POLITICS OF AGING:
GOVERNMENT AGENCIES AND THE AGING NETWORK

The new class war between the young and the old will manifest itself in several ways. First, there will be heavy pension taxes that may eventually absorb more than one-fourth of the income of both workers and employers. This new class war may progress so far that we will see workers and employers standing shoulder to shoulder against the hard- driven politicians who promise our senior citizens impossible pensions and encourage the older worker to exploit the younger worker, the older farmer to exploit the younger farmer, the older businessman ..., the older professional man ... Let us remember that these pension leaders will soon have the votes. Karl Marx and others have taught us that mass movements are rarely rational: they spring from broad social changes. These basic changes in the population pattern started recently and slowly; the resulting mass movement has not yet matured. Townsendism may be as important in the next fifty years as were the doctrines of Karl Marx during the last half century.

Has Dickinson's prophecy come to be? In Jagadeesh Gokhale and Laurence Kotlikoff's "Is War Between Generations Inevitable" they note how in 2001 a 65-year-old female can expect to receive $163,000 more in government transfer payments (e.g., Social Security, Medicare, Medicaid, and other state and federal welfare entitlements) than she will pay in taxes. A 20-year-old female, on the other hand, can expect to pay $92,000 more in taxes. Further, these two practitioners of the new discipline of "generational accounting" observe that while "an American born today can expect to pay 17.7 percent of his or her income over and above any transfer benefits he will receive," tomorrow's newborn can expect to pay 35.8%.

Former British Minister of Health, Ian Macleod, wrote that "in the capitalist democracies, the ageing of the population has raised new difficulties. It is the `Mount Everest' of the present day social problems." "Not only are there many more aged people than there were," wrote Simone de Beauvoir in The Coming of Age, "but they no longer spontaneously integrate with the community: society is compelled to decide upon their status, and the decision can only be taken at the government level. Old age has become the object of policy."

Consider what is, in effect, the Bill of Rights for the Old, Title I of the 1965 Older Americans Act:

• An adequate income in retirement in accordance with the American standard of living.
• The best possible physical and mental health which science can make available and without regard to economic status.
• Suitable housing, independently selected, designed and located with reference to special needs and available at costs which older citizens can afford.
• Full restorative services for those who require institutional care.
• Opportunity for employment with no discriminatory personnel practices because of age.
• Retirement in health, honor, and dignity--after years of contribution to the economy.
• Pursuit of meaningful activity within the widest range of civic, cultural, and recreational opportunities.
• Efficient community services which provide social assistance in a coordinated manner and which are readily available when needed.
• Immediate benefit from proven research knowledge which can sustain and improve health and happiness.
• Freedom, independence, and the free exercise of individual initiative in planning, and managing their own lives.

Do you know of any other age groups with such entitlements?! Whereas in 1992 some 46% of all federal domestic spending went to the elderly, only 11% went to children. Click here to examine this share of federal expenditures going to older Americans in 1995.  In 2001, 6.7% of America's GDP went to Social Security and Medicare (at a time when government spending was about 20%); projections are that in 2030 this will rise to 11.1%. Among the consequences of this legislation was the creation of the "aging network," including state agencies on aging and area agencies on aging, the abolition of most mandatory retirement age limits, meals-on-wheels, and numerous oversight and referral services. Click here for the 2006 Amendments to the Older Americans Act.

Over the past quarter century, as the proportion of older persons living in poverty has declined, that of children has increased. Click here to see longitudinal poverty rates of the young and old.  See also "Living Younger Longer" from the 2005 White House Conference on Aging (Oct. 1, 2004).

Robert Hudson's "Political Science Perspectives on Aging Policy"

THE VOTING CLOUT OF OLDER AMERICANS

Americans over 60 years of age vote with a vengeance and constitute a formidable bloc (see Casey Mulligan & Xavier Sali-i-Martin's "Gerontocracy, Retirement, and Social Security" [pdf format]). They have a vested interest in the political allocations: in 2002, Social Security and Medicare had roughly 40 million beneficiaries.  According to the New York Times's "Portrait of the 1996 Electorate," those sixty and older cast 24 percent of the total vote. This political clout will only increase as more educated cohorts enter into their sixties and seventies. In 1986, according to the Census Bureau, for the first time since 18-year-olds won the right to vote in 1972, America's youngest voters (those 18-24) were outnumbered by the elderly. Ten years later, those 18 to 29 cast but 17 percent of the total vote.

