Al Qaeda, North Korea and other adversaries probably never have heard of the prescription drug bill. But it benefits them more than they ever will know. This new entitlement program will divert trillions of dollars away from America's other spending priorities, national security among them.
America is in the throes of entitlement overstretch. (Or, as Niall Ferguson and Laurence Kotlikoff call it, fiscal overstretch.) Our policymakers - Republican and Democrat alike - are obsessed with coercing money out of one segment of the population in order to give it to another segment. This is far removed from the government's original mission. It is supposed to focus on providing services that the private sector is not good at providing, such as national defense, law enforcement, intelligence operations, diplomacy, national parks, transportation infrastructure, and environmental protection.
More than 60 percent of federal government expenditures are in the form of entitlements, up from 30 percent four decades ago. This is alarming; hundreds of billions of tax dollars per year are already unavailable for core functions of government. Because of the unsustainability of Social Security and Medicare, the government is on track to spend more than 75 percent of its money on entitlements within a few decades. At that time there will be precious little money left over for bold foreign policy or homeland security initiatives, among other things.
One would think yet another huge entitlement program should be the last thing on our leaders' agendas. But Congress is busily trying to pass the prescription drug bill, and the president plans to sign it. It will be the largest expansion of the welfare state since Lyndon Johnson.
The commonly-heard estimate of $400 billion in new prescription drug spending over the next 10 years is on the low side. Once the government starts giving out wads of free money, people and politicians clamor for more of it. The mushrooming elderly population will exacerbate the problem.
Upon passage of the bill, after their photo ops with seniors, lawmakers should call up their kids and grandkids and apologize profusely for the enormous financial burden that will be imposed on them. And they should consider how much more effective America could have been at waging the war on terror, were it not for this immense diversion of resources.
To be sure, access to prescription drugs is important. To pay for them, Congress should pre-fund them through establishing medical savings accounts for workers, in the same way that it should set up personal retirement accounts for Social Security. Coercing money out of younger generations to pay for older generations' prescription drugs makes even less sense now than it did decades ago before entitlements became such an albatross.
The percentage of the federal budget devoted to entitlement agencies has ballooned over the past several decades; e.g., the Health and Human Services Department went from 3.5 percent of federal expenditures in the early 1960s to a whopping 23.5 percent today. Not coincidentally, during that same time period the percentage devoted to most other government agencies has decreased or stayed flat. The Department of Defense constituted about 45 percent of federal spending in the early 1960s; today it constitutes 16.5 percent. International affairs (not counting defense) comprise only 1 percent of the federal budget, down from around 4 percent four decades ago.
If you believe that America's military power should be held in check, then you may consider entitlement overstretch a good thing. But chances are you care about the environment, education, and transportation. These areas will get crowded out. Already, over the past four decades the Department of Transportation declined from 4.7 percent of the federal budget to 2.5 percent. Since its creation in the 1970s, the amount devoted to the Environmental Protection Agency declined from about 1 percent to 0.4 percent. The percentage for the Energy Department has declined as well, and that for the Education and Interior departments has remained flat.
Passage of the prescription drug bill will accelerate our move toward a Europe-like sclerosis. Despite grandiose visions of a "superpower Europe," European Union leaders are bumping up against an overly-generous welfare state. Not much money is left over for anything else. Initial arrangements for an EU "rapid reaction force," for example, had to be scaled back because of budget constraints.
At the time of World War II, entitlements comprised less than a third of the federal budget. There was plenty of tax money available for that national security emergency. What if we get into a similar crisis down the road that dwarfs in magnitude the current terrorism problem? Because the prescription drug plan and other entitlements constitute "mandatory" as opposed to "discretionary" spending, we will essentially be locked out of making the necessary resource reallocations.
Few things should make America's enemies and antagonists more pleased than knowing our burgeoning entitlement spending is slowly but surely asphyxiating our national security budget. Rather than contribute to this process by signing the prescription drug bill, President Bush should veto it instead.