The Census Bureau just released a report on America’s aging population.
The big takeaway is that our population will be getting much older between now and 2050.
And since I’m a baby boomer, I very much like the fact that we’re expected to live longer.
But as a public finance economist, I’m not nearly as happy.
As I explain in this interview with the Wall Street Journal’s Digital Network (and as confirmed by BIS, OECD, and IMF data), the United States is going to get deluged by a tsunami of entitlement spending.
I mentioned that it’s important to focus on the ratio of workers to retirees. This “dependency ratio” matters because economic output largely is a function of an economy’s working-age population.
To cite my famous cartoons, you need a sufficient number of people pulling the wagon to support those riding in the wagon.
Here’s a chart from the Census report to help you understand the magnitude of the problem. As you can see, both in the United States and other nations, the increase in the dependency ratio is almost entirely the result of aging populations.
This is why I said that we face a slow-motion train wreck because of poorly designed entitlement programs.
But the good news is that there is time to reform those programs and avert a crisis.
Which explains why I probably sound like a broken record about the need for genuine entitlement reform.