So can older voters really be perceived as a voting bloc? Only if matters directly affect them. You will note from the New York Times's "Portrait of the 1996 Electorate" that older persons' votes generally have over the past seven Presidential elections been distributed among candidates in about the same proportions as have those of middle-aged and younger persons. The notable exceptions were in 1988, when they were significantly more likely than others to go for Dukakis, and in 1992, when they were significantly less likely to vote for Perot.

Will age- or generationally-based politics ultimately replace in the 21st century the race- and ethnically-based politics of the 20th?  Given the immigration wave of the 1980s and 1990s, it may well be the case that age-dynamics will only amplify the politics of the past, especially as the old will be disproportionately Anglo and the young will be disproportionately comprised of Hispanic and Asian Americans.  For one prognostication of the forthcoming impacts of aging Boomers on the political order see Peter Keating's "Wake-Up Call" (AARP: The Magazine, September & October, 2004).

FEDERAL SERVICES AND RESOURCES

Administration on Aging

U.S. Senate Special Committee on Aging

The National Aging Information Center

National Association of Area Agencies on Aging

National Institute on Aging

FirstGov for Seniors

Jacob Siegel's "Aging Into the 21st Century" (AoA Report, 1996)

Department of Veterans Affairs (VA) Home Page

Final Report of the 1995 White House Conference on Aging

SOCIAL SECURITY

There can be little doubt, in light of the President's State of the Union Address and the debate that it has generated, that Social Security will be one of the hot political issues of 2005.  One decade earlier, Social Security constituted 22 percent of federal spending, about 46 percent of all of its domestic spending. This program takes more money out of Americans' paychecks than does the federal income tax for nearly four out of ten American taxpayers (Click here to see how maximum taxable earnings and tax rates have changed since 1937). It is a regressive tax. (Made over $200,000 last year? Lucky you! You only have have to pay Social Security taxes on $87,900.) As will be developed below, built into the program is a system of "generational inequity,"  which has been likened to a huge Ponzi or pyramid scheme with payoffs proportional to how early individuals entered the game. It also has built-in class and racial inequities: life expectancy of the black male is barely more than the "magic age" of 65 at which time males can now retire with full benefits.

The first national social security program was implemented in 1883 by German Chancellor Otto von Bismarck, who, we should note, established that "magic age" of 65 at a time when life expectancy at birth was about 37 years. Bismarck's motivations were not so much humanitarian but politically motivated: the masses had to be weaned away from socialism, just as was the case sixty years later when FDR penned this country's program into law (see the SSA's version of its own history here). When Social Security began, only 54% of all men and 62% of all woman lived until 65; those who did make it that far could expect to live another 12.8 years. By 1990, 72% of all men and 84% of all women could expect to live until 65, and those who live that age in 1982 could expect to live more than 16 years.

Of all federal programs, Social Security has had an undeniable effect on the poverty rate of the oldest segment of the population. The poverty rate for those sixty-five and older fell from 35 percent in 1959 to 25 percent in 1970 to a 1989 low point of 11 percent. Demographics contributed to the success of this program that redistributes income from younger to older generations--and will contribute to its demise: in 1950, there were 16.5 workers per each beneficiary; by 1990, this ratio had declined to 3.3. By 2020, when most boomers will have entered into their seventies and eights, this ratio has been projected to be about 2.4.

Indeed, for early cohorts of older Americans, Social Security proved to be a great deal. Take, for instance, the case of Ms. Ida Fuller, recipient of the nation's first Social Security check, numbered 00-000-001, in 1940. She lived to the ripe old age of 100 and, for her $24.75 contribution in employee taxes, collected for than $20,000 in benefits. In Borrowed Time, Peter G. Peterson and Neil Howe describe how a man born in 1916, who began working at age 21, and who earned the average wages in Social Security- covered employment throughout his career. He retires in 1981 at age 65, and with his 65-year- old nonworking wife will receive, assuming average life-expectancy, some $178,000 in Social Security and Health Insurance. Still not a bad return on the $39,000 he paid in payroll taxes! The authors go on to note how this couple would have been reimbursed for all their Social Security payments plus interest within their first three and one-half years of retirement, and how, after six and one-half years, they would have been reimbursed for all of their federal income taxes as well. But such returns are not in the cards for the post-war generations. In the mid-nineties, an often-reported statistic was how more young Americans believed in UFOs than in the likelihood of their receiving Social Security when they retire.

