In 2007, Cullen Murphy, long-time editor of The Atlantic and Vanity Fair, published the book, Are We Rome? The Fall of an Empire and the Fate of America. Four years later, it seems Murphy might’ve picked the wrong ancient civilization for comparison. The better question, in light of current events, is this: Are we Greece? The cartoonists at Toronto’s The Globe and Mail certainly think so. In case you missed it, the paper published an editorial cartoon last week that featured a beaver staring nervously at a globe. What the beaver saw was the Western Hemisphere, but instead of the U.S. to Canada’s southern border, there was Greece.
The critique, of course, is that the U.S.’s debt-ceiling debacle and financial meltdown have brought very real concerns to the country’s economic sustainability. According to Standard and Poor’s seminal study, Global Aging 2010: An Irreversible Truth, the 2010s are a “window of opportunity to address the challenges posed by aging to the sustainability of public finances.” The report posited that “expected acceleration in spending” would start “in 2020.” As we have seen in recent weeks—with imminent threat of government default in no small part driven by entitlements—the “window of opportunity” is slamming shut.
Both Democrats and Republicans alike have been making a lot of wind recently about the size, shape, and scale of the national debt. Their debates, however, might be missing the point. In a trenchant and penetrating piece in this week’s Bloomberg BusinessWeek, Peter Coy argues the mainstream political debates are “nothing compared with the real threats to the U.S.’s long-term economic health.” According to Coy, the main threat is “sharply rising per-capita health-care spending, coupled with the graying of the populace.” Of course this was clearly shown in Richard Jackson’s CSIS Study a few months back, where he focused on aging populations’ healthcare spending as the culprit, and not only in the U.S. A “generation of workers turning into an outsize generation of beneficiaries.” So while debates rage on Capitol Hill about debt and spending over the next two to three years, the real threat, according to Coy, “will begin to strike with full force toward the end of this decade.” In other words, as our population ages, so, too, does the challenge of fiscal sustainability and economic health.
As more Americans become “seniors,” more will begin to qualify for already costly entitlements. So one solution, of course, is to re-think from the ground up what it means to age in the U.S. in the 21st century. For economists, this re-thinking is essential and has been under study for quite some time. Changes in entitlement programs are essential. But how do average Americans feel about these changes? According to a recent report by Pew Research Center, the majority of Americans believe we need “fundamental changes” in Social Security, Medicare, and Medicaid. However, most do not support “reductions in the benefits provided” by these programs. Irreconcilable beliefs? Perhaps.
One way through this log-jam is to reframe the current debates on debt and deficit ceilings. As long as we dance around the central issues, we’ll fail to progress because the public will be misled as to what is really driving the economic crisis. The great gift of Ancient Athens to the world was democracy—a revolutionary system in which citizens could participate in political and economic affairs. Now, 2500 years later, we should heed their lessons and refocus the debate around the issues driving it – the incompatibility of our aging population with the outdated structure of our social welfare entitlement programs.
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