Niall Feguson and Laurence J. Kotlikoff has an interesting piece in the current issue of The National Interest, available in PDF format here. For some odd reason, I can’t get the text select tool to operate to allow me to post excerpts.
They begin by noting that toppling three tyranies–Milosoveic, the Taliban, and Saddam–in four years is an impressive achievement and contrasting this with the American declinism school of thought popularized by Paul Kennedy and others a decade before. They note the irony that Kennedy has recanted much of his argument, noting the unforeseen Revolution in Military Affairs, precisely at a time when some of his arguments may in fact be coming to fruition. Most notably, they cite the U.S. fiscal overstretch caused, not by military spending, but domestic programs, notably transfer payments to the elderly.
In just five years’ time, 77 million “baby boomers” will start collecting Social Security benefits. In eight years…Medicare benefits. By the time they are all retired in 2030, the United States will have doubled the number of its elderly population but increased by only 18 percent the number of workers able to pay for their benefits.
At the same time, benefits for these retirees are growing rapidly, resulting in “a doubling of consumption per retiree relative to consumption per worker.”