NYT: Is the Growing Population of Old People Really a Burden for Social Security?

... some economists are sanguine about the country's ability to support the elderly and at the same time provide for the young. Gary Burtless, a senior fellow at the Brookings Institution, noted that the decline in fertility rates since the 1960's means that the burden of caring for the young has decreased dramatically - freeing resources to channel to the old.

The overall burden on the employed will grow, but not to unprecedented levels. The ratio of people of working age to those either under 20 or over 65 will decrease to 1.2 in 2050 from about 1.5 today. But this is still an easier load than in 1965, when the country was awash with children, and the ratio of the working-age population to each dependent was only 1.1.

True, the young are cheaper to maintain than the old. In 1990, economists at Harvard and M.I.T., including David M. Cutler and Lawrence H. Summers of Harvard, estimated that people over 64 consume 76 percent more than children.

Still, Mr. Burtless estimated that in 2050 a worker will have to sacrifice 49.6 percent of his or her wages - through taxes or other means - to maintain society's dependents. That is nearly 6 percentage points more than in 2000, but it is merely 0.8 percentage points more than 1965. And the percentage could well be smaller if people work later in life to pay for more of their keep.

The notion of incredible competition between what the public spends on the aged and what it spends on the young is driven by fear, Mr. Burtless said. "But so far the fears have not been grounded," he said. "In fact, we seem to be able to do both kinds of things. Increase spending on aged and protect spending on the young."

Indeed, total spending on education - the biggest item of public spending on the young - rose to 7.7 percent of gross domestic product in 2001, up from 6.1 percent in 1965. Mr. Burtless pointed out that for the last 100 or so years, real spending per student has been increasing, regardless of whether the population is booming or shrinking.

Mr. Cutler, the Harvard economist, argued that the aging of the population would probably require people to work a little longer in life and perhaps get a bit less in Social Security benefits. But, he said, there is no reason to be alarmed over the country's ability to finance everybody's needs as the population ages, even if the medical bill is growing at two to three times the rate of inflation - much faster than spending on education.

And, some scholars argue, older people are not selfish; they will not vote for politicians or programs that starve succeeding generations.