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Subject: As America Ages; We can't afford to have such a huge part of our adult
Date: Wed, 25 Nov 92 04:45:04 EST
Message-ID: <20.1992Nov25.044505@AmeriCast.com>
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As America Ages; We can't afford to have such a huge part of our
adult population<dependent and unproductive.<By Robert J. Samuel-
son<

 Bill Clinton (born 1946) and Al Gore (born 1948) made a big
point of being a new generation of leaders. If they are serious,
they will prepare for the retirement of their own generation: the
baby boom (the 75 million Americans born between 1946 and 1964).
The event is nearly two decades away. The first boomers don't hit
65 until 2011. But we can't sensibly cope with the graying of
America by simply waiting for it to happen.

 To ask a president to peer that far into the future may seem
fanciful. It shouldn't. In 1990, one in eight Americans was 65 or
over. By 2020, that will be nearly one in five. Already, programs
for older Americans (Social Security, Medicare and other health
and retirement programs) represent about a third of federal
spending. This share will inevitably rise, and it will explode
when the baby boom passes 65. We should control these costs,
while also encouraging people to work longer.

 As America ages, we can't afford to have such a huge part of our
adult population - much of it healthy - dependent and unproduc-
tive. There are already tensions between retirees and workers.
The conflicts will intensify. What's at stake is the social con-
tract that says how much people are responsible for themselves
and how much society cares for them in old age. The longer we de-
lay rewriting the contract, the harder it will be: Changes will
be more sudden, and conflicts will be uglier.

 Any discussion of these issues must discard the worn notion that
people instantly become "needy" at 65. They don't. A new Census
Bureau report ("Sixty-Five Plus in America") by demographer Cyn-
thia Taeuber makes this point with an impressive array of statis-
tics. Consider: Only 10 percent of Americans between 65 and 74
need help with normal activities (dressing, bathing, eating); 64
percent of married couples over 65 have incomes exceeding $20,000
(about half have incomes over $35,000); three-quarters of the
over-65 population own their homes.

  But the census report also reminds us that many older Americans
- especially the very old - become quite vulnerable.  Nearly half
those over 85 need help with daily activities. Significantly,
this group is expected to double, from 3 million in 1990 to 6.1
million in 2010.  Nearly half of black married couples have in-
comes under $15,000. Women live longer than men and fall victim
to chronic illness and low incomes. The conclusion seems obvious:
Government aid should go more to those who need it - and less to
the old as a group.

 Clinton and Gore should prepare us for these new social reali-
ties. A starting point is reducing today's budget deficits. They
bloat the government's interest payments, which now represent one
dollar in seven of spending. Lower deficits today will mean a
lower interest burden tomorrow. That will make it easier to spend
more on the elderly in the 21st century.

 But immediate deficit reduction isn't enough.  Unless we attack
the long-term causes of higher spending on the elderly, we will
ultimately be overwhelmed. Government will be forced to raise
taxes sharply, cut benefits dramatically or accept truly mon-
strous deficits. Just because this grim prospect lies in the fuz-
zy future is no reason to ignore it.  Unfortunately, everything
that needs to be done to avoid it would be hugely controversial.
Consider what we ought to do:

  Control Health Costs: Only a tough national program can tame
runaway costs. By 2000, health spending could reach 18 percent of
the economy's output, up from 13 percent in 1991 and 6 percent in
1965, according to the Congressional Budget Office. And that's
before the impact of the baby boom. On average, someone over 85
has health costs six times higher than someone under 65.

  Raise Social Security's Retirement Age: We oversubsidize people
who are healthy and self-reliant. The normal retirement age is
scheduled to rise to 66 by 2009 and to 67 by 2027.  The increase
is too small and occurs too slowly. It should go to 68 or 69 by
2010. Early retirement - with reduced benefits - would occur at
65 or 66, instead of today's 62 or 63. Those prevented from work-
ing by injury or illness would get disability insurance.

 Tax Social Security: Two families with, say, $35,000 of income
should be taxed similarly, whether the family head is 38 or 78.
Yet, only a small part of Social Security is now taxed. The argu-
ment against taxing it is based on the myth that Social Security
is a pension, whose benefits are paid from recipients' own con-
tributions. Not so. Social Security is welfare. Benefits are fi-
nanced from the payroll tax on workers.  Most of today's benefi-
ciaries receive far more than they ever paid in taxes.  Prevent
Pension Fraud: Pension rules are so lax that companies are tempt-
ed to make pension commitments they can't keep. The government -
through its Pension Benefit Guarantee Corp. - must then pick up
much of the cost. The PBGC has already estimated that its future
costs could exceed its insurance fund by $18 billion. But
Congress sat on reforms that would force companies to increase
pension contributions. Without reform, we invite an S&L-like de-
bacle.

 The point is not simply to control government spending. It is to
demolish the rigid distinction between "the old" and everyone
else. Government policies herd anyone over 65 into a protected
class, taxed lightly and discouraged from working. For example,
any earnings above a small amount result in a loss of Social
Security benefits. Naturally, this deters people from taking
jobs. This penalty, too, should be abolished.

 Most older Americans should not pass abruptly from "work" into
"retirement." It isn't good for them or the country.  They resent
being thrust into enforced retirement, and as a society, we need
their experience in the work force. They should be able to mix
jobs and leisure, much as young Americans do. Today's policies
frustrate this mixing.  Changing them would lead to new types of
jobs, suited to older workers in hours and demands.

 Clinton and Gore can prove they believe in the long view. Their
task is to alter policies without terrifying today's older Ameri-
cans. Changes will have to be made gradually and explained. The
temptation is to delay. Until 2010, the over-65 population will
rise slowly, reflecting low birth rates in the Depression and
World War II. This may give us a false picture of the costs of an
aging baby boom. Make no mistake: They're huge. Either we will
deal with them, or they will deal - harshly - with us.

02:15 11-25C9999-----

Copyright 1992, The Washington Post.  This story is from the
Washington Post's Capitol Edition On-Line and is not to be ar-
chived or redistributed.

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