Generational war is brewing

Tracey Press ^ | 11/10/05 | Froma Harrop

[qam1]

America should prepare for a big fat war between the generations. It’s going to be ugly.

On one side is the baby boom generation, which retires and claims a ton of government benefits. On the other are younger workers, forced to fund those benefits plus pay the bills their elders left them.

When the war comes, the Federal Reserve chairman will have to be a general. That person will likely be Bush nominee Ben Bernanke. The question is, for which side will he fight?

Outgoing Fed Chairman Alan Greenspan tried to represent both sides. He supported the Bush tax cuts.

This gave comfort to today’s taxpayers, who chose not to charge themselves for the wars in Afghanistan and Iraq, the new Medicare drug benefit and the quarter-billion-dollar bridge to nowhere.

Last spring, Greenspan did service for the other side. “I fear that we may have already committed more physical resources to the baby boom generation in its retirement years than our economy has the capacity to deliver,” he said.

One solution would be to ramp-up means-testing for Medicare, the health insurance plan for the elderly. Greenspan would reconfigure the program “to be relatively generous to the poor and stingy to the rich.”

The political reality is that the baby boom generation expects to see the nice government handouts its retired parents enjoyed, and then some. Younger workers expect to be taxed at today’s lower rates. One group will be very disappointed — or perhaps both groups — because there is no way the Candyland economics of today can go on.

The whole alarming future is nicely mapped out in a book, “The Coming Generational Storm,” by Boston University economist Laurence Kotlikoff and Scott Burns, a personal-finance columnist at The Dallas Morning News.

Kotlikoff and Burns clearly sympathize with younger Americans and Americans not yet born, who will be paying both our bills and their own. “Does it feel better,” the authors write, “if those unknown victims of our rapacity are someone else’s children and the children of those children and the children of those children of those children?”

Sounds like war to me. Kotlikoff and Burns try to be meticulously nonpartisan, but I won’t. Though the irresponsible policymaking spanned decades, today’s mad deficits rush us closer to disaster. Democrats are not shy about pushing for retiree benefits, but at least they consider raising taxes to pay for them. Not the current crowd, whose spend-and-borrow strategy is the 1919 Versailles Treaty of this-century America: an unstable setup that guarantees future conflict.

The scam is that the tax cuts are not really wiping the nation’s slate clean of tax obligations. When spending exceeds tax revenues, the difference must be borrowed. That debt does not disappear. It gets paid for, with interest, by someone’s taxes. So the Bush cuts simply move the taxes from one generation of shoulders to another.

Bernanke would certainly come to the Fed job with good credentials. Head of the president’s Council of Economic Advisers, he formerly chaired the Princeton economics department. Bernanke seems OK, but other candidates were more upfront about deficits.

One was Martin Feldstein, President Ronald Reagan’s top economic adviser. Feldstein drew flak for criticizing the Reagan deficits. The Bush White House wouldn’t want to hear that kind of thing. Anyway, there’s no need to worry about making ends meet when you can use the next generation’s credit card.

Another Republican contender for the Fed job was Larry Lindsey. He was fired as a Bush adviser in 2002, after predicting that the war in Iraq would cost up to $200 billion, a figure already passed. Lindsey did not understand: One simply does not talk price in the Bush administration.

Given the president’s tendency to give top jobs to those closest, we can give thanks that he did not nominate his banker brother. Neil Bush played a major role in the Silverado Savings & Loan fiasco of the 1980s, which cost taxpayers $1 billion.

Or perhaps the president was doing the big-brotherly thing in protecting Neil from a job sure to be filled with strife.

The person who heads the Fed in the next decade will be trying to steer the nation through the perfect economic storm. Good luck to the new chairman, and to all the generations.

[CSM]

"No, we have to. to pay for our kids."

You're funny! Thanks for the laughs this morning.

[redgolum]

I can understand your frustration. All your life you have been told that the money you paid into SS was going to be paid back to you. But in reality, it is gone.

The government blew it on who knows what a long time ago. There is and has never been any SS "lock box". In effect, your generation was lied to.

