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Entitlements

Definition: Benefits (services or financial benefits) guaranteed by law provided to eligible individuals by the federal government. Entitlement programs include (but are not limited to) Social Security, Medicare, Medicaid, the State Children’s Health Insurance Program (CHIP), federal employee retirement benefits, food stamps, and certain veterans’ programs.

History: The entitlement programs we are most familiar with today were developed primarily under two Administrations — during the 1930s and 1940s under Franklin Delano Roosevelt and in the 1960s under Lyndon Johnson. Roosevelt’s “New Deal” programs included the 1935 passage of the Social Security Act, one of the most far-reaching pieces of legislation to date, which gave the federal government a role in aiding retirees and the unemployed. Johnson’s “Great Society” program created Medicare to provide medical insurance for the disabled and people over 65, and Medicaid to provide medical coverage for low-income people.

What it Means: Entitlement programs account for more than half of government spending. Congress does not appropriate money every year to fund entitlement programs, as they do with programs funded through the annual appropriations process. Entitlement expenditure levels are based on the number of eligible enrollees and benefit criteria under current law. With a growing number of baby boomers reaching age 65, spending for Social Security and Medicare is anticipated to increase dramatically over the next few decades, making paying for these benefits challenging. In today’s environment of deficit reduction and spending cuts, policymakers are discussing ways to reform entitlement programs to rein in spending.