When Otto von Bismarck established the world's first social security system, he never dreamed that a large proportion of the populace would live long enough to draw pensions. With a tight grip on the public purse, the Iron Chancellor set age sixty-five as an eligibility threshold that few could be expected to cross. When the U.S. version of the welfare state came into being fifty years later, the labor force was still relatively large in comparison to the population of those receiving benefits. Few in the New Deal era could have anticipated the demographic developments that in our day threaten all of the institutions on which people rely for support and security. Impeding any easy solution is the fact that many of the current pressures on families, welfare systems, and benevolent associations are the by-products of genuine advances in health and opportunity.
Longer life spans have expanded the population of frail elderly persons, including victims of dementias characterized by lengthy periods of disability. Changes in women's roles have greatly reduced the traditional pool of caregivers for the very young and the very old alike. Low birth rates are decreasing the ratio of active workers to pensioners and persons requiring social assistance. In combination, declining birth rates and improved longevity mean that the dependent population now includes a much smaller proportion of children and a much larger proportion of disabled and elderly persons than ever before. But with increased divorce and unwed parenthood, the impoverished population is now composed largely of women and children.
The increasing pressure on economic and human resources from both ends of the age spectrum has received remarkably little attention from policy makers. And this despite a warning from the Senate Special Committee on Aging, which argued in a 2002 report that, without significant reform, "the United States could be on the brink of a domestic financial crisis." The issues cannot be ignored much longer, however, for the first wave of the nation's seventy-seven million baby boomers will reach age sixty-five in 2011. According to Alan Greenspan, the country "will almost surely be unable to meet the demands on resources that the retirement of the baby boom generation will make."
The pinch is already provoking generational conflict in the ambitious welfare states of northern Europe, where birthrates and immigration rates are lower than in the United States and where, as here, the elderly wield considerable political clout. Modest proposals to cut back on pensions or to raise the retirement age in France and Germany have met with strikes and protests from the groups affected. At the same time, young Europeans are complaining about the high cost of health care for the elderly, and are resentful...