Look Out! The Baby Boomers Are Coming of Age

2011 is the year in which the first of the Baby Boomers reach age 66--the age at which their full Social Security benefits are available to them. The Economist covered this story in its 2010 end-of-year issue, and, although they didn't call it this, they did a very nice age-period-cohort analysis of the political impact that this is going to have. The age part is obvious. At 65 in America you qualify for Medicare, the government-funded health insurance program for older (as well as disabled) persons, and, as noted, at 66 the full Social Security benefits kick in. By "full" I mean that by waiting to age 66, baby boomers can collect Social Security and continue to earn other income without any reduction in their pension benefit. 

The cohort effect refers to "the notion that a person’s lifelong voting habits are established early on. Charlie Cook, a political analyst, says today’s retired were shaped by the perceived failure of Jimmy Carter in the late 1970s and the success of Ronald Reagan in the 1980s. In 2008 some may also have identified more with the 72-year-old John McCain than the 47-year-old Mr Obama."

The period effect relates to the fact that President Obama's health care program has been perceived by many older people as potentially threatening to their own benefits and that is an important issue because "in the next two decades people aged 65 and over will rise from 17% of the voting-age population to 26%. Since the old vote more readily, their actual share of the electorate will be some three percentage points higher, reckons Robert Binstock, a political scientist at Case Western Reserve University in Cleveland."

Andrea Campbell of the Massachusetts Institute of Technology believes it was the creation of Social Security in the 1930s and Medicare in the 1960s that transformed the elderly into the most politically engaged age group in America. Ever more comfortable in retirement, they had the time and the means to follow politics and an issue to motivate them. But threats to the programmes seldom seemed significant or imminent. That may have changed in 2010 with Mr Obama’s health-care reform.

Last year Mr Obama’s bipartisan deficit commission recommended expanding the powers of Medicare’s cost-control panel and scrapping or reforming the CLASS Act, which creates a new entitlement for long-term care of the old and frail. Paul Ryan and Alice Rivlin, Republican and Democratic commission members, have separately proposed replacing traditional Medicare with vouchers for private care. All those proposals are complete anathema to the elderly.

They are not alone. Ms Campbell says that young and middle-aged voters are just as opposed to benefit cuts, perhaps because they have elderly parents or realise that they too will one day need the benefits. Polls find that, among all voters, the single most popular fix is to raise the cap on earnings subject to the payroll tax—no doubt because this would be borne by a minority of affluent working people. Yet to finance the boomers’ retirement with no cut in benefits would require unprecedented increases in taxes, which could be even more unpopular. The boomers’ capacity to upset the political apple cart is as great as it ever was.