The demographics of the baby boomer generation will have more sway in fiscal tightening than many policymakers are willing to acknowledge, writes the New York times in an article this week.
As policymakers strive to reach definite negotiations to program spending cuts mandated by the approaching “fiscal cliff,” two central issues posed by the rapidly growing boomer demographic could provide possible solutions to addressing the national deficit.
The New York Times writes:
For decades we have known that the retirement of the baby boomers would be a monumental event for the economy. But now that it’s happening, many fiscal policy makers are acting as if the boomers are eternal teenagers and are turning a blind eye to how the boomers’ aging changes how we should approach economic policy. And this affects two of the central issues of the negotiations: how much the government should spend and how we can cut unemployment.
These inexorable demographic changes mask the fact that over the past four years we have experienced historic levels of fiscal discipline.
This discipline, however, is being overwhelmed by demographic reality. We need to accept the fact that we simply cannot revert to historical norms in government spending and keep faith with commitments made to millions of aging workers.
Over the coming weeks, big fiscal policy choices will be made, and many will be looking backward for a guide on how to move forward. But just as the generation that once proclaimed “don’t trust anyone over 30” has had to face the reality of gray hair and grandkids, the new economics of the baby boom dictate that we must deal with the country and economy we have today—not the one in the history books.
Written by Jason Oliva