##Aging Demographics Turing application writing sample by Aaron Careaga
Demographics hold far greater influence over society's collective understanding and decision making than most people appreciate. At the most basic level, demographics are really just the consumers and workers in an economy. But changes in the profile of these groups directly affect individual, business, and government structures. Successful policies at all three levels must become more dynamic by incorporating the effects of an aging population in order to guide a more prosperous future.
Fluctuations in birth rates between cohorts directly influence the level of growth in an economy - more demand translates into higher levels of revenue, employment, and taxation. Government captures this demand through taxation and redeploys the capital in hope of guiding even higher levels of prosperity. Today, we find that many government programs were structured during a period of high economic growth and when large population cohorts were predominately young working class citizens.
Social Security is the prime example of an affected government program. Following the Great Depression, the Social Security Act established mass social insurance in the United Sates. This period segued into decades of exceptional economic growth while program coverage and benefit levels expanded at a rate far greater than corresponding tax revenue. Although many aspects stayed true to their original intents, general old age and healthcare subsidies were never meant to become primary sources of retirement income.
####Social Insurance Payroll Tax Rate History
| Employer & Employee | Self-Employed | |
|---|---|---|
| 1940 | 2.00% | - |
| 1950 | 3.00% | - |
| 1960 | 6.00% | 4.50% |
| 1970 | 9.60% | 6.90% |
| 1980 | 12.26% | 8.10% |
| 1990 - Today | 15.30% | 15.30% |
Employers and employees paid a combined tax rate of 6 percent or less from the inception of Social Security until 1970. Today, they pay a combined 15.3 percent. Social programs are now underfunded by $39.698 trillion dollars, net of assets and future tax revenue, because rates were held artificially low. This reality threatens the solvency of many federal programs.
Defense, education, R&D, and other discretionary programs are cut first as politicians attempt to balance the revenue shortfall, accelerating a negative feedback loop. Older groups of the population are now disconnected from the true cost of social insurance while inequitably benefiting. With less funding for programs that support opportunity, younger groups become deterred from advancing their education, maintaining employment, or starting a company. Why take risk if you can survive on social insurance?
Effects of such disincentives are visible across the current economic environment. If reform is delayed much longer, social insurance trust funds will be depleted forcing benefit cuts to match the amount of tax revenue collected. The CBO estimates this cut to be around 75 percent of current levels and to occur in 2016 for Disability Insurance and 2033 for Social Security.
Academics, elected officials, and professionals have warned of the impending crises for decades yet little action has been taken. I believe this is due to a lack of unbiased, transparent, and accessible resources available to the general public. In order to return to a commonwealth mentality the nation was founded upon, individuals must be aware of the country's current trajectory. Responsibility to motivate the necessary structural reform falls upon all citizens. America has the resources and ability to return to previous levels of opportunity.