Opinion

King: Campaigns not talking about U.S. fiscal challenges

The U.S. is facing a fundamental and seismic demographic shift. It is at the heart of the long-term fiscal challenge our national government faces. But it is also the 800-pound gorilla no one wants to talk about.

In the last century this country made the historic decision to shift the burden of caring for the elderly from individual families, where it had been since the beginning of human history, to society at large. This was accomplished by the enactment of Social Security and Medicare.

At the time those programs were adopted, the cost of caring for the elderly was much lower than today. At that time, life expectancies did not extend much beyond 65 years, and no one had even contemplated the miraculous medical technologies that would not only extend life but also vastly improve the quality of life in our latter years. These two developments have caused the cost of caring for the elderly to skyrocket.

The rising cost of caring for the elderly is compounded by the fact that our birth rate has plummeted. The current U.S. birth rate is about 2.3 children per mother, barely sufficient to maintain the population. As a result, the number of active workers supporting retirees is also falling. In the middle of the last century, there were about five active workers for each retiree. There are now only three. By the middle of this century it will be closer to two. This phenomenon has been made worse by the fact that we have promised millions of public employees that they can retire in their 50s and some cases even in their 40s.

This math does not work. It is impossible to have people in retirement for nearly a quarter of their life supported by only two to three active workers, especially when we have very high expectations as to the extent and quality of medical care in our retirement years. How we solve this dilemma is the fundamental challenge of this century. And because this country has made the decision to share these costs across society at large, it is also the fundamental national fiscal challenge.

What is disappointing about the current election is that neither side is addressing this issue. The Democrats make vague references to entitlement reform while not offering specifics.

Republicans do have an idea about how to address the problem, but they spend most of their time trying to disguise it. Their idea is to roll back the clock and begin transferring the cost of caring for the elderly from the national government back to the individual family. That is the fundamental effect of Paul Ryan's voucher plan for Medicare. The biggest problem with this "solution" is that it is wildly unpopular. So the Republicans use a lot of euphemisms to describe their plan, such as suggesting that it is more of a market-driven plan, which it absolutely is not.

The more interesting question is whether shifting the burden from the national government back to individual families would actually reduce the cost. While any such estimation can be little more than speculation, it seems likely that if individual families had to bear these costs, they probably would go down. If a retiree knew the cost of a particular medical procedure was coming directly from that retiree's children or grandchildren, it would probably have some dampening effect.

But the problem with shifting the burden back to families is that many seniors do not have a family to support them. And this country is not going to stand for that. So at the end of the day, the debate over shifting the burden away from the national government is largely academic.

The more likely solutions lie in using improved technologies and other measures too drive down the cost of medical care and making seniors provide a larger share of their own support. This can come in the form of delayed retirement ages, part-time employment in retirement and more robust saving plans during our working years.

But at the end of the day, there are no magic bullets. The math is the math. And the sooner we start having an intellectually honest conversation about the issue we are facing, the better off we all will be.

Email King at weking@weking.net and follow him on twitter.com/weking.