- Entitlements (budget geeks sometimes use the term “mandatory
spending”) are programs that automatically give people money if they
meet certain requirements (such as reaching a certain age or having
income below a certain level).
- Since these programs automatically give people money, they are not part of the annual appropriations process
(the “discretionary spending” parts of the budget that are determined on a yearly basis).
- Some entitlement programs are “means tested” and designed to funnel
money to low-income individuals. This type of spending is sometimes
referred to as “unearned benefits.”
- Some entitlement programs are “social insurance” since people pay
specific tax in exchange for specific benefits. This type of spending is
sometimes referred to as “earned benefits” (though in many cases recipient receive much more than they paid).
By the way, there’s one additional thing to understand…
5. Entitlement programs are a slow-motion fiscal train wreck.
…by the early 1960s, two-thirds of all spending continued to require
approval by the House and Senate appropriations committees each year,
and less than a third was spent on entitlement programs. … By 2019,
nearly two-thirds of all spending in the budget was for entitlement
programs, and less than a third went to annually appropriated accounts.