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Aging Population Poses Global Challenges

Some economists and interest groups say such fears are overblown. The real problem, they say, lies not so much in demography but in a health care system that is the world's most expensive and least efficient. The cost of Bush's Medicare prescription drug benefit alone -- $8.1 trillion in 75 years -- dwarfs the $3.7 trillion estimated shortfall in Social Security in that stretch.

Get control of federal health care costs -- through better use of technology and better management of chronic illnesses and disabilities -- and the problem of an aging population will look a lot less intractable, said John Rother, policy director at AARP, the advocacy group for retirees and near-retirees.

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Transcript: The Washington Post's Jonathan Weisman answered questions on his story on an aging planet.
A Graying Population As the U.S. population grows considerable older in the coming years, programs for the elderly are projected to consume an even larger share of federal tax dollars.
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Europe and Japan have already entered the demographic crunch that American policymakers fear, Rother said. And although economic growth in those countries has slowed, standards of living have remained high. If the U.S. economy could better harness the strength of an elderly workforce, through job creation and volunteerism, he said, some of the anticipated economic impact of a growing pool of retirees could be mitigated.

Besides, technological progress will continue to make workers more productive, even as their numbers diminish relative to retirees, said Dean Baker, co-director of the liberal Center for Economic and Policy Research.

"Previous generations had sacrificed to build our infrastructure, to invest in technologies" that help current and future workers, Baker said. "If they're paying a larger amount of taxes to help their parents, I don't see where the harm has been done."

But such arguments are held by a minority. Many liberals, such as Isabel V. Sawhill, director of economic studies at the Brookings Institution, say the what-me-worry position of some Democrats in Congress could prove self-defeating. If Democrats stand resolutely by programs for the aged, education and anti-poverty programs will end up being squeezed.

Richard Kogan, a budget analyst at the liberal Center on Budget and Policy Priorities, agreed: "This is big enough that you can't wish it away."

The Congressional Budget Office estimated five years ago that federal spending on the elderly would grow to more than $1 trillion -- 43 percent of the budget -- by 2010 from $615 billion -- or 35 percent of the federal budget -- in 2000. By 2015, spending on the elderly will consume nearly half the federal budget, through Medicare and Medicaid, pensions for federal workers and military retirees, veterans' health care and pensions, coal miners' benefits, Supplemental Security Income, food stamps, heating and housing assistance, and other programs for the elderly, according to the Brookings Institution.

At that point, Medicare spending will be growing at more than 8 percent a year and Medicaid at nearly 9 percent -- rates that dwarf the problems of Social Security, said Douglas Holtz-Eakin, the CBO's director.

"Medicare and Medicaid spending triples, maybe quintuples by 2050, while Social Security goes up by 50 percent," said Holtz-Eakin, a former White House economist.

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