Nearly a third of the $500 billion U.S. budget now goes to the elderly and their dependents, Secretary of Health, Education and Welfare Joseph A. Califano Jr. told the House Budget Committee yesterday.
"There has been a tremendous 'graying' of the federal budget over the past 10 years," said Califano, declaring that the percentage of the U.S. budget spent on the elderly had risen from about 21.5 percent in 1969 to about 30.5 percent in 1979.
Califano said most people think of his department, which handles much of the programs for the elderly, as an agency which transfers money from the well-to-do to the poor. But another way to view it, he said, is as a giant mechanism for "distributing money generationally" - from young and middle-age taxpayers to the elderly and retired.
Califano said the rising proportion of the federal budget spent on the aged reflects the growing numbers of aged in the population and the maturing of the Social Security system.
Citing figures developed by the National Journal from statistic supplied by his department, Califano said HEW is now putting $90 billion a year into Social Security payments for the aged and dependents about $35 billion into Medicare and Medicaid payments for the elderly and about $2 billion more into welfare and special programs for the aging. Aides said nearly $26 billion additional is paid by other federal agencies in civil service, railroad and military pensions - for a total of about $152 billion out of the overall $500 billion federal budget.
In some cases these figures include persons eligible for retirement before age 62.
Califano said that if the same trends continue over the next decade, by 1989 about 45 percent of the federal budget will go to the elderly.
Citing one program which is available to all low-income persons but where the elderly are increasingly taking up a larger share, Califano said the Medicaid (charity medical) propgram now spends half its money on long-term health care, including treatment of many diseases characteristic of aging.
The growing burden of care for the aged in the federal budget has serious implications for public policy. Although Califano didn't expound on them, they may portend an era of intergenerational political warfare in which younger workers increasingly draw back from paying the taxes needed to support the elderly.
Heavy Social Security taxes recently voted by Congress to keep the pension system solvent have drawn deep protest and resentment from many groups representing low and middle-income taxpayers below retirement age.
It is estimated that today there are three active workers available to pay taxes needed to help support each retiree with an aging population, the ratio is expected to drop to two-to-one in the next century.
This will mean a heavier burden for those workers, as fewer persons are available for taxation to support each retiree.
HEW figures presented by Califano reflect the rising proportion of the budget going for the aged and for health, education and welfare programs for all ages. In 1964, HEW outlays for all programs for all ages were $22.2 billion, or 18 percent of the federal budget. Outlays in 1979 are estimated at $181.5 billion - nearly nine times the earlier figure. They make up 36 percent of the federal budget.