Ezra Klein: The Baby Boomers Get Old

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January 30, 2006

The Baby Boomers Get Old

A bit boring, sure, but I think this may be useful. There's a certain subset of commentators and pundits who like to engage in a lot of eschatological posturing about the Baby Boomers coming retirement. The implication, always, is that we must either become a nation of paupers or leave our parents to beg on the street, there is neither a desirable middle ground nor the slightest sliver of hope. This isn't to understate the cost issues or pretend there are no tradeoffs, but it's worth thinking a bit about how big the baby Boom really is. So here ya go:

Babyboomgraph

And that's, well, it. For you USA Today readers, here's the same data in pie graph form:

Babyboompiecharts

Granted, you can't deal with a demographic crunch by cutting taxes, running up massive deficits, and crafting new entitlements in the most expensive, inefficient ways possible, but if you're serious about creating good public policy and willing to raise taxes to levels more in line with other Western governments, the coming retirements are fully absorbable. Add in a smarter immigration policy (immigrants tend to pay in much more than they take out from long-term entitlements), a renewed seriousness towards cost control, and a diminished willingness to sacrifice savings for industry profits and the insurmountable problems we face become instantly more surmountable. The Baby Boom will force soem touch choice, sure, but only because our legislators have been so profoundly unserious, ideological, and short-sighted thus far.

January 30, 2006 | Permalink

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Comments

(immigrants tend to pay in much more than they take out from long-term entitlements...

I see you were able to slide in the standard approval of illegal immigrants by attempting to show a perceived benefit by having them here.
However, whether they are beneficial or not is not the point. They are here ILLEGALLY. What part of ILLEGAL don't you get? When it comes to Bush, you're all about the law. Oh, yeah, bebe, the law is sexy then! And now?

Posted by: Fred Jones | Jan 30, 2006 3:07:26 PM

but if you're serious about creating good public policy and willing to raise taxes to levels more in line with other Western governments

Ah, but we're not. Most of those other Western nations have had significantly slower economic growth than the US over the past couple of decades. Are the increased taxes the sole reason for their slower growth? I doubt it but it's not right to say they're growing just as well with more taxation. They're doing worse.

Posted by: quietstorm | Jan 30, 2006 3:13:11 PM

Actually, I mean legal immigrants Fred. Illegal immigrants, obviously, don't pay a whole lot in taxes, save for sales taxes and consumption taxes. But feel free to fly off the handle and look like a fool.

Posted by: Ezra | Jan 30, 2006 3:23:47 PM

Great discussion.

Also: "No one knows exactly how much illegal immigrants contribute in taxes, but experts estimate it is billions of dollars." Many illegal immigrants use fake IDs and can certainly put money in the federal kitty.

Posted by: Brad Plumer | Jan 30, 2006 3:38:26 PM

Be careful with your pronouns. "They" (the Europeans and Japanese, mostly) are doing "worse" when it comes to GDP growth, yes. "They" the populations of the selfsame countries are not doing worse, because the marginal GDP growth difference between the US and the rest of the developed world has been sponged off substantially by top earners for a couple decades now. The data on that subject are quite clear.

Further, you've thrown up an utter straw man, since Ezra's point was that taxation at 1999 levels suffices to pay for the boomers (thanks to legal immigrants like my parents). 1999 US levels were quite low by developed-world standards, and were wholly consistent with high US growth since, you know, they were actual US tax levels. Funny you missed that.

However, Europe is in demographic trouble the US doesn't face. It's not because of their tax systems or public sectors, it's because they have low birthrates and low levels of immigration. Plus, the weather north of the Alps *sucks* in the winter, so I'll stay in California, thanks.

It's not for the fulsome public policy, though.

Posted by: wcw | Jan 30, 2006 3:40:23 PM

From The Drum major Report on Immigration:

In a fundamental sense, the middle class relies on immigrants’ economic contributions because the policies that strengthen and expand the middle class are funded by the taxes immigrants pay. In 1997, the National Research Council and National Academyof Sciences completed the most comprehensive analysis ever of the economic impact of immigrants on the United States. The report concluded that immigrants are net fiscal contributors to the U.S. economy. The average immigrant pays $1,800 more in taxes than she receives in government benefits. Over their lifetimes, this amounts to $80,000 more in tax contributions than the average immigrant and her immediate descendants receive in local, state and federal benefits.10 These taxes support the schools and public universities that educate middle-class children, the unemployment benefits that help struggling American workers to get back on their feet and the Medicaid payments that help the poor stayhealthyas theystriveto work their way into the middle class. But nowhere is the tax contribution of immigrants more striking than in terms of Social Security. [...]

