The largest entitlement program in the United States today is the Social Security (SS) program. Social Security benefits payments in 1997 amounted to over $316 billion, which is almost 18% of the federal budget and about 4% of U.S. GDP for that year; this represents a doubling as share of GDP in the past thirty years. Social Security in the United States is also a system in fiscal imbalance. The convergence of three trends in the early twenty-first century will cause problems with the long-run solvency of the program. Two of these trends are the aging of the “baby boom” cohort and the drop in the fertility rate of U.S. families. As a result, the ratio of persons over age 65 to those aged 20–64 has risen from 0.14 in 1950 to 0.21 today and is projected to rise to 0.36 by 2030 and to 0.41 by 2070. The third trend is the reduction in the rate of growth in real wages in the United States, which has lowered the base of earnings on which SS benefits commitments can be financed. As a result, current estimates imply that if the structure of the program remains unchanged, payroll taxes to finance this program, currently at 12.4% of payroll, would have to rise to over 18%.

This type of fiscal imbalance is reflected not only in the Social Security system in the United States, but in social security systems throughout the industrialized world.