That Used to Be Us_ How America Fell Behind in thted and How We Can Come Back - Friedman, Thomas L. & Mandelbaum, Michael [143]
The most powerful special interest of all is not a labor union or an industry. Most of its members are not wealthy and do not think of themselves as having lobbyists who do their bidding in Washington. Yet it shapes the federal government’s response to one of the country’s most serious problems—our fiscal deficits—and does more to divert resources from the kinds of programs needed to master the challenges America faces than any other group.
This special interest group is older Americans, and its lobby is the American Association of Retired Persons (AARP). We know this is a controversial position, but it seems to us that older Americans’ interests qualify as “special” because, while a secure and dignified retirement for America’s seniors is vital, that interest has to be better balanced with other vital interests than it is now. If the budgets for Social Security and Medicare cannot be cut at all, then the budgets for education, infrastructure, and research and development will surely be cut too much.
The federal budget deficit exploded during the Terrible Twos, even before the Great Recession of 2008. Even if we see a full recovery from the recession, though, the country’s deficits and debt are on course to explode again because of the rapid rise in the number of older Americans. The retirement of seventy-eight million baby boomers—Americans born between 1946 and 1964—will cause the costs of Social Security and Medicare to skyrocket. Between 2010 and 2020 those costs are expected to rise by 70 and 79 percent, respectively. By 2050, according to Michael Tanner of the Cato Institute, a libertarian think tank, these two programs plus Medicaid will take 18.4 percent of everything the United States produces.
The country has not put aside the money needed to pay the boomers the benefits to which they are entitled by law. The two main programs are funded on a pay-as-you-go basis, with the taxes of people presently in the workforce supporting, through their payroll contributions, those who have retired. The shortfall in revenue at current tax rates as the boomers retire will be immense: into the trillions of dollars. Without serious adjustments—that is, reductions—in Social Security and Medicare benefits, the prospect is for bigger and bigger deficits, requiring more and more borrowing, leading to a larger and larger national debt.
Members of Congress certainly understand this, but they—especially Democrats—have shied away from supporting serious measures to reduce Social Security and Medicare benefits because of the political power of America’s senior citizens. That power stems from two hard realities: there are many people sixty-five and older—more than forty million, comprising 13 percent of the population, in 2009, with the percentage expected to rise to 20 percent by 2050—and proportionally more of them vote than do people in other age groups. The AARP is a potent lobby, but what gives it its power is something bigger than money or expertise in the labyrinthine statutes and regulations of the federal government. It is numbers, numbers that can be mobilized for the battles that matter most to politicians—elections.
In the 1930s, when Social Security was established, old-age pensions of any kind were rare, and senior citizens were the poorest age cohort in America. Now, by some measures, seniors are overall the richest, while the poorest rung on the American ladder of wealth is occupied by children. But our entitlement programs transfer resources from the working population to the old at the expense of the young. Children are, as the cliché has it, our future, which means that our entitlement programs represent an investment in the past at the expense of the future. The national interest depends on everyone, including seniors, making some sacrifice so that the country can make the investments