Global Aging Recessions: New Study Outlines Fiscal Threats Posed by Aging in Industrialized Countries

1/24/2002

From: Mark Schoeff Jr. of CSIS, 202-775-3242; e-mail: mschoeff@csis.org; Craig Romm, 202-457-8732

News Advisory:

The growing imbalance between the population of working people and those who are retired threatens to unleash a tide of fiscal red ink in virtually every industrial nation by 2010, according to a new CSIS study, "The Fiscal Challenge of an Aging Industrial World," that will be released at 1:30 p.m. on Monday, Jan. 28, in the Holeman Lounge, National Press Club, 529 14th St., N.W., Washington D.C.

The event will feature the study's author, Robert England, and William Haseltine, CEO of Human Genome Sciences, as well as other experts on population demographics.

Working-age populations will fall precipitously in the coming half-century in Europe and Japan - even as the number of pensioners surges with the retirement of the postwar baby boom generation. "This crisis will occur because virtually all social security systems, including elderly health and nursing care, operate on a pay-as-you-go basis," the report states. "The future imbalance between workers and retirees in industrial nations could lead governments to make sharp cuts in old-age benefits. Alternatively, it could lead to large increases in debt that could destabilize some currencies and financial markets. It also could lead to large tax increases that would dampen economic growth or cause aging recessions."

The CSIS study evaluates official budget forecasts for spending on the elderly among the seven largest industrial nations, including their assumptions on longevity and fertility. It also examines policy reforms in Germany and Italy and delves into science's quest for significant gains in longevity. Most developed countries expect that increases in life expectancy will slow dramatically in the future, despite growing indications that major breakthroughs against the diseases of old age are on the horizon.

According to the study, the portion of the population that is older than 65 in Japan will increase from 17 percent today to 30 percent in 2030; in Italy, from 18 percent to 29 percent; in Germany, from 16 percent to 28 percent; and in the United States, from 13 percent to 22 percent - "giving the United States as a whole a population profile of elderly Americans similar to that now found only in Florida." Between 2010 and 2030, the number of elderly Americans will surge by 82 percent, while the working-age population will grow by just 5 percent.

"America's Social Security crisis is real, and medical breakthroughs could make it much worse," said Paul Hewitt, director of the CSIS Global Aging Initiative. "The president and Congress need to prepare the American people for the enormous challenges of global aging."

WHAT: "The Fiscal Challenge of an Aging Industrial World" study release

WHEN: Monday, Jan. 28 1:30 - 2:30 p.m.

WHERE: National Press Club Holeman Lounge 529 14th St., N.W. Washington, D.C.

WHO: -- Robert England, author, research director, CSIS Commission on Global Aging -- William Haseltine, CEO of Human Genome Sciences -- Sylvester Schieber, vice president, Watson Wyatt Worldwide -- Ben Wattenberg, senior fellow, American Enterprise Institute -- Paul Hewitt, director, CSIS Global Aging Initiative

------ CSIS is an independent, nonpartisan public policy organization.