The US political system is “too broken” to address the “demographic bomb” it faces - with older people expected to outnumber the number of children under the age of 18 in the country in 20 years.
This is according to Marc Goldwein [right], a policy director at a top think tank, who told PF International an ageing population was one of the US’s most “significant economic challenges.
Goldwein, vice president and senior policy director of the Committee for a Responsible Federal Budget, a non-partisan think-tank in the US, told PF International in Washington DC on Wednesday the US was facing a “demographic bomb”.
The think-tank director, who has served on national commissions and select committees, said: “People used to say we have to [fix the system] for our grandkids. But we actually have to do this for our grandparents – it’s a now problem.
He added: “But the system is just too broken to fix it.”
The US Social Security, the programme which provides pensions and disability benefits, could run out of money by 2035, according to an annual report by the trustees of the fund, to which employers and workers pay into for retirement.
If this happened, it would put additional pressure on public coffers to support the baby-boomers who are now retiring – and future pensioners.
Goldwein said to address the challenge, the government should reform the social security system, undertake healthcare reforms to get better value for money - and make care cheaper, which is a big issue in the country - and raise “significantly” more tax revenue.
Currently, the government has a “mentality to be looking for a free lunch” by spending more while cutting taxes.
An ageing population is a challenge to countries all over the world, as less children are born while people are living longer, and rely on services for longer.
In the US it is estimated, in a 2018 US Census Bureau report, that there will be 78.0 million people 65 years and older compared to 76.4 million under the age of 18 in 2035.
This means the elderly population will outnumber children for the first time in the country’s history.
President Donald Trump sent his budget proposals to Congress over the weekend, which included extending some of the tax cuts, introduced in 2017 and increased spending on defence.
In the 1990s countries around the world, including the US, acknowledged that an ageing population would become a global issue.
Many countries, including Canada, Australia and the Nordic countries, undertook pension reforms to address this. The US did “absolutely nothing about it”, Goldwein said.
“We’ve spent the last 20 years talking about it – but we’ve spent the last 20 years doing absolutely nothing. It’s tragically hilarious.”
Goldwein said there were few seniors living in poverty, which remains an issue for other groups. “The political priorities are all backwards – the government spends more paying interest rates than it does on children,” he said.