Maybe the retiring Boomers won't bankrupt us...

[TownieDeac]

http://theamericanscholar.org/the-fear-factor/#.U5xUTY1dUdp

The Fear Factor

Long-held predictions of economic chaos as baby boomers grow old are based on formulas that are just plain wrong

By Lincoln Caplan

For the past half century, the biggest demographic changes in the United States have often reflected the stages of life for the 76 million baby boomers. The demographer Dowell Myers has described their passage as “a rolling tsunami that first rocked the schools, then flooded the labor market, and next drove up house prices and triggered waves of gentrification.” When the first wave of boomers turned 65 in 2011, the rest of the country started paying attention to what demographers had been warning about for a generation: the tsunami was turning gray and driving the United States toward fundamental shifts in social policy.

Demographers use a measure called the dependency ratio to prove their point. They add the number of Americans who are regarded as not in the workforce (traditionally, those 14 and younger and 65 and older) and divide that total by the number of people who are regarded as in the workforce (those 15 to 64). Then they multiply by 100. An increase in the ratio is understood to mean a growing burden on each person in the workforce to support the economically dependent.

The calculation is often modified to yield what’s known as the old-age dependency ratio, comparing the numbers of Americans 65 and older and those of working age. For the past four decades, that ratio has been relatively steady, but between 2010 and 2030, it is projected to shoot up from 13 to 22—an increase of close to 60 percent. The U.S. government takes this ratio and projected jump seriously, as the headline in a 2010 government press release indicated: “Aging Boomers Will Increase Dependency Ratio, Census Bureau Projects.”

The addition of “old-age” as the modifier to the starkness of the dividing line between the dependent and the productive bluntly separates older Americans from everyone else. It presents them as being unable to care for themselves. With an objective formula, it seems to document that those who make up the gray tsunami are a large and growing liability, undermining the country’s assets. The old-age dependency ratio appears to justify the view of alarmists like former Federal Reserve Board Chairman Alan Greenspan, who testified before the Senate that this outsized group of aging Americans “makes our Social Security and Medicare programs unsustainable in the long run.”

The dependency ratio is only occasionally mentioned in debates about public policy, but its premise—that the growth in the ratio indicates how greatly baby boomers will burden the rest of society—is shaping some of the most consequential debates in the United States today: about the size of the federal government, about how government expenditures should be allocated, and about the nation’s financial viability in the next generation.

...

Given how ardently the program’s finances have been debated, the most remarkable thing about it may be the conspicuous conservatism of the government’s approach to financing it. The people who oversee the program, called trustees, have a legal duty to report annually to Congress about those finances for every year going out 75 years, based on projections of revenue supporting the program and of benefits it will pay out. Because the revenue has generally exceeded money paid out, the surplus in Social Security trust funds is now $2.8 trillion. It is projected to grow to $2.9 trillion by 2020. Most of the revenue to support Social Security comes from taxes (87 percent), but some comes from interest on those reserves (13 percent).

In 2021, the trustees project, Social Security benefits will exceed tax revenues plus interest income and the program will start to draw down its reserves. In 2033, when the last boomers will be turning 69 and the number of Americans on Social Security is projected to double, the reserves are projected to be depleted and tax revenues are projected to cover only 77 percent of benefits due, unless there is a change in revenues or benefits.

For a generation, critics on a spectrum from neoliberals to conservatives have cited projections like these to argue that, unless it is overhauled, Social Security will create a crisis for the nation. Invoking the dependency ratio, they argue that as fewer people earning incomes in the U.S. economy pay Social Security taxes to support more recipients, productive generations will be increasingly supporting unproductive ones in an indefensible breach of generational equity, since each generation should provide for itself. They propose cutting benefits, raising the age when people qualify for Social Security, and instituting a variety of more aggressive reforms, such as making 401k and other personal savings accounts part of the Social Security system. Reining in Social Security has been integral to recommendations of bipartisan blue-ribbon commissions about how to balance the U.S. budget after a decade and a half of economic turmoil has badly unbalanced it.

 

[bigdoublezero]

I'm sure they'll find another way to fuck us over anyhow.