In less than 11 months, the first of America's 77 million baby boomers will retire, a landmark event in the long-term demographic makeover of the United States into a much older nation. Visitors to Florida are often struck by how in certain communities there are more pharmacies than 7-Elevens, every restaurant touts “early bird” specials, and streets empty soon after dark. By 2030, the average age in the United States will be what it is now in Florida, and such communities will be everywhere. Our transformation from a nation in which there are four working adults for every retiree to a nation in which the ratio is 2-to-1 will be nearly complete.
U.S. population
65 or older
1950
12.4
million
2000
35.1
million
2050
86.7
million*
*estimated
Source: U.S. government
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The result: Unless there are major changes in the status quo, the cost of Social Security, Medicare and Medicaid – already more than half the federal budget – will explode. This will force vast increases in taxes, vast new borrowing or both – inevitably yielding a devastated economy and a diminished quality of life.
Given this looming disaster, it is astounding to watch the debate over President Bush's newly released 2007-08 federal budget play out in such conventional fashion.
Republicans praise the fiscal plan for whittling away at the deficit and offering hope for a balanced budget by 2012. Democrats complain that it freezes spending for their favorite domestic programs. Independent analysts praise the plan for being more forthcoming about the cost of the wars in Iraq and Afghanistan than past budgets but complain that talk of a balanced budget in 2012 depends entirely on the next president controlling spending. To a dismaying degree, the media have gone along with this conventional framing of the budget debate.
Here's the truth: The deficit numbers have little to do with reality. The president predicts a $240 billion deficit next year, but that's only because federal accounting rules let him spend nearly $200 billion in annual Social Security payroll tax revenue – money that by all logic should be set aside to pay for the coming avalanche of retirees. Using corporate accounting rules, which require factoring in the cost of long-term pension and health care obligations, the deficit would be closer to $700 billion. The kicker here is a sad one: When we look back in a few years – after another 10 million or so boomers retire – we probably will consider the 2007-08 budget to be relatively healthy.
Unless, that is, our leaders stop focusing on ephemera and finally tackle the entitlements crisis.
Yes, the current budget is important. We back attempts to contain spending, yet not stint on national security. We applaud the president's call to control the rate of growth in some entitlements, and find Democrats' continuing demagoguery on Social Security reprehensible.
But we need a comprehensive fix of entitlements – not just tinkering on the edges – and Republicans as well as Democrats are too scared of the fallout to even try. Meanwhile, the media often seem bored with the topic, and the public ignores the stakes.
Add it all up, and here's what you get: a formula for national ruin.