An analysis of Social Security Administration data by the National Foundation for American Policy, a non-partisan policy organization, finds that at current immigration levels, new immigrants entering the United States will provide a net benefit of $407 billion to the Social Security system over the next 50 years.11 Immigration policy must recognize the significance of immigrants’ tax contributions to programs like Social Security or it risks robbing the middle class of
a crucial support program or increasing the fiscal burden on middle-income taxpayers. Based on Social Security Administration data, the National Foundation for American Policy projects that if legal immigration to the United States were reduced by one third, Social Security’s actuarial deficit would increase by ten percent over fifty years. To make up for the shortfall, a middle class person making $60,000 in 2004 would have to pay $600 more in taxes over the next ten years if the program was maintained as it is currently set up.12 More drastic restrictions on immigration would expand the deficit still further, meaning deeper cuts in Social Security benefits or still higher taxes to maintain the same benefits. A complete moratorium on legal immigration would cost our prototypical middle class American making $60,000 in 2004 an additional $1,860 in payroll taxes over the next ten years just to makeup for the loss of immigrants’ contributions.

Posted by: Ezra | Jan 30, 2006 3:46:45 PM

Be careful with your pronouns. "They" (the Europeans and Japanese, mostly) are doing "worse" when it comes to GDP growth, yes

Since that was all I said in my post, your's serves only as a pretext for a stored rant.

As to the strawman charge, I was quoting straight from Ezra's post. You somehow claim that his point referred to the 1999 US economy which is something he mentioned in a separate and later post.

Posted by: quietstorm | Jan 30, 2006 4:10:43 PM

But feel free to fly off the handle and look like a fool.

I learned it from you.

Posted by: Fred Jones | Jan 30, 2006 4:24:33 PM

Ooh! Contentless quasi-burn cause he's got no response!

Posted by: Ezra | Jan 30, 2006 4:32:46 PM

europeans are also doing just fine when you look at gdp per person, instead of patting ourselves on the back just for having a growing population.

Posted by: dan | Jan 30, 2006 4:43:54 PM

Dan,

http://www.mapsofworld.com/gdp-per-capita.htm

check it out

Posted by: quietstorm | Jan 30, 2006 4:49:34 PM

I feel much better now, Ezra, and can now calmly look forward to my retirement instead of fearing a great political coonfrontation. 1999 tax levels? No problem, Republicans will go for it without a whimper.

Democrats will need 300 house seats to get that passed.

Posted by: bob mcmanus | Jan 30, 2006 7:35:13 PM

interestingly, these pie charts don't seem to account for the fact that a 55-65 year old in 1950 was far less productive than a 55-65 year old is today. to me, you should just collapse those two categories.

when you look at 18-65 today, 1950, and in the future, it's pretty clear that we the percentage od productive adults in the society has barely shifted-what we have done is move from kids to old folks.

by definition, there must be a reckoning for these sorts of imbalances. but maybe we'll escape it becuse we have the ability to bring in virtually unlimited numbers of 18-65 year olds?

it's good to be the king, I guess. but it does make me worry more than a bit for the rest of the world.

Posted by: theorajones | Jan 30, 2006 9:49:37 PM

In re: stored rants, you're welcome. I figured one good totally unrelated comment deserved a response in kind. Glad you liked it.

Posted by: wcw | Jan 31, 2006 12:58:16 AM

Quietstorm,

Your map is misleading; per-capita numbers are based on means, not medians. In other words, from the perspective of the middle class things don't look nearly so favorable for the U.S. compared to countries where the transfer of wealth upward isn't nearly so great.

Posted by: modus potus | Feb 1, 2006 4:06:14 AM

Baby Boomers?

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Job Seeking? Looking for a recruiting site with something different, that will take into account your unique background?

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Job Bank, Resume Bank

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