicted just the opposite in response to the election of Donald Trump.

While those on the left espoused gloom and doom, economic indicators are up across the board. Stock market record highs. Job creation, employment, labor participation and wages are up.  In terms of government spending, welfare programs account for more of the budget than any other item.

Chart prepared by Republican side of the Senate Budget Committee, showing the break down in expenditures (the welfare bar represents state $283B and federal $746B in spending combined). Image Source: Senate Budget Committee

Chart prepared by Republican side of the Senate Budget Committee, showing the break down in expenditures (the welfare bar represents state $283B and federal $746B in spending combined). Image Source: Senate Budget Committee

A new report by the non-partisan Congressional Research Service finds that the largest federal budget item is spending on welfare programs. To support the 83 programs that CRS identified as welfare programs, the federal government spends $745.84 billion.

That exceeds the $725 billion spent by the federal government on Social Security, $480 billion on Medicare, and $540 billion on non-war defense.

In all, the U.S. government, including federal and state governments, spends in excess of $1 trillion on welfare.

“Based on data from the Centers for Medicare and Medicaid Services and the Oxford Handbook of State and Local Government Finance, Budget Committee staff calculated at least an additional $283 billion in state contributions to those same federal programs, for a total annual expenditure of $1.03 trillion,” according to the Republican side of the Senate Budget Committee.

About the Author

Mark A
Mark A
Mark is a political writer and journalist who has worked on campaigns for Brexit.

3 Comments on "The GOP Tax Bill: A Prelude to Entitlement Reform in Budget"

  1. 60% of all jobs are minimum wage (below the poverty line), 4% are unemployed, the next 10% are barely scraping by… meanwhile the top 1% owns 51% of all stocks/bonds and 60% of the wealth. The collective wealth of America is around 56 trillion dollars. So that 1 trillion we’ve got tied up into the welfare programs.. Honestly, that number is low. Its the least we can do to help the bottom 50% of America. Do your research people. Wake up!

  2. Really tired of government calling Social Security an entitlement program. People pay into SS. It is not an entitlement program. Congress receiving free medical coverage is an entitlement program. Congress receiving 2/3 of their salary for life after leaving congress is an entitlement program. They should have to pay into SS and live like the rest of us on their investments and SS. Tired of Congress passing laws then exempting themselves from same laws. Example would be a slush fund for settling sexual assult claims and exemting Congressional members from insider trading. Something we all would do jail time for. They all need to be voted out an get some honest people in office.

    • Social Security is considered an “entitlement” because it pays out considerably more than what was paid into it.

      If it only paid back what was paid into it, people would be amazed. Unlike investments such as IRAs or 401Ks, Social Security doesn’t generate interest. It gets spent by politicians on other things and retirees get paid out of younger worker’s contributions.

      So, yes you pay into it, but in the end you get more out of it. Even adjusting for those who don’t live to collect, it is a net loss for the government which means your kids and grandkids are subsidizing your retirement, ie. welfare, wealth redistribution, entitlement.

      Not to mention the fact that all those working years of contributions are taken out of the economy where that money could be working and growing through interest and dividends.

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