The Shape of Things to Come is a quarterly issue brief series that was jointly published by the Global Aging Institute (GAI) and The Concord Coalition in 2020 and 2021. The series explored the fiscal, economic, social, and geopolitical implications of the aging of America
Three Myths about Health-Care Reform
Anyone familiar with the federal budget outlook knows that, along with interest on the national debt, the growing cost of Medicare, Medicaid, and other health benefit programs is the main driver of long-term budget deficits. Three Myths about Health-Care Reform, a joint Concord Coalition/Global Aging Institute issue brief, takes a close look at the forces pushing up health-care spending and corrects some of the wishful thinking and mistaken assumptions that have undermined past efforts to control the cost of federal health benefits. It explains why controlling costs will require real trade-offs, that countries with national health systems spend less because they set limits, and that federal cost control need not await national cost control. Indeed it must not, since the deficit-financed growth in health benefit spending threatens the nation’s future.
According to the CBO’s latest long-term projections, all growth in the U.S. working-age population over the next three decades will be attributable to immigration. Yet even as its importance to demographic and economic growth has been increasing, immigration has been declining. The Vital Role of Immigration in an Aging America, a joint Concord Coalition/Global Aging Institute issue brief, places immigration policy within the broader context of America’s changing demographics and explains why the country needs more of it, not less. Along the way, it clears up a number of widespread misconceptions about the costs and benefits of immigration that distort the current debate.
The federal debt held by the public reached 100 percent of GDP in 2020, up from 35 percent in 2007 on the eve of the Great Recession. According to the latest March 2021 CBO long-term budget projections, it will be approaching 200 percent of GDP by 2050, and there are good reasons to believe that this projection is optimistic. At least as startling as the debt projections themselves is the fact that so many economists seem unconcerned. Why the National Debt Still Matters, a joint Concord Coalition/Global Aging Institute issue brief, explains why it is wishful thinking to suppose that America can continue to run up the national debt without grave risks, including a global financial crisis, a domestic fiscal crisis, and the long-term erosion of U.S. living standards. It also explains why CBO’s budget projections may greatly understate the future debt burden, and hence the dangers of failing to change course soon and decisively.
The dramatic shift in the age structure and growth rate of the U.S. population poses many challenges. As the ratio of elderly to working-age adults increases, fiscal burdens will rise. As the growth rate in the working-age population slows, so will employment growth and GDP growth. Productivity growth may also decline, and along with it growth in living standards. As the electorate ages, the social mood may come to be characterized by greater risk-aversion and shorter time horizons. As America’s population and economy grow more slowly, its geopolitical stature could diminish. The Macro Challenges of Population Aging, a joint Concord Coalition/Global Aging Institute issue brief, takes our readers on a guided tour of the macro challenges posed by the aging of the U.S. population.
On its current demographic and economic trajectory, America is headed toward a future of permanently slower growth, crushing fiscal burdens, and greatly diminished opportunity. Five Imperatives for an Aging America, a joint Concord Coalition/Global Aging Institute issue brief, lays out five steps that America can take to put the nation on track toward a more hopeful future. The first is to limit the extent of population aging by increasing the fertility rate and net immigration above today’s low levels. The second is to offset the demographic drag of population aging on economic growth by encouraging longer work lives and leveraging the productive potential of the elderly. The third is to control the growth in health-care spending, which is the main driver of long-term structural budget deficits. The fourth is to stabilize the national debt as a share of GDP. The fifth is to resist the rising tide of protectionism, which if unchecked will deprive an aging America of the immense benefits that can flow from open global capital markets and labor markets.
The aging of the United States threatens to usher in a new era of relentless fiscal pressure, economic stagnation, and growing intergenerational conflict that pits the interests of the old against those of the young. Or does it? Some optimists believe that improvements in the health of the elderly could be a potential game-changer that both eases fiscal burdens by lowering health-care spending and boosts economic growth by facilitating longer work lives. Are Health Spans Rising along with Life Spans? reviews recent trends in the health of the elderly. The issue brief, which is the third in a joint Concord Coalition/Global Aging Institute series, concludes that there is indeed room for optimism that better health at older ages will facilitate longer work lives. Unfortunately, there is much less reason to believe that it alone will have much impact on health-care spending. Difficult choices will still be required.
Over the course of the postwar era, life spans and health spans have risen dramatically in the United States. Yet far from working longer, people are retiring earlier. The Case for Longer Work Lives argues that nothing would do more to maintain economic and living standard growth in an aging America than unlocking the productive potential of the elderly. The issue brief, which is the second in a joint Concord Coalition/Global Aging Institute series, reviews recent trends in elderly labor-force participation, explores the economic, fiscal, and individual benefits of extending work lives, and suggests constructive steps that business and government can take to encourage longer work lives. The good news is that America has already made a start. After bottoming out in the 1990s, elderly labor-force participation has once again begun to rise. America’s success in building on the momentum may well determine whether it prospers while it ages.
The Concord Coalition and the Global Aging Institute (GAI) have joined forces to produce The Shape of Things to Come, a quarterly issue brief series that explores the fiscal, economic, social, and geopolitical implications of the aging of America. In America’s Demographic Future, the inaugural issue, we discuss the U.S. demographic outlook and the underlying forces shaping it, including recent trends in fertility, life expectancy, and net immigration. The good news is that America is not currently projected to age as much as many of its developed-world peers. The bad news is that the relatively favorable U.S. demographic outlook is deteriorating. America’s unusually large Baby Boom, moreover, means that its age wave is rolling in unusually fast. The fiscal and economic shock may thus be as large or even larger than in many countries due to age more than America is.
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