Robert Samuelson has a column about -- shocking, I know -- the need to cut entitlement spending in which he finally just decides to throw up his hands at the public's unwillingness to adopt his policy preferences and decides to go for the last refuge of the damned: The bipartisan commission. Even Samuelson knows his schtick is boring:
Let's review the problem (again). From 2000 to 2030, the 65-and-over population will roughly double, from 35 million to 72 million, or from about 12 percent of the population to nearly 20 percent. Spending on Social Security, Medicare and Medicaid -- three big programs that serve the elderly -- already represents more than 40 percent of the federal budget. In 2006, these three programs cost $1.1 trillion, more than twice defense spending. Left on automatic pilot, these programs are plausibly projected to grow to about 75 percent of the present budget by 2030.
The response to this, too, is boring. But as usual, Samuelson is getting the scope of his analysis all wrong. The vast majority of the growth in spending on "Social Security, Medicare and Medicaid" comes from Medicare and Medicaid. And that growth is mostly driven by rising health care costs rather than by aging.
Population aging, meanwhile, insofar as it's a problem isn't merely a challenge for federal entitlement spending. Insofar as a lower ratio of productive workers to retired consumers is a problem for Social Security, it's also a problem for everything else since the basic shape of the issue is that society can only consume as much as gets produced.