But what worries and angers some in the later generations is that when the Baby Boomers retire, there will only be 1-2 people paying into SS for each person taking out of it. So either SS goes under, or tax rates increase astronomically. No matter what happens, many in my generation have figured out we will not be able retire. At best we can expect to work till we die or have one of our kids take us in when we are unable to work. But the safety net promised by so many politicians is going to be gone, and I have a bad feeling of what will happen to the stock market once millions of people begin to cash out their 401(k)s.

[CSM]

"For all of you knocking Baby Boomers, YOU all should know it was the best time to grow up, we did not have computers we had REAL LIVE friends to talk too... We knew how to fix our own bikes, we did not have *FAT KIDS* running around, boys knew how to fix there cars, they had inventive minds and took chances NO OTHER GENERATION HAS..."

Now your generation is the one legislating these things into extinction. Thanks again.

[JamesP81]

Your black and white broad brush strokes are really showing your youthful bias.

One of the things my father made sure I understood was this: older people will tell you they know more than you because they're older, but it's not true and I found that out when I got into the workforce. I've had a boss that was always saying, 'you're young, I know better' and, hey, the guy meant well but the truth is he just Didn't Get It on a lot of things that I did. Bottom line: he turned out to not be any smarter than anyone else. Including me.

As I've said in other posts, you can continue to chant 'youthful bias' but no one's listening. Try a different argument please, because this one has no effectiveness anymore, it puts people off a bit, and it's a very tired argumentl.

[CSM]

"And guess what...there are millions and millions of baby boomers who are in the same 'good' situation as we are..."

If that is the case, why are the boomers so resistant to SS reform?

[CSM]

"You can refuse to admit it all you want, but previous generations didn't work all that hard. Working 9-5 was standard. Nobody, except government bureaucrats, work such easy hours anymore."

Heck, people don't even have time to take a lunch break any more. Except the gov. bureaucrats you mention, plus union members......

[CSM]

"The way *I* you seem to forget I am one of those Boomers who are into *I* and I am not dis-counting what you do for a living at all, but it's far from the sweat that many men had to do to take care of a wife and 7 children with little education...."

The sweat of a man's brow is only worth what a nother man's intellect has made it worth. Without intellectual advancements, man's labor would never see productivity increases.

You really need to read "Atlas Shrugged."

[wtc911]

Are there any of your generation having babies? Even one? If so then using your logic your entire generation is scum or maybe just the women. Silly to see things that way isn't it?

[Grampa Dave]

"I wish just ONE time one of this self important morons who write this crap would bother to take a couple of Econ classes before they go out spewing their hyper stupid nonsense."


Maybe this uber liberal could take econ lessons from Herr Krugman!

Naah, that wouldn't help. Both are uber liberals who hate America and real capitalism. They love socialism and would love to be the facists in charge of the socialism and people.

[CSM]

"Make the cutoff date the day before my birth, and I will call all the taxes I have paid, sunk cost, and we will be done with socialism.
Better that I absorb the price of injustice, than pass it on to my child."

You have my full support for this, I to am willing to consider all my SS payments a sunk cost if I could be exempted from the system.

[GOPJ]

One group will be very disappointed — or perhaps both groups — because there is no way the Candyland economics of today can go on.

Wrong. This is a problem with the unions that run medicine -- (AMA) The private sector, including innovators like Walmart can do an end-run around the bloodsuckers. Medical care doesn't have to pit generations against each other.

[CSM]

"Huh? Where did I ever talk about private property?"

If you don't consider the money that you earn to be your property, how would you categorize it?

[CSM]

"Based on what facts...My Aunt had 27 illegal abortions in 1967."

I hope I stumble on clarification of this in a later post. 27 abortions in one year doesn't seem possible.

[thirst4truth]

In Oregon, the Fed and state governments together, own more than 50% of the state.

[CSM]

Cool tagline.

[tonycavanagh]

re :We baby boomers reared too many kids without fathers out of our selfishness. It will come back to bite us.

.I guess you mean you, because I didn't.

