Joe Pitts, March 3, 2006

It’s budget time again on Capitol Hill -- time for Congress to put together another year’s blueprint for funding Uncle Sam’s seemingly limitless undertakings.

It also means another chance for Congress to face the facts and be honest with the American people about the coming fiscal crisis we face if real entitlement reform is not undertaken.

But, before I get ahead of myself, perhaps it’s useful to define some terms. Washington policy wonks like to toss around a lot of jargon when talking about budget policy. But, to understand the fiscal crisis we face, there are really just two budgetary terms that one needs to know: "discretionary" spending and "entitlement" spending.

Congress passes a series of spending bills each year allocating money for scores of federal programs. The money spent annually through this process is what’s referred to as discretionary spending. So named because Congress has complete discretion every year as to what programs will be funded and at what levels. This is the money that pays for things like launching the space shuttle, maintaining National Park trails, and paying the salaries of thousands of federal government employees.

Entitlement spending is that spending which is set by law to be automatically paid out to people who qualify for certain government programs. For instance, when you turn 65, you automatically become eligible for full Social Security benefits. In fact, Social Security, Medicare, and Medicaid are by far the three biggest entitlement spending programs. Unlike discretionary spending, which is reallocated each year by Congressional spending bills, Congress isn’t required to do anything in order for entitlement money to be paid out to recipients. If you qualify, you’re entitled to it by law.

Those are the two basic terms. Now the bad news.

For all of the posturing and boasting done each year in Congress about the need to keep discretionary spending under control, the truth is that discretionary spending is not our biggest problem.

Don’t get me wrong. It is certainly important that we are responsible about the way we spend discretionary dollars, but the coming fiscal crisis lies in entitlement spending.

Entitlement spending represents nearly two-thirds of all federal spending. Because of this, real spending discipline cannot be accomplished without addressing entitlement spending. And yet, this enormous chunk of total federal spending is rarely ever touched by Congress.

One of Washington’s dirty little secrets is that Congress doesn’t even have to act in order for these entitlement programs to grow. They are set by law to grow on autopilot unless a change is specifically enacted.

Unfortunately, the current autopilot glide path of entitlement spending growth is simply unsustainable. To further compound the problem, entitlement spending is expected to nearly double over the next decade as baby-boomers begin retiring. The result will be far more people eligible for entitlement programs than the programs are able to support.

Anyone who has ever made a budget knows that when spending far outpaces revenue, something has to give.

It’s no different in this situation.

If we are to sustain the current rate of growth of entitlement spending, we will have to either raise taxes every year until taxes are 60 percent higher than what they are today, or eliminate every federal program except for Social Security, Medicare and Medicaid by 2045.

A third option is to do nothing and sit back and watch as our federal debt becomes so large that it threatens the stability of the entire economy.

Clearly, none of these options is acceptable to our nation’s future, which is why meaningful entitlement reform must happen now.

Last year, Congress found $35 billion in savings from entitlements. This year’s Presidential budget calls for $65 billion in savings, found by simply slowing the rate of growth of entitlements.

These savings represent a good first step, but more must be done if we are to save these programs from fiscal unsustainability. Though President Bush has shifted his focus away from his plan to reform Social Security, this is something that Congress and the President should return to next year.

Bold, forward-looking ideas like this will be required today if we are to avoid a fiscal crisis down the road.

Congressman Joe Pitts, a Republican, represents Pennsylvania's 16th Congressional District, which includes Lancaster County and parts of Chester County and Berks County.