In short, the dependency ratio — the percentage of non-working members of society who depend on the working members — is rapidly growing and will exceed 70 percent from 2030 on. Unlike in the last period in which the ratio was that high, 1960 to 1980, however, the majority of dependents will be elderly adults, not children. The Census Bureau doesn’t say so, but we couldn’t help noticing that the onset of these all-but-inevitable developments coincides with two other events that the Social Security and Medicare trustees recently forecast: the exhaustion of the Medicare trust fund in 2029 and the insolvency of the Social Security trust fund in 2034.
Also left unsaid in the Census Bureau report: The year 2030 is only six Congresses away.
What should lawmakers do to prepare? The United States needs two things to make it through this impending financial and demographic squeeze: first, more population, especially among younger, working-age people; and second, entitlement reforms to extend the life of the vital safety net programs for the elderly. Unfortunately, neither is on the agenda for President Trump and the Republican majority on Capitol Hill. To the contrary, they are moving in the opposite direction.
Mr. Trump favors a Republican-drafted Senate bill that would restrict not just illegal immigration but also the legal kind. The bill would cut annual legal immigration to 500,000, whereas the Census Bureau report notes that even its relatively modest future population growth estimates assume 1.1 million immigrants per year. Without immigration, U.S. birthrates will not be sufficient to avoid even more rapid aging of the population and an even higher dependency ratio than the ones the Census Bureau forecasts. Meanwhile, Mr. Trump campaigned on a promise not to touch Social Security and Medicare, and without presidential leadership, not even a Republican Congress is likely to move on that issue.
Demography dictates that action be taken. In no way does it dictate all the legislative specifics, however. Skills-based immigration could constitute a larger share of the legal immigration flow, as long as that flow remains substantial, numerically. Any trims to entitlements must be means-tested, focusing on those seniors most able to bear sacrifice while protecting the poorest and most vulnerable. The only options that should be ruled out are to leave policy on its current path, or to make matters worse, as the president’s program is doing.