According to George Church and Richard Lacayo ("Social (In)Security," Time, March 20, 1995:24-32):

• In 1995, a time when those numerous Boomers were hitting their earnings peak, SSA ended up with a surplus of $58 billion.
• This surplus goes into a trust fund (contrary to what 15% of Americans believe, it doesn't go into personal accounts) where it is "invested" in Treasury bonds.
• This "investment" is actually an IOU of the federal government, which spent this $58 billion on such things as military weapons and welfare checks.
• Check out the bookkeeping: "The government gets to report a deficit of $193 billion, rather than the $251 billion it would have to confess to if it did not have the use of that Social Security money. At the same time, the Social Security trust fund shows an increase of $58 billion in the money it supposedly has stashed away to pay future pensions."
• When the crunch comes and money paid out exceeds that which is taken in, the Treasury bonds must be converted to cover payments. To do this the federal government has several grim choices: raise federal taxes, raise Social Security taxes (which have already been raised ten-fold over the past 45 years), slash pensions, or just print more currency (how do you spell I-N-F-L-A-T-I-O-N?)

And how do Americans view this program and its effect on aged poverty? According to The Washington Post/Kaiser Family Foundation/Harvard University Survey Project's "Why Don't Americans Trust the Government?" survey of late 1995 (n=1,514 adults 18 and older), when asked "Compared with 20 years ago, do you think the share of Americans over 65 who live in poverty has increased, decreased or stayed about the same?" some 59% believed that it had increased (and only 15% saw a decrease). And when asked about "what effect, if any, do you think the federal government's [old age] programs have had on the share of Americans over 65 who live in poverty", only 23 percent thought that they have "helped make things better" while 32 percent thought they have "made things worse" and 39 percent seeing not "much effect either way." According to the combined 2000-2002  NORC General Social Surveys of American adults (n=5,297), as can be seen in the graph on the right, belief that we're spending too little on Social Security generally decreases with age, from 66% of those in their thirties to 45% of those eighty and older.

With this level of pluralistic ignorance (which may well have kept a number of generationally-based social movements from sprouting), reform will be difficult as time begins running out. According to the Cato Institute, sometime between 2006 and 2012 Social Security will begin paying out more than it takes in. In fact, the event transpired in 2010 in the midst of the Great Recession. Among the options being considered is the privatization of the program, with the Chilean pension system often pointed to as a model to be emulated. There all but the poorest tenth of workers are required to put 12% of their salaries into one of twenty-four government-regulated investment funds. With national savings rate up to 29% (compared to 3% in the United States), that nation's economy is prospering as are its citizens, whose average net worth is roughly four times their average salary (compared to a ratio of one in the U.S.). Be sure to check out the positions favoring and opposing privatization among the groups below.

"Social Security 75th Anniversary Survey Report: Public Opinion Trends" (2010)

SSA Home Page, including the 2004 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds, which claims the trust fund will remain solvent until 2038

Center on Budget and Policy Priorities' "How Would Various Social Security Reform Plans Affect Social Security Benefits? An Analysis of the Congressional Research Service Report"

Century Foundation's Social Security Network

Public Agenda's Social Security Study Guide

Christiane Roehler's "The Social Security Page"

Walter M. Cadette, "Social Security Privatization: A Bad Idea" (Policy Notes from the Jerome Levy Economics Institute)

Christian E. Weller, "Raising the Retirement Age: The Wrong Direction for Social Security" (Fall, 2000)

PizzaEconomics claims that "privatizers are feeding the American public a lot of misinformation about Social Security"

C. Eugene Steurele's (Urban Institute) "The Simple Arithmetic Driving Social Security Reform"

INTERNATIONAL SOCIAL SECURITY PROGRAMS AND INITIATIVES

Social Security Programs Throughout the World-1997 (pdf format)

Japan's Social Security Initiatives (from Japan's Ministry of Foreign Affairs)

International Labour Organization's Cost of Social Security--Basic International Tables, 1990-93

MEDICARE/MEDICAID

Throughout the 1990s, escalating  medical costs for older persons sent political shockwaves throughout Washington. Between 1990 and 1997, Medicare spending had increased an average of 10% a year.  Any threats of spending curtailments quickly produced powerful opposing social movements.  The Spring of 1993, for instance, saw a group of 20 organizations representing the aged, hospitals and physicians launch an attack on rumored Senate cuts of as much as $35 billion in Medicare and Medicaid spending. The House had approved $55 billion in cuts in future Medicare and Medicaid spendings, which over the following five years was projected to be $1.1 trillion just for Medicare. By the conclusion of the fiscal year ending September 30, 1998, annual Medicare spending had reached $212 billion. Six years later it was almost $300 billion.

