The Solvency of Federal Welfare Entitlement Programs: Social Security and Medicare

Abstract

When President Clinton signed the Welfare Reform Bill in 1996, he described it as the “end of welfare as we know it.” It was a premature declaration of victory, for welfare is alive and well in the American economy. It is growing at a rate that will soon ignite public debate over the cost of federal entitlement programs. But the major beneficiaries are not the poor. They are the cohort of the U.S. population over the age of 62 that will swell the number of welfare recipients in 2008 when the first Baby Boomers become eligible to collect Social Security. The burden will jump again in 2011 when they become eligible for Medicare. The 50 million Americans who will be 62 years or older in 2010 will grow in number to 83 million by 2030 and to 100 million by 2050. Their relative importance in the population will rise from 16% in 2010 to 24% in 2050. Extended life expectancy assures that the bulge will last for many decades and will exacerbate the drain on the financial reserves of the Social Security and Medicare trust funds.