Business & Economics

Why more boomers are an answer to the coming boomer entitlement mess

Robert Reich

I was born in 1946, just when the boomer wave began. Bill Clinton was born that year, too. So was George W. So was Laura Bush. And Ken Starr (remember him?) And then, the next year, Hillary Clinton. And soon Newt Gingrich (known as “Newty” as a boy). And Cher. Why so many of us begin getting born in 1946? Simple. My father was in World War II. He came home. My mother was waiting. Ditto for the others.

Sixty years later, we boomers have a lot to be worried about because most of us plan to retire in a few years and Social Security and Medicare are on the way to going bust. I should know because I used to be a trustee of the Social Security and Medicare trust funds. Those of you who are younger than we early boomers have even more to be worried about because if those funds go bust they won’t be there when you’re ready to retire.

It’s already starting to happen. This year Social Security will pay out more in benefits than it receives in payroll taxes. The tipping point came sooner than anyone expected because the recession has kicked so many people off payrolls. But it was coming anyway. And it adds new urgency to reforming Social Security — a task the president’s commission on the nation’s debt is focusing on.

So what’s the answer?

Fed Chair Ben Bernanke this week listed the choices. “To avoid large and unsustainable budget deficits,” he said in a speech on Wednesday, “the nation must choose among higher taxes, modifications to entitlement programs such as Social Security and Medicare, less spending on everything else from education to defense, or some combination of the above.”

Bernanke is almost certainly right about “some combination,” but he leaves out one other possible remedy that should be included in that combination: Immigration.

You see, the biggest reason Social Security is in trouble, and Medicare as well, is because America is aging so fast. It’s not just that so many boomers are retiring. It’s also that seniors are living longer. And families are having fewer children.

Add it all up and the number of people who are working relative to the number who are retired keeps shrinking.

Forty years ago there were five workers for every retiree. Now there are three. Within a couple of decades, there will be only two workers per retiree. There’s no way just two workers will be able or willing to pay enough payroll taxes to keep benefits flowing to every retiree.

This is where immigration comes in. Most immigrants are young because the impoverished countries they come from are demographically the opposite of rich countries. Rather than aging populations, their populations are bursting with young people.

Yes, I know: There aren’t enough jobs right now even for Americans who want and need them. But once the American economy recovers, there will be. Take a long-term view and most new immigrants to the U.S. will be working for many decades.

Get it? One logical way to deal with the crisis of funding Social Security and Medicare is to have more workers per retiree, and the simplest way to do that is to allow more immigrants into the United States.

Immigration reform and entitlement reform have a lot to do with one another.

(Originally published on Robert Reich’s site.)

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Comments to "Why more boomers are an answer to the coming boomer entitlement mess":
    • Carl Williams

      I did not get to finish my thoughts because of a miss poked finger.We as a
      Nation are illiterate fools,lazy,obese,non readers except for people magazine.Our Politicians don’t even read the Bills they pass,and have admitted it on National News shows.Most are so misinformed they voted for the same people who brought on this Depression.Buffoons that will not take the time to become informed.You are not Americans,never will be!all who fall in this category get what you deserve.I am ashamed to have fought in a War to preserve this selfish,distorted,perverted place of my Birth,yes I know your response,get out,if you don’t like it.If I did get out who would give you your opinion.

      [Report abuse]

    • Carl Williams

      Social security is a pyramid scheme,exporting all of the jobs that might have held it up longer are gone.Politicians agreeing to any and all lobby groups, have stolen our childrens future

      [Report abuse]

    • Erik Kengaard

      Excessive immigration is a major factor in what got us into this mess. Just consider the role of recent immigrants and their children on costs over tax receipts for education, welfare, criminal justice, health care. Look up the facts. More won’t make it better. Especially if more consists of low wage, welfare dependent people. Also consider the effect of population density, driven by excessive immigration, on cost of housing, cost of roads, and quiet enjoyment of the environment. Look up crime and children of immigrants. Where are your data?
      Will is right – you are proposing a pyramid scheme.
      If you want to be persuasive, provide a mathematical model.

      [Report abuse]

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