The Cost of Growing Older

Why paying for an aging population may force the United States -- and its allies -- to cut back on military spending.

By 2050, rapidly graying populations are likely to impose an unprecedented fiscal burden on the United States, many European countries, Japan, and South Korea. This aging is the topic of intense political, economic, and social welfare debates worldwide. But it may prove to be a problem with implications far wider than just national or even regional reach, posing profound foreign and security policy challenges and possibly undermining the ability of America and its allies to sustain current levels of military and development spending. All sorts of expenditures will be up for review -- and prominent on the chopping block could be defense and foreign aid.

For example, "some European and rapidly aging East Asian states might conclude that they cannot afford to maintain a sizeable military," noted the U.S. National Intelligence Council in its report "Global Trends 2030: Alternative Worlds." And with this eventuality, Washington's perennial frustration with its allies' failure to share the burden of paying for global security may only grow. And the allies' ability to compensate for America's shortcomings in the provision of foreign aid could well be compromised.

The generation of baby boomers, who for decades fueled the expansion of consumer demand and economic growth around the world, will require assistance as their prime working years are ending. In 2010 in the United States, there were 19 people age 65 or older for every 100 people of working age (15 to 64). By 2050 there will be 36 old-age dependents per 100 working-age Americans.

As daunting a fiscal challenge as this may be for the United States, it is dwarfed by the test facing other aging societies. Japan's old-age dependency ratio will double from 36 seniors per 100 working-age people to 72 oldsters by midcentury. South Korea's elderly dependency burden quadruples from 15 to 66, while Germany's increases from 32 to 60. A new survey by the Pew Research Center has found that while only about a quarter of the U.S. population looks to government to bear the greatest responsibility for people's economic well-being in their old age, a third or more of the publics in Britain, France, Germany, Japan, and South Korea expect their governments to be their primary support.

Faced with a graying population that will need additional support, U.S. spending on public pensions is expected to grow from 6.8 percent of the economy in 2010 to 8.5 percent in 2050, according to estimates by the International Monetary Fund (a prospect that has already ignited a political debate over priorities among American politicians). Meanwhile, South Korea is expected to increase pension spending from 1.7 percent of GDP to 12.5 percent over that same period. And Germany will grow such expenditures from 10.9 percent to 13.1 percent.

The intensity of the potential competition this may create between spending on the elderly and spending for defense will differ among the allies. Over the next four decades, the United States must find an additional 1.7 percentage points of GDP to fund public pensions. In 2012, Washington devoted 4.4 percent of GDP to the Pentagon, according to data from the Stockholm International Peace Research Institute. That proportion is shrinking already, potentially freeing up some money for the elderly. But U.S. defense spending as a portion of GDP is still larger today than in most years since the early 1990s, suggesting the competition for resources could be intense.

America's other allies face even tougher trade-offs. In 2012, South Korea spent just 2.7 percent of its GDP on defense, but it must find an additional 10.8 points of GDP to support its rapidly aging population by 2050. Germany spends only 1.4 percent of GDP on the military and needs to increase public pension expenditures by 2.2 points of GDP. Britain, France, and Japan face lesser challenges balancing guns and pensions, but all will have to make spending choices.

The rapid aging of China may help attenuate some of the need for allied defense spending, thereby easing friction with spending on the elderly. Beijing spends 2 percent of its GDP on defense, a huge amount in nominal terms given the size of China's economy. Such spending is one reason Washington and its allies feel the need to maintain their military expenditures. But, by 2050, China will have 39 people age 65 or older for every 100 working-age people -- an old-age dependency ratio higher than that in the United States. And a plurality of Chinese (47 percent) expect Beijing to bear the greatest responsibility for their economic well-being in their declining years. This leads the IMF to project that China will spend 10 percent of GDP on pensions, up from just 3.4 percent in 2010. Beijing is also likely to face its own guns versus pension spending trade-offs.

Foreign aid may prove even more vulnerable to new pressures to allocate more resources to the elderly. The United States devotes only 0.19 percent of gross national income to development assistance, according to data from the Organization for Economic Cooperation and Development, the advanced-economy think tank in Paris. This is hardly a deep well to plumb to support the elderly. But foreign aid has never enjoyed widespread public support in the United States, which has always made it a favorite target for budget cutters.

Moreover, the recent fate of development assistance spending in Europe in the wake of the euro crisis suggests just how vulnerable it may be in future domestic battles over spending, even in societies that have proved far more generous than the United States in the past. Between 2011 and 2012, recession-challenged Spain slashed official foreign aid 47 percent, and Italy reduced it 32 percent. Even Germany, which has weathered recent economic storms better than most, cut such assistance by 2 percent.

