Oh, dear. Fareed Zakaria doesn’t understand (or is paid not to understand, in finest Upton Sinclair fashion) why we silly liberals don’t understand that Grandma must be put out on an ice floe so Pete Peterson can have a few more swimming pools:
The American left has trained its sights on a new enemy: Pete Peterson. The banker and private-equity billionaire is, at first glance, an obvious target—rich and Republican. He stands accused of being the evil genius behind all the forces urging Washington to do something about the national debt.
The facts are hard to dispute. In 1900, 1 in 25 Americans was over the age of 65. In 2030, just 18 years from now, 1 in 5 Americans will be over 65. We will be a nation that looks like Florida. Because we have a large array of programs that provide guaranteed benefits to the elderly, this has huge budgetary implications. In 1960 there were about five working Americans for every retiree. By 2025, there will be just over two workers per retiree. In 1975 Social Security, Medicare and Medicaid made up 25% of federal spending. Today they add up to a whopping 40%. And within a decade, these programs will take up over half of all federal outlays.
Too bad that Zakaria’s much-touted facts are irrelevant to the discussion at hand.
In the course of spanking Zakaria, the CEPR’s Dean Baker points out a key fact that is quite relevant, which is that even modest gains in productivity growth far outweight the impact of demographics:
Note that even in the most pessimistic productivity story, the slowest rate of productivity growth of the post-war era, the impact of productivity in raising living standards is more than three times as large as the impact of demographics in reducing them. Furthermore, this takes 2035 as an endpoint. After that year there is little projected change in demographics for the rest of the century whereas productivity will continue to grow.
See also the chart above, from his article. The calculations backing it up are here.
If anyone out there still reads Time magazine, feel free to send this to the editors thereof.