[Myrddin]

40 Boomers supported one retiree. 3 Gen Xers will support one Boomer butt.

Lets get the numbers right. The ratio of "greatest generation" to retirees was 23:1 when the program was instituted. Today, the ratio is 3:1 boomers to "greatest generation". Boomers are carrying the majority of the load right now. Boomers will start retiring in 2016 (age 70 1/2). At that point the ratio of workers to recipients will be approaching 1:1. The boomers start becoming a burden and cease contributing to sharing the costs in the post 2016 time frame. There are plenty of boomers carrying the load right now. It is the boomers will get screwed at retirement because there just aren't enough Gen X people with sufficient earning capacity to cover the obligations. The only solution is to cut social security outlays. The boomers will have get little or nothing. The boomers far outnumber Gen X. There is no way the program can continue as it is today.

[Myrddin]

Why are his hours so long? Because of Clinton's downsizing. It's been this way since the mid 90's. 4:30 to 7 or 8PM. This doesn't include the field problems, schools, TDY posts, and combat. That's the norm for our family and for every military family that we know. It's a hard life, but it's all we adjust

I have the same problem, but for different reasons. There is a limited pool of people that are sufficiently healthy, sufficiently skilled, possess appropriate clearance and willing to tolerate long hours. Many prior project team members left the project because they couldn't handle the stress of 16 hour days, 7 days a week for months on end. I've been camped in this hotel room since Oct 23. Thankfully, I'll be able to return home Nov 19th to enjoy Thanksgiving with my family, wash my clothes and prepare for another trip to cover my other project.

Speaking of washing clothes, I need to do that today. It is a good use of time while the laptop grinds through a 4 hour compilation of the ACE-TAO framework. Cheers.

[Myrddin]

I grew up in a Navy household. The first place I remember well was Imperial Beach, CA around 1959. Next stop was 2 1/2 years in Pearl Harbor, Hawaii for kindergarten and 1st grade. We moved Chula Vista, CA for 2nd grade. 3rd grade was in Federal Way, WA. 4th grade was in Chula Vista, CA. 5th grade was divided between Norfolk, VA and West Springfield, VA. A new school was built, so 6th grade was at the new school in the Rolling Valley area of Springfield, VA. 7th grade was split between Springfield, VA and Chula Vista, CA. That was the last move until I got married and left home. It's frustrating to watch the packers turn your dresser drawers upside down into boxes. It's hard to make a lifelong friends when life is a series of snapshots in different places. Mom kept the household running while dad went to sea or spent endless hours at the "office". Being XO of 32nd St Naval Station, San Diego from 1970 to 1977 was a 7x24 experience for my dad and the family. There was no such thing as "time off" when running a facility that large.

My wife's family was Navy enlisted. She didn't move quite as often, but experienced the broken home with an alcoholic father. We both vowed not to put our kids through that kind of life experience and we stood by that. My sons are 18/22/25. The 22 year old has been on his own since age 18 and will finish a business degree next June. He just took his real estate broker's license exam Wednesday and filed his paperwork to open his own business yesterday.

[Myrddin]

And a world-class education it was. Thank you for contributing to the highest illiteracy rates in the history of our nation. Appreciate that. Yup. Your generation really helped us out there.

You get out of it what you put into it. If you ended up illiterate, blame the person in the mirror tomorrow morning. My 22 year old had crappy teachers, so he took the bull by the horns and conducted review sessions for his fellow students so they could score well on the AP exams. If you just let life happen to you, you will be a miserable failure. My formal education is in molecular biology and pathogenic microbiology. I make my living as a computer scientist and electrical engineer. The skills that pay the bills were acquired by purchasing books and studying ravenously. That beats pushing a broom at Walmart and crabbing about insufficient opportunities in the field of genetics engineering.

You can lay the blame for crappy schools on the leftists who dumbed down the schools to make the underachieving minorities "feel good". The schools teach leftist claptrap today and expect little or no level of academic achievement. It wasn't boomers who set those policies in motion. It was the "greatest generation" who were the politicians and the teachers and administrators at the schools attended by the boomers. Gen X is getting the second wave of the dumbed down process.