Bacon's Rebellion

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Chart of the Day: Virginia’s Aging Population

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James A. Bacon
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aging

This graph comparing Virginia’s age between 1980 and 2013 comes from Luke Juday’s latest post over on the Stat Chat blog, published by the demographics shop the Weldon Cooper Center for Public Service. I urge you to check out the opening chart in his post to see an animation of the changes year by year. It’s fascinating to watch the bulging Baby Boomer generation crawling up the age ladder.

I would love to see a projection of Virginia’s demographic profile over the next 20 years. We would see the big Boomer blob move up, out of the workforce and into retirement age. The implications of that massive shift cannot be over-estimated. Virginia’s working-age population won’t be increasing in size — indeed, it probably will begin shrinking within a decade. Extrapolate that trend nationally, and you’ll understand why the Congressional Budget Office (CBO) maintains that the structural U.S. budget deficit — “only” $583 billion this year, according to the Obama administration’s updated forecast, will march relentlessly higher within a few years as the growing ranks of seniors put increasing stress on the Medicare, Medicaid and Social Security programs.

America still faces a Boomergeddon scenario, although we may have bought ourselves a few years’ grace. The CBO thinks that the slowdown in the growth rate of medical spending experienced since the 2007-2008 recession is a lasting phenomenon and will slightly bend the spending curve downward — enough to keep the Medicare Part A trust fund solvent through 2030. In February, the non-partisan budget shop had projected that the trust fund would run out of money in 2025, reports the Wall Street Journal.

The good news is that Congress has five more years to dither and procrastinate about reforming Medicare. The bad news is that Congress probably will take full advantage of that five years before making hard choices.

— JAB

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10 responses to “Chart of the Day: Virginia’s Aging Population”

  1. larryg Avatar
    larryg

    the most important thing that people can do who say they are worried about the budget, deficits and debt is to truly understand the Medicare and Defense issues.

    Medicare comes in 4 variants and Part A is the only one that is by law – cost-contained – i.e. it cannot pay out more than it has in funds without Congress doing something to make it happen – otherwise – people’s Part A benefits will automatically reduce and they will pick up a larger cost.

    Not so with Medicare Part B which is guaranteed 80% coverage for 100.00 a month even for folks who make up to 85,000 in retirement income.

    and it gets’ worse – Medicare Part C is heavily govt subsidized “gap” coverage for the 20%…

    I’m not sure it even takes Congress to change the 85,000 retirement limit to a more reasonable truly means-tested number… All this blather in Congress about repealing health care and they can’t even make people who make 85K in retirement income pay even 500.00 a month for guaranteed health insurance!

    and if that does not snap your socks, just look at what Virginia has OPTIONALLY chosen to do with MedicAid – they’ve chosen to use it as a wealth preservation tool for people who own their own homes but go into a nursing home and want to leave their assets to their kids. Virginia legislators, the very same ones who say they are “worried” about the Feds not funding MedicAid, yes those same guys have CHOSEN to not reform this particularly egregious “income re-distribution” scheme for people who have wealth.

    I’ve already covered defense before but suffice to say – we are spending about a trillion dollars a year on TRUE defense expenditures – when you count them honestly – and we take in 1.3T dollars a year in income taxes.

    no country can spend 3/4 of it’s available revenues this way and not have deficit/debt problems – yet Conservatives continue to whistle in the dark – on purpose by failing to deal with the real issues and instead making this an ideological jihad.

    a POX on THEM!

    1. James A. Bacon Avatar
      James A. Bacon

      Fact warning to anyone who reads Larry’s post.

      While the personal income tax may bring in only $1.3 trillion, total U.S. government revenues this year from all sources will be $2.8 trillion. Our defense budget is only a modest part of what is causing the budget deficit. Defense spending is no longer growing. Entitlements are booming.

      1. larryg Avatar
        larryg

        fact warning for Jim:

        you show me revenues that are not earmarked for other purposes beyond the 1.3 Trillion that is truly discretionary.

        that’s the fiscal reality that you are dealing with unless you are advocating using FICA tax for something other than Social security and Medicare Part A.

        what I advocate here – is some HONESTLY – about the revenues that are available and discretionary and the honest truth is that we spend about a trillion dollars on ‘defense’ and the available revenues are 1.3T unless you want to claim that the FICA tax is also “available” for “spending”.

        let’s be honest here. how about it?

  2. TooManyTaxes Avatar
    TooManyTaxes

    The changing demographics, an aging population with fixed and/or lower incomes, when coupled by a significant decline in average wages for newly hired people, will make it much harder for government to fund spending programs. And there are not enough rich people to pick up the slack.

    State and local government needs to become extremely more efficient; drop funding for ineffective and duplicative programs; stop corporate subsidies; and prepare to lay off a lot of the professional caring class.

