<P> Mandatory spending is expected to continue increasing as a share of GDP . This is due in part to demographic trends, as the number of workers continues declining relative to those receiving benefits . For example, the number of workers per retiree was 5.1 in 1960; this declined to 3.0 in 2010 and is projected to decline to 2.2 by 2030 . These programs are also affected by per - person costs, which are also expected to increase at a rate significantly higher than economic growth . This unfavorable combination of demographics and per - capita rate increases is expected to drive both Social Security and Medicare into large deficits during the 21st century . Unless these long - term fiscal imbalances are addressed by reforms to these programs, raising taxes or drastic cuts in discretionary programs, the federal government will at some point be unable to pay its obligations without significant risk to the value of the dollar (inflation). By one estimate, 70% of the growth in these entitlement expenses over the 2016 - 2046 period is due to healthcare . </P> <Ul> <Li> Medicare was established in 1965 and expanded thereafter . Spending for Medicare during 2016 was $692 billion, versus $634 billion in 2014, an increase of $58 billion or 9% . In 2013, the program covered an estimated 52.3 million persons . It consists of four distinct parts which are funded differently: Hospital Insurance, mainly funded by a dedicated payroll tax of 2.9% of earnings, shared equally between employers and workers; Supplementary Medical Insurance, funded through beneficiary premiums (set at 25% of estimated program costs for the aged) and general revenues (the remaining amount, approximately 75%); Medicare Advantage, a private plan option for beneficiaries, funded through the Hospital Insurance and Supplementary Medical Insurance trust funds; and the Part D prescription drug benefits, for which funding is included in the Supplementary Medical Insurance trust fund and is financed through beneficiary premiums (about 25%) and general revenues (about 75%). Spending on Medicare and Medicaid is projected to grow dramatically in coming decades . The number of persons enrolled in Medicare is expected to increase from 47 million in 2010 to 80 million by 2030 . While the same demographic trends that affect Social Security also affect Medicare, rapidly rising medical prices appear to be a more important cause of projected spending increases . CBO expects Medicare and Medicaid to continue growing, rising from 5.3% GDP in 2009 to 10.0% in 2035 and 19.0% by 2082 . CBO has indicated healthcare spending per beneficiary is the primary long - term fiscal challenge . Various reform strategies were proposed for healthcare, and in March 2010, the Patient Protection and Affordable Care Act was enacted as a means of health care reform . CBO reduced its per capita Medicare spending assumptions by $1,000 for 2014 and $2,300 for 2019, relative to its 2010 estimate for those years . If this trend continues, it will significantly improve the long - term budget outlook . </Li> </Ul> <Li> Medicare was established in 1965 and expanded thereafter . Spending for Medicare during 2016 was $692 billion, versus $634 billion in 2014, an increase of $58 billion or 9% . In 2013, the program covered an estimated 52.3 million persons . It consists of four distinct parts which are funded differently: Hospital Insurance, mainly funded by a dedicated payroll tax of 2.9% of earnings, shared equally between employers and workers; Supplementary Medical Insurance, funded through beneficiary premiums (set at 25% of estimated program costs for the aged) and general revenues (the remaining amount, approximately 75%); Medicare Advantage, a private plan option for beneficiaries, funded through the Hospital Insurance and Supplementary Medical Insurance trust funds; and the Part D prescription drug benefits, for which funding is included in the Supplementary Medical Insurance trust fund and is financed through beneficiary premiums (about 25%) and general revenues (about 75%). Spending on Medicare and Medicaid is projected to grow dramatically in coming decades . The number of persons enrolled in Medicare is expected to increase from 47 million in 2010 to 80 million by 2030 . While the same demographic trends that affect Social Security also affect Medicare, rapidly rising medical prices appear to be a more important cause of projected spending increases . CBO expects Medicare and Medicaid to continue growing, rising from 5.3% GDP in 2009 to 10.0% in 2035 and 19.0% by 2082 . CBO has indicated healthcare spending per beneficiary is the primary long - term fiscal challenge . Various reform strategies were proposed for healthcare, and in March 2010, the Patient Protection and Affordable Care Act was enacted as a means of health care reform . CBO reduced its per capita Medicare spending assumptions by $1,000 for 2014 and $2,300 for 2019, relative to its 2010 estimate for those years . If this trend continues, it will significantly improve the long - term budget outlook . </Li> <Ul> <Li> Social Security is a social insurance program officially called "Old - Age, Survivors, and Disability Insurance" (OASDI), in reference to its three components . It is primarily funded through a dedicated payroll tax of 12.4% . During 2016, total benefits of $910 billion were paid out, versus $882 billion in 2015, an increase of $28 billion or 3% . Social Security's total expenditures have exceeded its non-interest income since 2010 . The deficit of non-interest income relative to cost was about $49 billion in 2010, $45 billion in 2011, and $55 billion in 2012 . During 2010, an estimated 157 million people paid into the program and 54 million received benefits, roughly 2.91 workers per beneficiary . Since the Greenspan Commission in the early 1980s, Social Security has cumulatively collected far more in payroll taxes dedicated to the program than it has paid out to recipients--nearly $2.6 trillion in 2010 . This annual surplus is credited to Social Security trust funds that hold special non-marketable Treasury securities . This surplus amount is commonly referred to as the "Social Security Trust Fund". The proceeds are paid into the U.S. Treasury where they may be used for other government purposes . Social Security spending will increase sharply over the next decades, largely due to the retirement of the baby boom generation . The number of program recipients is expected to increase from 44 million in 2010 to 73 million in 2030 . Program spending is projected to rise from 4.8% of GDP in 2010 to 5.9% of GDP by 2030, where it will stabilize . The Social Security Administration projects that an increase in payroll taxes equivalent to 1.8% of the payroll tax base or 0.6% of GDP would be necessary to put the Social Security program in fiscal balance for the next 75 years . Over an infinite time horizon, these shortfalls average 3.3% of the payroll tax base and 1.2% of GDP . Various reforms have been debated for Social Security . Examples include reducing future annual cost of living adjustments (COLA) provided to recipients, raising the retirement age, and raising the income limit subject to the payroll tax ($118,500 in 2014). Because of the mandatory nature of the program and large accumulated surplus in the Social Security Trust Fund, the Social Security system has the legal authority to compel the government to borrow to pay all promised benefits through 2036, when the Trust Fund is expected to be exhausted . Thereafter, the program under current law will pay approximately 75--78% of promised benefits for the remainder of the century . </Li> </Ul>

Who decides how much to tax and how to spend the money taken in