And soon, we may cross an important symbolic threshold: when the overall majority of government expenditures are spent on, essentially, insurance programs. (Another way to conceive of the major categories of entitlement programs are as health insurance, retirement insurance, unemployment insurance and so forth). Already, this is true of federal government spending (and it has been true since the early-to-mid-1990s). It is very close to being true even if one also accounts for state and local spending, and may well become true as soon as this year.
Slowing the growth of entitlement spending will not be easy. Particularly in the case of health care, it has become substantially more expensive for individuals with both public and private insurance to purchase the same level of care.
And on a political level, cuts to entitlement programs are liable to be more noticeable to individual voters than cuts to things like infrastructure spending. A 10 percent cut to Social Security or Medicare benefits will surely draw the ire of voters. A 10 percent reduction in the amount allocated to bridge repair, or in the amount of government-sponsored energy research, will affect individual citizens less directly (even if they are perhaps ultimately more economically damaging: most of the academic literature is supportive of high long-run returns to infrastructure and research and development spending on private-sector productivity and economic growth).
Nevertheless, the declining level of trust in government since the 1970s is a fairly close mirror for the growth in spending on social insurance as a share of the gross domestic product and of overall government expenditures. We may have gone from conceiving of government as an entity that builds roads, dams and airports, provides shared services like schooling, policing and national parks, and wages wars, into the world’s largest insurance broker.
Most of us don’t much care for our insurance broker.