    1. larryg Avatar
      larryg

      we have to be willing to more seriously confront what the “spending” is for.

      we have to decide as a country:

      1. – if we should be spending 3/4 of our available tax revenues on “defense”
      2. – if we should continue selling guaranteed health insurance to people making 85K a year for 100.00 a month.
      3. – that we can use general revenue money to pay for nursing homes for people who own their own homes
      4. – if we should have tax-free health insurance
      5. – if we should not tax inputed rent
      6. – if we should allow mortgage tax deductions for more than one median-priced home
      7. – if we should subsidize flood insurance

      there’s more.

      our problem is that we won’t deal with the realities and take responsibility and instead want to blame others and government for what we ourselves won’t do.

      so we do things like “blaming” the “aging” population for putting pressure on spending 75% of our available tax revenues on “defense”.

  3. TooManyTaxes Avatar
    TooManyTaxes

    Larry, I think were are both in agreement that defense spending has long since ventured into the realm of pork and that reductions could be made without jeopardizing US security. And this includes government contracting.

    Am I willing to pay higher taxes or have my benefits capped to expand the welfare state? No. I think Obama’s current fiasco on the southern boarder, which, in turn, has been based on earlier policy decisions reinforces my position. I had the same feeling with respect to GWB’s lack of enforcement too.

    How about limiting private foundations and taxing bequests thereto? Why does the Ford Foundation exist? Why should Bill Gates be able to give money to a foundation without first paying taxes on it?

    But bottom line, absent economic growth throughout the population, how are you going to pay for new and existing programs? With a large retired population and job growth at low wages, who is going to pay for what you want to accomplish?

  4. larryg Avatar
    larryg

    TMT – you are getting the welfare state benefits guy and you are basically saying you got your benefits and you’re opposed to anyone else getting what you already have, right?

    what I’m saying is take away your benefits… to reduce the deficit/debt.

  5. TooManyTaxes Avatar
    TooManyTaxes

    I’ve been paying Social Security all my working years, just like my grandparents and parents. Either I or my employer paid the other part as well. I expect the same deal they had. If I were in my 30s, I might feel differently. But when I was in my 30s, all proposals for change were rejected in order to preserve the status quo. So I guess a deal is a deal.

    My conscience doesn’t bother me at all. Not when we allow the Gates, the Fords, the Buffets to avoid death taxes by giving money to tax exempt foundations. And, of course, Hilary Clinton donating her speaking fees to her foundation.

    1. larryg Avatar
      larryg

      what about your mortgage deduction and tax-free health insurance and pension? do you consider them entitlements? how about when you will qualify for Medicare?

      see, my point here – is that you already get entitlements and yet you are opposed to others getting them if they are not the ones you get.

      I’m in favor of getting rid of the current entitlements – mortgage deductions, tax-free health insurance and pensions and Medicare for 100.00 a month – as a way to cut spending now.

  6. larryg Avatar
    larryg

    If you take away mortgage interest and real estate tax deductions – many folks would not benefit by itemizing their deductions and would be subject to the same taxation as people who do not have deductions.

    This would be people who rent, who cannot claim the mortgage interest deduction, nor the state and local real estate and property tax deductions nor their health care costs or charitable deductions.

    so the question is – why are some folks entitled to these deductions while others are not and what effect do these deductions have on the budget deficit?

    so we have a level playing field for all people or are some of us receiving entitlements while others are not and the reason why is mostly arbitrary and not really a level playing field for everyone?

    we talk about “aging populations” and younger folks who receive “welfare” as a proxy for blame for the deficit and debt but my view is that we already have quite a few entitlements for those who are not “aged” or “on welfare”.

    We take in about 1.3Trillion in income taxes. It is estimated that tax expenditures – preferential tax treatment – i.e. not taxing some kinds of income – costs us an additional trillion a year.

    that’s enough to not only get rid of the deficit but generate a surplus that can pay off the debt.

    yet – we “blame” those who might receive entitlements who are not – already.

    in other words – we have the “I’ve got mine” folks basically opposing others from getting theirs in a bit of a kabuki theater where we assign virtue and righteousness to those who “deserve” these entitlements and blame to those who don’t.

    we have a dysfunctional tax system – a perverse one that rewards those who gravitate towards employers who provide health insurance and 401(k)s and employees who buy homes and punishes those who don’t get such work benefits and usually rent rather than own.

    how does that justify the current system?

    if the govt – you know that nasty welfare state – stopped giving “welfare” to those who are given govt-sanctioned tax-free benefits – and those folks were on the same level as those who did not get such benefits and could only afford to rent – would we have a more level playing field for all workers – more taxes collected, and a surplus instead of a deficit?

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