Not surprisingly, such sums triggered considerable greed. During the 1980s there were reports of Medicare and Medicaid being billed for patients never seen, for excessive tests, and for prescriptions never filled. In 1989, a government study by Richard Kusserow, the inspector general of the Department of Health and Human Services, found that physicians who own or invest in laboratories prescribed 45% more clinical services for Medicare patients than did other physicians. Also that year the GAO concluded that over $10 billion in Medicare funds had been misspent over the previous six years, with Medicare picking up the tab for payments for which private health plans actually were liable. In 1997, federal investigators for the Department of Health and Human Services reported that the government overpaid hospitals, doctors and other health care providers last year by $23 billion, or 14% of all the money spent in the standard Medicare program.

As the 2000 Presidential election heated up the high cost of prescription drugs and the extent to which Medicare should cover their purchase emerged as key issues for older persons.  Click here for story of how pharmaceutical companies are battling against government interventions in their industry. 

Fact from the Files: Some 28% of Medicare expenditures are used by 5.9% ultimately deceased older population. In other words, between one-quarter and one-third of Medicare monies go to those in their last few months of life.

Robert B. Helms, "The Origins of Medicare"

Charlotte Twight, "Medicare's Origin: The Economics and Politics of Dependency"

Health Care Finance Administration

Official U.S. Government Site for Medicare

Texas Medicaid Reform Web Server

State of Florida: Department of Elder Affairs

Bureau of Maine's Elder & Adult Services Resource Directory

North Central-Flint Hills Area Agency on Aging; page 1

Texas Department on Aging

Texas Dept. of Protective and Regulatory Services: Preventing abuse

ADVOCACY

Lobbying groups on behalf of older persons have proliferated in the past two decades, profoundly shaping federal social policy. The Leadership Council of Aging Organizations now lists 40 such groups, up from 29 in 1988. They are the latest stage in the history of the senior movement, which, according to Armond Mauss in Social Problems as Social Movements, can be typified thusly:

• Incipiency: (1920-49) old-age pension movements, Townsend Movement, Social Security, founding of National Retired Teachers Association (1947);
• Coalescence: (1950-69) National Council On the Aging founded (1950), American Association of Retired Persons founded, 1961 White House Conference on Aging, Senate Special Committee on Aging (1961), NCSC founded in 1961, Medicare, Older Americans Act (1965), establishment of Administration on Aging;
• Institutionalization: Gray Panthers founded (1970), 1971 White House Conference on Aging, 1972 Social Security Amendments, House Select Committee on Aging (1974), National Institution on Aging (1974);
• Fragmentation
• Demise: abolition of Congressional select committees on aging?

The Townsend Movement is a fascinating chapter in this history. In the early thirties amidst the Great Depression, Francis Townsend, a California physician, had an economic model for getting America out of its plight involving the velocity of money: the government would give $200 a month (or, according to my calculations, $2,339 in 1997 dollars) to all individuals over the age of 60, who, in turn, would be required to spend it. Needless to say, with over one-half of the nation's old living in poverty, the popularity of this idea was considerable. Over five million older persons joined Townsend clubs around the country. The number of these clubs varied considerable across the states, ranging from nearly 38 clubs per 100,000 people in Oregon to .58 club in South Carolina. What state level indicators predictors were associated with the popularity of this movement? Interestingly, not the percentage of the population over 65. Among the factors we found were (with Pearsons r): 1924 membership in the International Workers of the World (.53), high male/female sex ratio in 1940 (.69), high rates of home ownership (.62) and the proportion of workers in the professions (.66), and sizable Scandinavian populations (e.g., %Swedish=.46).

FirstGov for Seniors--a government portal just for older Americans

Alliance for Aging Research--non-profit advocacy group promoting the acceleration of geriatric research

The National Council on the Aging

Elder Abuse Prevention

GERONTOCRACIES

Give me a staff of honour for mine age. But not a sceptre to control the world. 
--Shakespeare

Gerontocracies, or rule by the old, have received mixed reviews throughout history.  In 44 B.C., Cicero argued how  "Old men...as they become less capable of physical exertion, should redouble their intellectual activity, and their principal occupation should be to assist the young, their friends, and above all their country with their wisdom and sagacity."  But with industrialization and modernization, elder veneration decayed as did the notion of elder wisdom.  In the final quarter of the 20th century, the aging of the "founding fathers" of Russia and China (who seemed reluctant to entrust power to younger generations who did not know life before the revolution) came to be viewed as obstacles to change.  In the United States, there were stories of President Reagan dozing during cabinet meetings and in his meeting with the Pope.  At century's turn, there were less than flattering stories of nonagenarian Strom Thurmond and octogenarians Henry Hyde, Jesse Helms and Robert Byrd.  One wonders what the relationship is between the age structure of Congress and the number of long-term goals it establishes.  For a particularly harsh indictment against older rulers see "Conditions Affecting the Sway of Custom" in Edward A. Ross's 1919 Social Psychology.