Tyranny of the Old

Colin Masterson

• Unprecedented Demographic Changes

• Power of the few over the many

• Generational strife

• The promises

• How we got here

• What may happen?

Demographics 101

• Basic population growth – Birth Rate – Death Rate = Population Growth

• Fertility– Replacement Rate ~ 2.1

• Age of women at first child

• Life expectancy

Life Expectancy

Fertility

United States

Year 2000 2010 2030Under 18 Number 72,293,812 74,431,511 85,707,297

Under 18 Percent of total population 25.7 24.1 23.6

65 and older Number 34,991,753 40,243,713 71,453,471 65 and older Percent of

total population 12.4 13.0 19.718-65 61.88 62.88 56.77

Total Population 281,421,906 308,935,581 363,584,435

Voter Participation

Reported Voted in 2008 Election

10%

32%

38%

11%

9%

..18 to 24 years

..25 to 44 years

..45 to 64 years

..65 to 74 years

..75 years and over

Citizens age 65 and older had the highest registration rate (79 percent) while those age 18 to 24 had the lowest (58 percent). The youngest group also had the lowest voting rate (47 percent), while those age 45 and older had the highest turnout (about 70 percent).

Where the Electorate Power Lies

• Historical Trends in Elections

• Maximum Participation occurs at Retirement age

• Young are disenfranchised by choice

Benefits

• Largest is OASDI (Social Security)

• Medicare

• Disability

• Supplemental Medical Insurance

• Prescription Drug Benefit

The Supreme Court has established that no one has any legal right to Social Security benefits. The Court decided, in Flemming v. Nestor (1960), that "entitlement to Social Security benefits is not a contractual right".

Social SecuritySocial Security Trust Fund

0

500000

1000000

1500000

2000000

2500000

Year

1938

1940

1950

1960

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

Year

Mill

ion

s $$ Receipts

Expenditures

Assets

Where Social Security is nowHealth of the OASDI Trust Fund

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

18.00%

Year

1938

1940

1950

1960

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

Year

% o

f G

DP receipt % of GDP

Expenses % of GDP

Assest % of GDP

Where it is GoingFunding levels of the Federal Trust Funds

0%

50%

100%

150%

200%

250%

300%

350%

400%

450%

Calen

dar y

ear

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

Year

Per

cen

tag

e F

un

ded

OASI

DI

HI

Conclusions

• The Elderly Caucus have increasing influence– Very difficult to roll back promises

• There will be 2 workers for every Retiree• Pension Funds will have to be taken over by the

Federal Government – More Trust Funds• The average annual medical bill for someone

over 75 y.o. is >$12,000• It will cost too much for families to maintain a

fertility rate of > 2• The cycle will get worse than currently projected