Posted on 11/10/2005 1:22:46 PM PST by 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- My response was based more from a Stress Factor and the impact on families, an Educated job is going to give a person the money, admiration and lessens the burdens of life than a less educated person, that's a given.
Many of the World War11 era men had low paying factory, construction, plant style jobs and with that came a wife that did not work and larger families to support, so those men had a bigger burden to hold and in essence did not make the best husbands or fathers because they were just made to feel as PROVIDERS to the home no more and no less...
So what do you think will happen to the value of privately held land if the Feds dumped their supply on the market?
That behavior is mandated by the ERISA law. The draw down will start around 2016. ERISA was crafted when companies realized that unbounded responsibility for defined benefit pensions could not be sustained with extended lifetimes that draw retirement for periods that may exceed the number of years actually worked. Workers that have participated in ERISA based defined contribution programs have been driving up the stock market for the last 25 years. There is about 10 more years before the "bill" comes due. You need to find an alternative strategy to the stock market before 2015.
I'm not. Cut it off now. Stop stealing 15% of my gross income. I'll take care of my self. I frankly never expect to get a dime from SS. I've paid the maximum amount every year for the past 15 consecutive years.
You might be talking about ONE previous generation -- perhaps TWO in some situations.
It wasn't all that long ago (late 1940s to early 1950s) that the "standard" work week was reduced to 5.5 days (Saturday was reduced to a half-day). Before that, most people worked a full six days every week.
I don't take a lunch break. An Atkins bar and a can of Diet Mountain Dew suffice for nourishment as I work away at my desk. I do break for dinner when I'm at home as it is the only time I have to spend time with my wife before she runs off to work.
Me too. I can invest the 15% that is being confiscated and have much more than the government will ever return.
Which generation was young enough to take advantage of it?! Certainly not the "Greatest Generation" or the "Silent Generation". Most people in those generations were already past menopause or suffering hot flashes by 1973.
Typical pass the buck, baby boomer behaviour.
I guess you are an example of age not giving one more knowledge or wisdom.
I suppose, based on your "logic" that if some theif comes in my house and steals my computer that I am perfectly entitled to waltz into your house and steal yours.
Exactly. The Welsh worked 6 day weeks and took Sunday off. They combined access to a bible in Welsh with church activities to conduct "Sunday School" to preserve the language. Having one day off each week was the norm until union types negotiated us into a 5 day week with 8 hours as a 'norm'. The only time I ever experience this 8 hour shift world was as a high school student working in a restaurant to earn money to go to the prom.
The French socialists have cut their work week to 37 hours in the mistaken belief that a shorter work week would generate opportunities for more employees to be hired to cover all the available work hours. All it did was trash productivity.
Very good points you've raised there.
And the intellectuals that are sitting at desks created automation, assembly fixtures, smelting equipment, welding equipment, etc. These devices made the physical labor more productive, therefore increasing its value. Compare the difference between how much steel a blacksmith could produce vs. the amount of steel that can be produced by todays smelting operations.
Yes, they carried a load. I would contend that the load is heavier today. The tax rate is one of the major reasons that 2 incomes are the norm. Now families spend their "free" time doing the domestic work that used to be done by the homemaker. Each member of the family is doing at least the work of 2.
Technology, created by desk sitters (intellectuals), has allowed this to occur. The government punishes us for the advancements.
"I'm not. Cut it off now."
We are in agreement. Maybe I should have asked it differently. Sorry about that. Let me try again.
In your opinion, since the folks getting ready to retire are so well off, why are they generally resistant to SS reform?
HR25, a very interesting proposal that would help a great deal.
"Upon retirement some of these people are getting a $100,000. or more."
That sickens me. How much do I get?
For all the good *Technology* has done, it also has done some bad... Do you think the foods we now injest Mass produced, hormone injected and all, are better than the foods of my parents that could afford to buy organic vegetables, hormone free meats, grain fed chickens?
Houses are built with sub-standard materials now a days.
Electronics, Phones, TV's, household appliances are made to last no more than 5 years if that...
What was produced by a man's hands is now produced by technology, so are we truly better off?
You completely changed the context of the issue with your comment. It wasn't boomers who made the Roe v Wade decision. It wasn't boomers who owned, operated and financed the abortion clinics either. The post 1973 boomers were the first generation that had access to birth control pills and abortions. They do deserve blame to the extent that they availed themselves of abortion instead of raising children.
I didn't "pass the buck". I raised 3 sons. My sister raised two kids as well. We both earn big incomes and pay enormous taxes. You are getting wrapped up in "group think". Castigating a whole generation is as reprehensible as racism. Chronological age is an unchangeable attribute.
Women of my mother's generation were pretty washed up by the time they hit Menopause-Average age 51 years, because Medicine NEVER was developed to address women's health issues..They pretty much gave women hysterectomies in droves, women lost all sex drives which in essense drove husbands to leaving them or indulging in extra marital affairs..
Women look and feel great now in there 40's and 50's and are productive fascinating women now...
So your employer doesn't have a sick leave policy? My employer mixes "sick leave" and vacation time under a single policy. It is earned vacation time. I can take it as paid time off or my employer can pay me a lump sum upon termination. I'm only allowed to accrue a maximum of 480 hours on the books. That would be a gross lump sum of about $28K if I terminated employment. Frankly, it is better to stay on the payroll and take the vacation until it is consumed. You get the same money and maintain your benefits. The lump sum is often taxed incorrectly leaving you with a big sum owed to the IRS.
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