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Ever-expanding entitlements make elusive target But push to cut them is gaining steam

THE BALTIMORE SUN

WASHINGTON -- Already they account for almost half of all federal spending, and still they are among the fastest-growing programs in government.

They were at the center of the political compromise last week that got President Clinton's budget through the House, and they will be the focus of the looming battle he faces in the Senate.

They are the entitlement programs, which benefit the elderly, the young, the needy and the not-so-needy.

They range from Social Security to food stamps, from unemployment benefits to targeted health care, from veterans benefits to retirement pay for federal workers.

With popular demand for deficit reduction gaining strength, almost everyone agrees the country cannot afford to continue paying for their constant growth.

The economic argument

Economically, the argument for action is as strong as the programs' expansion.

In 1973 they consumed 8.8 percent of gross domestic product (GDP), the total of goods and services produced by the nation. This year it will be 12.5 percent, and by 2003, according to the Congressional Budget Office, 15.1 percent of GDP -- almost doubling their share of federal spending in 30 years.

"The big cuts are clearly in entitlements," said Stanley Collender, director of budget affairs of Price Waterhouse.

"There is clearly going to be movement toward entitlement caps and entitlement reductions."

The problem has been to find both the political will and an acceptable way to control the programs that make life more livable for millions of Americans. Now, their status as the untouchable "sacred cows" of government is being challenged.

Mr. Clinton agreed last week to a compromise between conservative and mainstream Democrats in the House to put target limits on future costs of the entitlement programs, with a requirement that any time those targets are exceeded the president must find offsetting savings or tax increases or increase the deficit. The move does not cut the programs, but it would subject them to what Mr. Clinton called "some discipline."

The issue now moves to the Senate, where David L. Boren, a conservative Democrat from Oklahoma, has joined with John C. Danforth, a moderate Republican from Missouri, to craft an alternative to the Clinton plan for cutting the deficit. Both senators are members of the Finance Committee, which is critical to Senate passage of the budget.

Their bipartisan plan would slash Mr. Clinton's proposed tax increases from $272 billion over five years to $150 billion, mainly by eliminating the broad-based energy tax. It would offset this reduction in taxes by spending cuts of $337 billion over five years, up from $174 billion proposed by the administration.

Most of the increased savings would come from capping entitlement programs, with cuts of $114 billion in Medicaid and Medicare, and a reduction in cost-of-living adjustments on Social Security benefits above $600 a month, which would save another $23 billion.

"We are finally facing up to a very basic question for our country," said Mr. Danforth, although it remains doubtful that the proposal to actually cut the programs will be adopted.

No 'partisan flavor'

Robert Moffitt, domestic policy analyst at the conservative Heritage Foundation, said: "The significance of this is that it does not have a partisan flavor really. That really changes the debate. It is no longer a Republican vs. Democrat argument on Capitol Hill. It is more a conservative vs. liberal argument.

"I think there is widespread recognition that we can't continue to spend money the way we are spending it. We are starting to

recognize, and the sentiment is growing, that we can't continue to do this. We are threatening the future of the country if we continue down this road."

At the liberal end of the spectrum, Robert Greenstein, director of the labor-backed Center on Budget and Policy Priorities, pointed out that entitlements generally, with the exceptions of Medicaid and Medicare, were not major contributors to the deficit.

He suggested voters were more ready to support cutting "entitlements," a word whose precise meaning they might not understand, than they were to see their parents' Social Security checks reduced, their grandmother's Medicare benefits pared back, or their own unemployment compensation cut.

"This is one of those situations where it depends how you ask the question," he said. "To simply say there is support for cutting something abstract like 'entitlements' is not very illuminating."

Mr. Greenstein said he favored "judicious" entitlement expenditure cuts. But he opposed spending caps that could prevent benefit programs from responding to increased need during recessions or expanding to cater for increased eligibility. He cautioned that capping health care entitlements could simply shift costs from the federal government to alternative state or private care providers.

Call for specifics

"I see the entitlement cap as a dodge. I see it often being supported by people who don't have the guts to identify specific entitlements they want to cut," he said.

R. Kent Weaver, senior fellow in government studies at the liberal Brookings Institution, said: "I just don't see the willingness on the part of the politicians or the public to accept explicit, open cuts in programs."

Certainly, the benefit programs are still political dynamite to handle. Each program has its powerful constituency and its political protectors.

There is strength in their numbers:

* 42 million beneficiaries of Social Security, who will receive total payments of $305 billion this fiscal year.

* 36 million recipients of Medicare, the health program for the elderly which will cost an estimated $146 billion.

* 31 million recipients of Medicaid, which provides care for the needy at a projected cost to the federal government this year of $80 billion.

* 27.3 million receiving food stamps totaling an estimated $27 billion.

* 3.4 million veterans collecting benefits worth $23.8 billion.

* 2.9 million unemployed whose benefits are expected to total $36.3 billion this year.

Altogether, entitlement programs for individuals this year will consume 44.8 percent of all federal spending.

As the Clinton administration's first budget was being drafted inside the White House, budget director Leon Panetta and his deputy, Alice Rivlin, argued for a direct assault on the entitlement programs. They lost out to those who favored more tax increases than spending cuts.

But once the budget was announced, it became clear that it was out of whack with popular priorities. Both the administration and its Democratic supporters in Congress were caught off balance by the lack of voter enthusiasm for economic stimulus and the strength of demand for deficit reduction through more spending cuts, fueled by the populist cost-cutting campaign of independent Ross Perot.

Citizens want cuts

"They have been way-to-heck-and-gone behind the curve of deficit reduction. Period," said Carol Cox-Wait, president of the business-backed Committee for a Responsible Budget, which holds regular budget-making "games" for citizens around the country. A majority of participants, according to a survey of nine meetings last year, favor elimination or cuts in some entitlement programs and reduced cost-of-living allowances or money-saving adjustments in others.

Ms. Cox-Wait said: "The point is that the audiences we do exercises with would cut spending and the deficit very %o considerably more than the president's budget or the congressional budget."

Mr. Clinton is not the first president to find himself entangled by entitlements.

Since the late 1970s, there have been various efforts to make the programs less generous. Presidents Ronald Reagan and George Bush sponsored restraints, setting the trend that is now intensifying.

It should be said that the biggest program, Social Security, is not the core problem these days. It currently takes in more than it pays out. Its projected growth rate is fairly level, and its next funding crisis is not expected until after the baby-boomers, now in or entering their forties, reach retirement age.

The crux today is the explosive cost of the entitlement health care programs -- Medicare and Medicaid. This is due mainly to the increase in the number of older Americans and the introduction of expensive new medical technology. The combined $226 billion projected cost of the two programs this year is expected almost to triple to $672 billion over the next decade.

Mr. Clinton has opposed major changes in these health programs, pending introduction of his health care reform package, which will be geared to restraining costs. Under current planning, this would fold Medicaid into a national system of universal coverage while leaving Medicare as an independent program for the elderly.

History of programs

The mandatory programs date back to the Social Security Act of 1935. They are mandatory because they are funded automatically without being subject to the annual appropriations procedure in Congress.

They became known as "entitlements" in the 1960s, after the courts ruled that recipients of Social Security payments were legally entitled to their benefits as contributors to the program.

Boom time for the entitlement programs was from the mid-1960s mid-'70s.

It was during this period that automatic inflation adjustments were added to many of the programs, according to an analysis of the programs by the Brookings Institution.

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