by Calculated Risk on 12/09/2005 12:37:00 AM

For a related post, see Kash's: The Role of Spending Growth in the Deficit

Many people think of the "Baby Bust" as the period right after the "Baby Boom". The real Baby Bust happened from 1925 to 1939. See this animation:



This has important implications for policy. Those people born between 1925 and 1939 are now 66 to 80 years old - the peak years for receiving retirement benefits.

The Baby Boomers are 40 to 60 - their peak earning years.

So these are the Best of Times for fiscal policy: fewer than the normal percentage of the population are recipients of elderly social programs, and a larger than normal percentage are in their peak earning years.

Social Security should be running a large surplus, and it is!

Medicare should be running a large surplus, but it is only breaking even.

The Federal Government should be running a large surplus, but it is running a large deficit.

From the prespective of demographics, the US Government needs to address the General Fund deficit NOW. America also needs to reform the health care system. These are the two most pressing long term fiscal issues for America.