Thus, as aging societies come to grips with how to pay for sustaining the rapidly growing elderly share of their populations, what they spend on defense and development assistance may well become part of the conversation. Washington has long argued that allied defense spending is woefully inadequate. And it has relied on its allies to pick up some of the slack in foreign aid spending as the United States focuses its international expenditures on security. But the competition for resources created by aging populations is only likely to generate even greater burden-sharing friction.

In the future, aging will not be just a social welfare challenge. It may prove to be a national security one as well. And in Washington's discussions with Berlin, Tokyo, and Seoul about global burden sharing, it is not too early to begin to share perspectives on how these allies intend to balance competing fiscal responsibilities. Because a day of reckoning on priorities and a clash between the needs of aging populations and national security concerns may come sooner rather than later.

Photo: John Moore/Getty Images


The Top 10 Mistakes Made in the Afghan War

From Tora Bora to wartime fatigue, the U.S. legacy in Afghanistan was just one failed endeavor after another.

America's long war in Afghanistan isn't likely to end well, and the American people seem to know it. Despite a wholly predictable effort to portray the war as an American victory, the United States isn't going to defeat the Taliban between now and the scheduled departure of most U.S. troops later this year. Meanwhile, relations between the United States and the Karzai government are going from bad to worse. Afghan President Hamid Karzai is not only refusing to sign a security agreement that would allow the United States to leave a residual force in country, he is also making increasingly strident accusations that the United States is to blame for recent civilian deaths.

This depressing outcome is not what most Americans expected following the rapid toppling of the Taliban back in 2001. It is therefore important that we draw the right lessons from the experience, if only to partly redeem the sacrifices made by the soldiers who fought there. In that spirit, here is a list of the top 10 mistakes made in America's Afghan War.

1. Trying to Go It Alone

After 9/11, America's NATO allies invoked the mutual defense clause of the NATO treaty and offered to help the United States go after the Taliban and al Qaeda. Convinced that the job would be easy and that allies would simply make things harder, the Rumsfeld Pentagon responded with a brusque "No, thanks." Instead of making Afghanistan a collective project from the start, the Bush administration wanted to show it could do the job all by itself, with an assist from the Afghan Northern Alliance. That decision seemed justified when the Taliban fell quickly, but when Bush & Co. marched off to Iraq (see below), there was hardly anybody left to keep the Taliban from coming back. By the time NATO got involved big-time, a new civil war was underway and the best opportunity to build a stable Afghanistan had been squandered.

2. Blowing It at Tora Bora

The United States invaded Afghanistan for one reason: to get Osama bin Laden and as many of his followers as possible. Unfortunately, poor coordination with local Afghan forces and a reluctance to commit sufficient U.S. troops at the Battle of Tora Bora allowed bin Laden to escape into Pakistan, where he remained at large for another eight years. Had we caught him then and there, al Qaeda might have been dealt a fatal blow and the United States could have declared victory in the "war on terror" instead of watching al Qaeda morph into a global franchise. Yet despite this costly failure, the U.S. commander at Tora Bora -- Army Gen. Tommy Franks -- was later chosen to command the invasion of Iraq.

3. The Afghan Constitution

The Bonn Agreement in December 2001 established an interim government for post-Taliban Afghanistan and was, in many ways, an impressive diplomatic achievement. Unfortunately, the Constitution adopted in 2004 was an ill-conceived misstep. It created a highly centralized state that ignored Afghan traditions of local autonomy and gave the president too much formal power. The new government was supposed to run the entire country from Kabul and appoint all the key local officials, but the Karzai regime lacked enough competent civil servants and the new structure created irresistible opportunities for patronage and corruption. Moreover, the Afghan economy could not support an elaborate governmental structure or large security forces, which made the fledgling Afghan state permanently dependent on outside support from the start.

4. The Detour Into Iraq

The Bush administration's decision to invade Iraq was not just a disaster for Iraq and for the United States, it also diverted military and intelligence resources from Afghanistan and allowed the Taliban to regroup and resume the war. Sadly, we will never know what might have happened had the United States and NATO kept their eyes on the ball back in 2003.

