What a surprise, the Washington Post is at it again, and it is the usual culprit, Robert J. Samuelson. Of course he has his attack buried under a title that appears to point more broadly, “The deficit is everybody’s fault,” although not if “everybody” includes people who die before they become eligible for Social Security and Medicare (and those parts of Medicaid that go to old people). He even has further cover in that the new numbers come from the “left-leaning” Center on Budget and Policy Priorities in a report issued on Sept. 6 written by Paul van der Water, and I grant that the numbers he shows do come from that report, which makes projections out to 2035, the year when the adjustment for baby boomers going onto elderly entitlement programs will have been largely completed.
While in fact the report shows a slightly lower budget deficit as percent of GDP in 2035 than now (3.0% to 3.1%), that does involve a tax increase of 2.7% of GDP, along with cuts in spending on numerous categories of the budget. These are in place to offset increases on four items: Social Security at the top of the list with an increase of 1.3% of GDP (from 4.9% to 6.2%), followed by Medicare with an increase of 1.2% (from 3.2% to 4.4%), interest on the national debt of 1.1% (from 1.3% to 2.4%), followed by “other health” (mostly Medicaid) of 0.5% (from 2.3% to 2.8%). With maybe 60% of the latter not being due to more old people, and interest payments also not due to them, that leaves those aging baby boomers responsible for about 2.7%, just equal to the amount of the tax increase assumed to have the budget deficit decline by 0.1% of GDP, and although it is implied otherwise, some of that tax increase presumably would be paid by those elderly.
OK, I agree that old people will increase as a percentage of the population. The number that appears in the CBPP report shows them rising as a percentage of the population from 15% today to about 20% in 2035, an increase of a third, or 33 and 1/3%. But the increase in Social Security spending is only a 26% increase, not as much as the increase in the share of old people in the population. The underlying report notes that indeed cuts in Social Security spending already passed will be responsible for this gap, but Samuelson somehow does not note this, and calls for more cuts. It is the one item he specifically mentions.
However, two of the other three items are projected to increase by more than the rate of increase of the elderly population. Medicaid is to increase by 37.5% (3/8), an extra 4.5% beyond the population increase and interest on the national debt is to increase by a whopping 84.6%. Only “other health” to increase by less at 21.7%. In the underlying report slight lip service is given to reining in rising overall medical care costs, but this is largely shoved aside by noting that new techniques will probably cost a lot (far from certain) and that there will be more super old, above 85 years, who really cost a lot. But, as Dean Baker and others have relentlessly pointed out, we already spend way more than other nations on health care. At a minimum a serious reining in of future increases ought to be very high on the agenda for the US. This remains an obvious way to go.
As for the increase in the interest payments, the report does take this projection from a CBO estimate, and so I am not going to say that van der Water is cooking up some unreasonable number. But this also depends on something else, future Federal Reserve policy. It is true the Fed has been talking a lot about interest rate increases, but in fact they have delivered much less on that front than they have talked about, and with not that much increase in national debt as a percentage of the GDP projected, it would not take all that much restraint to reduce the increase due to this number.
As it is, as usual, Samuelson says nothing about reducing the interest rate increase number and nothing about reducing the rate of overall health care cost increases. His only proposal is his usual one, to make further reductions in increased per capita Social Security payments as a percent of GDP beyond those already cooked into the books, although he does not recognize or admit that this is what he is doing. But then, we have seen this before from him repeatedly, so this is not a surprise.