When Erskine Bowles and former Senator Alan Simpson, co chairs of President Obama’s Debt Commission proposed, “Indexing the retirement age in social security to longevity,” they were acknowledging that Social Security and Medicare were created at a time when living well into one’s 70s, 80s, and 90s was the exception, not the rule. But by referencing longevity, the two Chairmen have hit the central driver of what will become unsustainable debt over the next three decades – paying for the health and welfare of an aging population. Have they also hit upon the harsh truth that last century’s social programs are impossible to carry with today’s demographic realities – the number of citizens living longer into their 80s and beyond against the number of citizens contributing to those programs within the traditional working age.
Deficit Commissions come and go, and some even seem to lead to fiscal balancing acts, as with President Reagan’s Social Security Commission chaired by Alan Greenspan. But it’s no coincidence that eventually deficits return. It was true in Europe despite the 1992 Maastricht Treaty which sets deficit and debt levels of 3 per cent and 60 per cent respectively for all EU countries. Right, that really works – as in Greece or Ireland! Or the UK which is struggling with its 2010 general government debt at £1000.4 billion, equivalent to 71.3 per cent of GDP.
This takes us back to the profound changes the 21st century demands for aligning social structure with demography. Changes that cannot come from accountants or political deals not just in America, but globally. How about investing in medical research to find the cure for Alzheimer’s so we not only keep the current $604 billion global spend from exploding, but reduce it substantially by finding the cure. Or applying new approaches to education and learning, at early ages, so citizens can work longer. Sesame Street’s innovation, Next Avenue, is targeting people as young as 45. Big Bird is set to offer a path earlier in life that is about lifelong learning, offering people a chance to keep working. If we can stay productive contributors to economic and social life through our 70s then we won’t have to go through Bowles and Simpson’s tortures of indexing.
Michael W. Hodin, PhD, Adjunct Senior Fellow at the Council on Foreign Relations and Executive Director of the Global Coalition on Aging