Entitlements - Research Paper Example

Macroeconomics - En ment, Transfer Payments, Non-discretionary Expenditures, and Mandatory Expenditures - of ProfessorNumber of Words: 554Definition of TermsEntitlements – in the context of a privately-owned market economy, entitlements include inheritance, transfer or acquisition of commodities, properties, or a job contract through the process of trading and entrepreneurship (OECD, 2010). i.e. social security and Medicare.Transfer Payments – a type of government spending that does not acquire goods and services; includes transfer of money like social security payments (Business Dictionary, 2010).

Non-discretionary Expenditures – same as mandatory expenditure, non-discretionary is a type of government spending used in “carrying out of functions imposed by statute, legal liabilities, contractual obligations, governance, and public order and safety” (Office of Local Government, 2010, p. 95).Mandatory Expenditures – a type of government spending programs required by the law (Sullivan & Sheffrin, 2003, p. 371). Reaching a total of $2.16 trillion, table below summarizes the most recently projected U.S. non-discretionary spending on mandatory programs and the amount of annual expenditure of each program FY 2011.U.S.

Mandatory ProgramsU.S. Federal BudgetSocial Security$730 billionMedicare$491 billionMedicaid$297 billionTroubled Asset Relief Program (TARP)$11 billionJobs Program$25 billionHealth Care Reform$17 billionOthers: Food Stamps, Unemployment Compensation, Child Nutrition, Tax Credits, Income Support Program, Crop Insurance or agricultural subsidies, Supplemental Security for the Disabled, and Student Loans.$619 billionTotal$2.16 trillionSource: White House, 2010The most significant discretionary spending of the U.S. government is allocated for defense budget.

Estimated by Donald M. Snow – a professor at the University of Alabama, approximately 58 percent of the total discretionary funding or 15 percent of the annual federal budget is spent on defense (Kennedy, 2010). Unlike the mandatory or non-discretionary expenditures, discretionary budget that is being allocated for Congress is controllable. It means that the Congress can decide whether or not to spend a portion of discretionary budget on certain projects. It is unfortunate to learn that two-thirds or almost 67% of the total federal budget has to be allocated for non-discretionary or mandatory expenditure (Kennedy, 2010).

According to Kennedy (2010), the Veteran’s Health Administration is already serving the pension and health care needs of more than 8 million veterans. Given the amount of non-discretionary expenditure (2/3 of federal fund) with the amount of discretionary expenditure (1/3 of federal fund), it is clear that the U.S. government should strictly avoid getting involve in the war between Iraq and Afghanistan to control the increasing number of Veterans that is entitled to receive not only pension but also health care support.

By doing so, the large number of veterans that is currently being financially supported by the U.S. government through entitlements can be controlled. Likewise, the U.S. government can also be free from having to spend a significant portion of the federal fund on defense budget.On top of the $5.5 billion that is being spent on war each month, it has been reported that the U.S. government has already spent more than $1 trillion on wars between Iraq and Afghanistan as of June 2010 (Anti-Imperialist News Service, 2010; Kennedy, 2010).

It is the U.S. taxpayers who are suffering the consequences of war. Rather than using this portion of federal fund in the promotion of new jobs, the money that taxpayers are paying only goes down the drain.Considering the current economic situation in the U.S. aside from the fact that the money used in paying the interest of the country’s national debt is considered as mandatory expenditure, there is a strong need for the U.S. government to carefully manage the allocation of government expenditures.

It the trend behind the use of government expenditures continuous, our people will suffer from having the need to face the long-term economic and social consequences of having large amount of federal debts. *** End ***ReferencesAnti-Imperialist News Service. (2010, June 14). Retrieved October 5, 2010, from $1 Trillion for War : http://www.anti-imperialist.org/war-one-trillion_06-14-10.htmBusiness Dictionary. (2010). Retrieved October 5, 2010, from Transfer Payment: http://www.businessdictionary.

com/definition/transfer-payment.htmlKennedy, S. (2010, June 24). Business Gather. Retrieved October 5, 2010, from National Debt Reaching Critical Mass, Military Spending Bloats Budget: http://business.gather.com/viewArticle.action?articleId=281474978325767OECD. (2010). Retrieved October 4, 2010, from Glosarry of Statistical Terms: Entitlement: http://stats.oecd.org/glossary/detail.asp?ID=6814Office of Local Government. (2010). Retrieved October 5, 2010, from 8. Issues and Constraints for Local Government Expenditure: http://www.jr.net.

au/Downloads/VIC/Facing%20the%20Renewal%20Challenge%20%20-%20DR8_Final.pdfSullivan, A., & Sheffrin, S. M. (2003). Economics: Principles in action. Upper Saddle River, New Jersey: Pearson Prentice Hall.White House. (2010). Retrieved October 5, 2010, from Summary of the Budget for Fiscal Year 2011: http://www.whitehouse.gov/sites/default/files/omb/budget/fy2011/assets/tables.pdf