According to the Congressional Budget Office (CBO), large chronic budget deficits will push the national debt up to 156 percent of GDP by 2055, a level once associated with banana republics. By then, America will be spending twice as much each year on interest payments to bondholders as it will be on national defense. In this Vantage Point, we offer an overview of the long-term budget outlook and the dangers it poses. We also explain why, as daunting as they are, CBO’s projections may greatly understate the magnitude of America’s looming fiscal crisis.
The latest UN population projections reveal a world on the cusp of a stunning demographic transformation. The global baby bust continues to deepen, countries almost everywhere are aging, and a growing number face long-term demographic decline. In this issue of Vantage Point, we discuss the coming global demographic transformation, as well as the daunting social, economic, and geopolitical challenges it poses.
According to new CDC data, the U.S. total fertility rate (TFR), a measure of average lifetime births per woman, resumed its decline in 2023, falling to an all-time historical low of 1.62. The drop more than erased a post-pandemic uptick in the TFR that some experts hoped might herald a turnaround in U.S. birthrates, which have been falling almost continuously since the Great Recession. Now it looks more and more like low fertility is here to stay. In this Vantage Point, we look at the latest fertility numbers and what they mean for America’s future.
It’s not surging productivity that’s driving today’s surprisingly resilient economic expansion. Nor is it surging labor-force participation. It’s surging immigration. In other words, the same development that has unleashed chaos at the southern border, overwhelmed the asylum system, and overburdened state and municipal governments is also what has helped the U.S. economy defy gravity in the face of rising interest rates and ebbing fiscal stimulus. In this Vantage Point, we examine the role immigration is playing in today’s expansion—and explain why it is becoming ever more critical to growth as America ages.
South Korea’s fertility rate fell to just 0.72 in 2023, another world record low and barely one-third of the 2.1 replacement rate needed to maintain a stable population from one generation to the next. In this Vantage Point, we discuss the causes of South Korea’s fertility freefall and draw lessons for the United States and other developed countries. The most important is that seeking to maintain traditional gender roles does not raise birthrates, but lowers them.
America's Rapidly Deteriorating Demographic Outlook
According to new Census Bureau projections, the U.S. population will peak later in the century, then decline. Until just a few years ago, it seemed certain that the United States would have a growing population for the foreseeable future. What explains the rapid deterioration in America’s demographic outlook? And what does it mean for America’s future? In this Vantage Point, we discuss the new Census Bureau projections and consider their long-term fiscal, economic, and geopolitical implications.
According to the latest UN projections, China is on track to lose nearly one-half of its current population by the end of the century. Over the past few decades, China’s unusually favorable demographics have helped to propel its stunning economic rise. In the future, its deteriorating demographics threaten to place an ever larger drag on economic growth. In this issue of Vantage Point, we discuss this reversal and the economic and geopolitical risks it poses.
Immigration is already the only reason that the United States still has a growing workforce, and by the 2040s it will be the only reason that it still has a growing population. In this issue of Vantage Point, we take a step back from today’s politically polarized immigration debate and consider the critical role that immigration can and should play in an aging America.
Between the new CBO budget baseline released in February, the President’s 2024 budget proposal released in March, and the looming debt ceiling crisis, the federal budget has been much in the news lately. To help our readers navigate the sometimes confusing issues, concepts, and terminology in the budget debate, this issue of Vantage Point offers a concise budget primer.
The world’s population passed the 8 billion mark in November, triggering renewed fears about runaway population growth. These fears are largely misplaced. Global population growth is in fact slowing, and the world’s population will likely peak later in the century, then decline. In this Vantage Point, we offer an overview of the global demographic outlook during the rest of the century. Although population growth will remain a serious challenge in some parts of the world, especially sub-Saharan Africa, the challenge for an increasing number of countries will not be population growth, but population decline.
U.S. life expectancy has been much in the news lately, and the news has been mostly grim. The recent CDC report showing that life expectancy fell for the second straight year in 2021 was the most widely covered development. But there have also been new and worrisome reports on the large and growing gap in life expectancy between the United States and its developed world peers, as well as on the enormous variation in life expectancy across America’s fifty states. In this Vantage Point, we review recent developments on the life expectancy front. We also consider the disconnect between the increasingly uncertain prospects for U.S. life expectancy and the optimism of most projections, which continue to assume that it will rise steadily in decades to come.
With the exception of a minor uptick in 2014, the U.S. birthrate has fallen every year since 2007. Or at least it did until last year. According to preliminary data released in May by the CDC’s National Center for Health Statistics, the birthrate rose in 2021, a development that surprised many demographers. What accounts for the unexpected increase? And does it mean that America’s baby bust is finally over? In this Vantage Point, we explore recent developments on the fertility front.
Why the Collapse in U.S. Population Growth Matters
Declining birthrates and declining immigration are pushing the United States toward a future of much slower population growth and perhaps even population decline. As population growth slows, so too will economic growth. Domestically, living standards may stagnate, while internationally America’s stature may erode. Why the Collapse in U.S. Population Growth Matters examines the economic and geopolitical challenges posed by slowing population growth and considers a variety of policy responses that could improve America’s long-term demographic and economic outlook, from increasing labor-force participation to increasing immigration. Much is at stake, since a slow-growth America may be a less prosperous and less hopeful America, as well as a less safe America. The issue brief is part of a series called Critical Issues which the Global Aging Institute is producing in collaboration with The Terry Group.
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.
Elderly workers have become an increasingly critical driver of U.S. economic growth, accounting for almost three-fifths of all gains in employment in the 2010s. Yet since the pandemic began, nearly one in ten have dropped out of the labor force. Rethinking Retirement in an Aging America examines recent trends in retirement behavior, explores the economic, fiscal, and individual benefits of longer work lives, and identifies a variety of policy initiatives which could make remaining on the job longer more attractive for those workers who are able to do so, while at the same time protecting those who are not. America’s success at reversing the recent decline in elderly labor-force participation and more fully unlocking the productive potential of the elderly, it concludes, may well determine whether it prospers while it ages. The issue brief is part of a series called Critical Issues which the Global Aging Institute is producing in collaboration with The Terry Group.
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.
Not so long ago, the United States was among the rich world’s longevity leaders. Today it is its longevity laggard. From Longevity Leader to Longevity Laggard explores the reasons behind the startling U.S. slide in world life expectancy rankings. It digs deep into the worrisome divergence in trends in morbidity and mortality by socioeconomic status, warning that America risks becoming two separate nations, one long-lived and one short-lived. Along the way, it also clears up the widespread confusion about the impact of COVID-19 on life expectancy. The good news is that the large pandemic-related reduction in life expectancy will almost certainly prove transitory. The bad news is that if we fail to confront the gathering health crisis afflicting much of America we may find out too late that stagnating or retrogressing life expectancy is the new normal. The issue brief is part of a series called Critical Issues which the Global Aging Institute is producing in collaboration with The Terry Group.
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.
Until recently, America’s relatively high fertility rate seemed to ensure that it would remain the youngest of the major developed countries for the foreseeable future, as well as the only one with a steadily growing workforce. But birthrates were already in a steep decline before the pandemic hit, and now have plunged to European levels. The End of U.S. Demographic Exceptionalism digs deep into the story behind the new “baby bust,” exploring why birthrates have been falling, whether they are likely to rise again, and, if they don’t, what it means for the budget, the economy, and the position of the United States in the world order. The issue brief is the first in a series called Critical Issues which the Global Aging Institute is producing in collaboration with The Terry Group. The series aims to provide timely and authoritative analysis of key demographic and economic trends and developments that are reshaping America and the world, and in particular the future environment for retirement and health care.
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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