November 9, 2012 · 0 Comments
By Dean Baker:
It is fashionable in elite circles to talk say that the aging of the population will bankrupt the country as a result of the higher costs it will impose on Social Security and Medicare (referred to as "entitlements.") It makes you seem a knowledgeable and concerned person to issue dire warnings along these lines.
Of course it is utter nonsense as everyone familiar with the projections knows. The projected rise in Social Security spending due to aging would increase the annual cost of the program by 1.2 percentage points of GDP over the next two decades, roughly two thirds of the increase in military spending associated with the wars in Afghanistan and Iraq. The aging of the population would actually have less impact on Medicare's costs, except that it is coupled with the expectation that per person health care costs wll continue to rise much more rapidly than inflation. However, this menas that the Medicare cost problem is a health care cost problem, not a problem due to the aging of the population.
Given this reality [it] is difficult to see why the NYT allowed Jonathan Haidt to [say] in his oped column:
"we do face bankruptcy when the baby boomers retire and a shrinking percentage of workers must pay the ever growing expenses of a ballooning class of retirees. Yet the Democrats want to “protect” older Americans, students and almost everyone else from the need to sacrifice."
Haidt obviously wants to make middle class workers sacrifice more than they already have with three decades of wage stagnation, but his rationale is entirely his own invention. There are no remotely plausible projections that show the retirement of the baby boomers bankrupting the country. Insofar as there will be budget problems they are due to the costs of a broken health care system. This requires fixing the health care system, for example by paying doctors and drug companies less.