December 20th, 2012
09:36 AM ET

Left can't stick heads in the sand on entitlement reform

"Fareed Zakaria GPS," Sundays at 10 a.m. and 1 p.m. ET.

By Fareed Zakaria

In 1900, 1 in 25 Americans was over the age of 65. In 2030, just 18 years from now, 1 in 5 Americans will be over 65. We will be a nation that looks like Florida-I don't mean the strip malls, I mean demographically. Because we have a large array of programs that provide guaranteed benefits to the elderly, this has huge budgetary implications. In 1960 there were about five working Americans for every retiree. By 2025, there will be just over two workers per retiree. In 1975 Social Security, Medicare and Medicaid made up 25 percent of federal spending. Today they add up to a whopping 40 percent. Within a decade, they will be over 50 percent.

Now, we've gotten away with these huge new costs so far by borrowing heavily, for decades. But debt is now 100 percent of GDP and surely that can't keep going up for ever. The Peter G. Peterson Foundation calculates - using Congressional Budget Office numbers - that by 2040 we are likely to spend 10 percent of GDP on interest payments alone (we pay about 1.4 percent today). That is four times what we spend on education, infrastructure and scientific research put together. Now, since entitlements-social security, Medicare and defense spending have powerful interest-group support, what's going to happen is, everything else, all other federal spending will wither. So the left has to ask itself why is it tethered to a philosophy that insists that government's overwhelming responsibility is for pensions and health care even when, as an inevitable consequence, this will starve the other vital functions of the state. Is insurance for the elderly the only important function of government?

Above education? Above scientific innovation? Above investments in infrastructure and energy? Above poverty alleviation? And yet that is the direction we are headed.

Watch the video for the full take.

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Topics: Economy • GPS Show

soundoff (294 Responses)
  1. David

    For the past 3 decades did the government move social security surplus payments to the current account rather than invest them and allow them to accrue? If so, should today's younger generation–who didn't elect the politicians making those decisions–be forced to pay for the mistake? The people old enough to vote over the past thirty-five years are responsible for the bad decisions made with our "retirement trust fund", and we alone should pay for are own short-sightedness, not our grandchildren. The demise of social security has been extensively written about–this isn't a surprise– and yet we choose to keep electing officials who ignored reality. The problem is in the mirror, but who wants to live in a society that turns its back on the elderly? A combination of benefit cuts, higher withholding, and means testing is necessary.

    December 27, 2012 at 8:23 am | Reply
  2. Zakaria4President

    Fareed has always been the one that made the most sense with no agenda to his opinions. He presents facts and the bigger picture.

    December 27, 2012 at 10:47 am | Reply
    • CR

      Who are you... his mother from Bombay?

      December 30, 2012 at 12:53 pm | Reply
  3. YankeeDoodle

    Welfare to people who struggle with putting food on the table is bad but welfare to companies and banks is ok? We subsidize different parts of our economy and provide many financial benefits to companies that are making millions and billions a year. Yet we don't want to give a couple thousand dolalrs to people who are struggling?

    December 27, 2012 at 10:55 am | Reply
  4. Barbara

    My parents lived on their Social Security and some money in the bank. That was it. And by the way, I am not going to apologize for being a boomer. Wait until some of you get there, and YOUR CHILDREN are going after you.

    December 27, 2012 at 1:47 pm | Reply
  5. Shawn Irwin

    We should, within reason, be getting back out what we put in. Some of us have been putting away dollars into the social security system and medicare for most of our lives, and others have put in hardly anything. A distinction needs to be made regarding this. Also . . . if you have been contributing to these programs that are meant to provide for you in your retirement days, then what the demographics say should be meaningless . . . . however . . . . these government programs are nothing more than a huge rip off, because if they still had all the money that was put into the system, there would be no problem, and no reason to fret about the future. . . .

    December 30, 2012 at 9:02 am | Reply
  6. CR

    Censorship of non-profane and non-"PC" comments is alive and well on CNN blogs. Nice job 'dominating' the news!

    December 30, 2012 at 12:55 pm | Reply
  7. S

    SS will need to lower the benefits paid out so everyone can still get benefits. And doctors will need to be more honest that expensive surgeries are not going to extend life much. Nobody lives forever and a few more months in a hospital are not going to change things for the better. And benefits for rich people need to be taxed. The government was too overly generous, failed to account for longer life expectancies, and ran up too big of debt. Defense spending should be cut first. Not every program should get funded. Most of the contractors and two thirds of the generals should get axed.

    December 30, 2012 at 7:56 pm | Reply
  8. Gault

    Actually there is a young rapidly expanding demographic in the US. However this minority, soon to be a majority, doesn't work. I think they have 50% unemployment. Thus I guess this group isn't even considered in the article as possible contributors in terms of taxes to the system. Everybody knows they just use welfare, even when age 22. Also they don't believe in education.

    January 2, 2013 at 10:30 pm | Reply
  9. empresstrudy

    Raise all taxes to 99% and lower the retirement age to 27.

    January 5, 2013 at 12:26 pm | Reply
  10. Victor

    Social security is paid for by almost all who paid into it. It should in some reasonable way be related to the total steady income of the person retiring and not just calculated on how much he made or how much he paid into the system. The retirement age should be reviewed too. The govt. should be forced to stop dipping into it by the Feds.
    Medicare is hightly inefficient and wasteful. But nobody talks about policing it to make it less wasteful. We can't have unlimited access to doctors, medicines, specialists etc. It is said by knowledgeable folks in the medical business that during the last year of the life of most individual, the largest amount of money is spent to keep him alive, when the doctors know that the time for the person to meet his maker has come. Is this right?
    Just for the record I am a retiree myseolf.

    January 5, 2013 at 3:42 pm | Reply
  11. panorain

    Why the worry? Obama can just keep money to pay for everything. As Obama said teachers deserve twice what they are being paid. Plus retiring police and firemen after 30 years with full pay is only right. Perhaps Obama should grant some of the money printing rights to local jurisdictions too. After all NYC is now paying more in police and fire pensions than they pay for the police themselves. So a printing press would come in quite handy.

    January 6, 2013 at 10:25 am | Reply
  12. Buy Content

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    April 29, 2013 at 10:54 pm | Reply
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