5. The 2009 Surge

In the 2008 presidential campaign, Barack Obama burnished his national security street cred by declaring that he was going to end the war in Iraq so that he could focus on the "real war" in Afghanistan. He then succumbed to military pressure and sent additional U.S. troops, starting with 17,000 shortly after taking office and adding another 30,000 in the fall of 2009. But the decision to escalate was fatally flawed, because the Taliban still had sanctuaries in neighboring Pakistan and were never going to be defeated by military force alone. To succeed, the surge would have had to be far larger and much longer in duration, and Afghanistan simply wasn't worth that level of effort. The surge also led to a sharp uptick in Afghan and American casualties, which gradually undermined support for the war back home.

6. Setting a Time Limit

The mistaken decision to escalate was compounded by a second error: Obama made it clear from the start that the surge would be a temporary measure and gave the Taliban a pretty good idea when the United States would begin to get out. As critics noted at the time, telling your adversary exactly when you were going to quit was hardly the best way to persuade them to give up the fight. Instead, it told the enemy exactly how long they needed to hang on in order to wait us out.

7. Downgrading Diplomacy

Ending the war and building a functioning Afghan government required a reconciliation process that would integrate the more moderate elements of the Taliban back into the Afghan political community. Unfortunately, the United States didn't get serious about a peace process until it was too late. As U.S. special envoy James Dobbins acknowledged last year, "it was probably a mistake to delay a serious effort at reconciliation until 2011." Washington should have pushed hard for serious discussions while the surge was at its peak, instead of waiting until its role (and therefore its leverage) was declining. The United States also failed to engage regional powers that might have helped put together a stabilization deal, in part because it wasn't even talking to some of them (e.g., Iran).

8. Losing Public Support

When the Taliban refused to give up bin Laden, the United States had no choice but to go after the man who had orchestrated the 9/11 attacks. The American public signed up for that war with enthusiasm, but not to an open-ended effort to transform an impoverished, land-locked, and ethnically divided Muslim country that had never been a vital U.S. strategic interest before. And neither Bush nor Obama ever managed to persuade them that the war was worth the cost, mostly because the American people aren't completely gullible. By 2008, the war was costing the American taxpayers an amount several times larger than Afghanistan's entire GDP, and neither Bush nor Obama could come up with a convincing rationale for continuing to pour money and lives into distant strategic backwater.

To be sure, Obama tried to justify the war as necessary to prevent al Qaeda from establishing a "safe haven" again, but al Qaeda already had better havens by 2009 and was barely in Afghanistan by that point. Moreover, a long and costly war against the Taliban was increasingly a distraction from the broader campaign against al Qaeda itself.

Bottom line: the American people will support a war when vital interests are at stake and there is a plausible theory of victory, but by 2009, neither of those conditions had been met.

9. Failure to Manage Unruly Allies

Winning the war in Afghanistan depended on getting at least two foreign governments to play ball. The first was the Afghan government itself, which was corrupt, inefficient, and increasingly unwilling to listen to well-intentioned U.S. advice. The second was Pakistan, which continued to play footsie with the Taliban and sometimes put roadblocks (literal ones) in the way of the U.S. military. Unfortunately, U.S. leaders never fully appreciated that the war could not be won if we didn't get more cooperation from these supposed allies, and that we wouldn't get that support as long as they were convinced that Washington would never call their bluff. It's a sad but familiar story: a once-powerful patron becomes too strongly committed to a weak client with its own agenda, that client extracts many concessions by threatening to collapse or by telling us one thing while doing another.

10. Strategic Contradictions

Finally, the U.S. campaign in Afghanistan was bedeviled by strategic contradictions that were never fully recognized or resolved. Although many American soldiers fought with skill and heroism, achieving our stated war aims was an uphill battle from the get-go.

For starters, the United States and NATO couldn't win without a much larger investment of resources over a much longer period, but it just wasn't worth that level of investment. And for all the talk about COIN, Army Field Manual 3-24, and supposedly brilliant commanders like David Petraeus and Stanley McChrystal, the U.S. Army was never designed for or adept at this kind of operation and isn't likely to get much better at it with practice. And finally, building a new Afghan state and fighting a counterinsurgency war required outsiders to pour billions of dollars into an impoverished country, but the flood of poorly managed money merely fueled corruption and ensured that much of the aid money was wasted.

No one should take any pleasure in contemplating these (and other) mistakes, especially when one considers how long the United States fought there and how shallow its learning curve was. One at least hopes that some larger lessons have been learned, and that U.S. presidents will be a lot warier of this sort of quagmire in the future. Or as former Secretary of Defense Robert Gates said in 2011: "In my opinion, any future defense secretary who advises the president to again send a big American land army into Asia or into the Middle East or Africa should have 'his head examined.'"

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