Elephants in the Room

As the pie chart above depicts, Social Security, Medicare, and Medicaid combine for about 45% of the federal budget.  The big problem is that these pieces are growing rapidly.  Between 2008 and 2013, the Consumer Price Index increased by 8.2%.  Here is how entitlement growth compared:

Expenditure	2008	2013	Spending Growth
Social Security	$617B	$818B	33%
Medicare	$391B	$511B	31%
Non-Medicare Health Care	$248B	$334B	35%
Total	$1,256B	$1,663B	32%

Source:  http://www.whitehouse.gov/sites/default/files/omb/budget/fy2014/assets/hist03z2.xls

Perhaps this growth rate will slow down, you would hope.  Unfortunately not.  Here are OMB estimates for 2013-2018 spending growth of these programs.  And if anything, the estimated growth for Medicare and Medicaid will likely be understated compared to what will actually occur over the next five years.

Expenditure	2013	2018	Spending Growth
Social Security	$818B	$1,086B	33%
Medicare	$511B	$615B	20%
Non-Medicare Health Care	$334B	$557B	67%
Total	$1,663B	$2,257B	36%

Entitlement programs are the third rail of American politics, and necessary reforms would likely need to be part of a grand compromise (e.g. Bowles-Simpson):

http://www.fiscalcommission.gov/sites/fiscalcommission.gov/files/documents/TheMomentofTruth12_1_2010.pdf

Regardless of your political persuasion, when the threats of government shutdowns and debt defaults cannot even reduce entitlement spending growth by $1, it does not bode well for this possibility.

Any legitimate attempt to make reforms and stave off much greater financial difficulties is met with extreme viciousness.  It takes a mobilized electorate to realize there is no free lunch, and that starts with being armed with facts to see through self-interested politicians who feebly resort to scare tactics at the mere mention of reform.

Source: http://www.cagle.com/news/socialsecuritymedicare/