America's Clash of Generations: How Many Working People Can Support One Retiree in the Future?

RCM ^ | 12/09/2013 | Robert Samuelson

[SeekAndFind]

We are locked in a generational war, which will get worse before it gets better. Indeed, it may not get better for a long time. No one wants to admit this, because it's ugly and unwelcome. Parents are supposed to care for their children, and children are supposed to care for their aging parents. For families, these collective obligations may work. But what makes sense for families doesn't always succeed for society as a whole. The clash of generations is intensifying.

Last week, a federal judge ruled that Detroit qualifies for municipal bankruptcy. This almost certainly means that pensions and health benefits for the city's retired workers will be trimmed. There's a basic conflict between paying for all retirement benefits and supporting adequate current services (police, schools, parks, sanitation, roads). The number of Detroit's retired workers has swelled, benefits were not adequately funded and the city's economy isn't strong enough to take care of both without self-defeating tax increases.

The math is unforgiving. Detroit now has two retirees for every active worker, reports the Detroit Free Press; in 2012, that was 10,525 employees and 21,113 retirees. Satisfying retirees inevitably shortchanges their children and grandchildren. Though Detroit's situation is extreme, it's not unique. Pension benefits were once thought to be legally and politically impregnable. Pension cuts in Illinois (last week), Rhode Island and elsewhere have shattered this assumption. Chicago is considering reductions for its retirees.

[GOPJ]

Samuelson’s a liberal elite. That’s where the ‘war’ is - between liberal elites and the people.

[monocle]

As the citizens of Soviet Union were wont to say: “They pretend to pay us and we pretend to work”.

[Organic Panic]

Obama has a pill for this.

[GeronL]

ObamaCare is going to give us fewer retirees to support