America’s Fiscal Eyewash

FAIRFAX, VIRGINIA – At their recent national conventions, America’s two main political parties devoted a lot of time on the podium to addressing how they would reduce the country’s annual deficits and national debt. Indeed, the United States has run four straight trillion-dollar deficits, driving the national debt to a record $16 trillion, and threatening to weaken the dollar and derail the global economic recovery.

While US debt might be a deciding factor in the upcoming presidential election, its origins are not as clear as many claim. Neither President Barack Obama nor former President George W. Bush should be blamed. Assertions by Republican Party leaders that excessive social support is the primary culprit – a favorite theme of vice-presidential candidate Paul Ryan – are just as mistaken as Democratic Party leaders’ claim that permitting tax cuts for the wealthiest Americans to expire at the end of this year would cure all.

In fact, no single president, party, or policy is responsible. Rather, the problem is rooted in the period from the 1930’s to the 1970’s, when bipartisan majorities enacted – or supported the expansion of – the popular Social Security and Medicare programs, which provide, respectively, pensions and health care to senior citizens.

When Social Security began to pay benefits in 1940, only 55% of men (at the time, few women qualified for full benefits) reached age 65. Today, 87% of all Americans live to 62 – the age at which many begin to receive Social Security payments. Since 1950, the number of Americans over 65 has more than tripled, from 12.3 million to 40.2 million, while the total US population has only doubled. Indeed, Americans’ life expectancy beyond age 65 has increased by roughly 40%.