Robert Samuelson wrote an article that I have been thinking about for a while. There is a fight happening in this country that pits the young versus old, worker versus retired, child versus parent:
The elderly’s interests are running roughshod over other national concerns . Social Security, Medicare and Medicaid — programs heavily for the retired — dominate the budget, accounting for about 44 percent of spending, and have been largely excluded from deficit-reduction measures.
Almost all the adjustment falls on other programs: defense, courts, research, roads, education. Or higher taxes. The federal government is increasingly a transfer agency: Taxes from the young and middle-aged are spent on the elderly.
And Social Security, Medicare and Medicaid are only growing as portion of our government dollars.
It’s uncomfortable but frankly, I’m tired of being pushed around by my parents and grandparents generation. Our school budgets are cut, our roads don’t get repaired, our cities file bankruptcy, all while they give themselves the retirement benefits they promised themselves.
Samuelson’s right: we are beginning to stir.
I enjoy your blog a lot, and I agree with most of what you have to say, but you’ve touched a nerve here :>)
Our generation was the first since WW2 that wasn’t drafted. We never had to serve our country. Our taxes are far lower than our parents’ and grandparents’ taxes were. The top income tax rates went from 90’s to the 30’s under Reagan. Then, due to the Bush tax cuts, tens of millions of us no longer had to pay any income taxes at all.
We were given the gift of the most powerful country on earth by the generations that won WW2 and then the Cold War. We were given the gift of Silicon Valley and an exploding economy that resulted from massive government investment made possible by those high tax rates and the sacrifices of out parents’ generation.
We have been asked for essentially nothing in return.
And now we complain about taking care of the people that gave us this great country as they grow old and move on?
I won’t join in; I won’t complain about this; I will gladly chip in and pay them back.
Also, it is misleading to think of this in terms of ‘spending’ without considering revenue.
Social Security and Medicare are paid for with special taxes. With no changes at all, Social Security is solvent for the next 20 years. After that benefits could be paid at 75% of their current levels forever. Social Security is an extremely regressive tax. If we were to flatten it so that everybody paid in at the same rate on all of their income, SS would be solvent forever and the rate could even be lowered.
Medicare is a different story as it is not structurally sound to the extent that Social Security is. That being said, Obamacare has gone a long way towards correcting that. One of the most important things about Obamacare is that it removed the regression from the Medicare tax so that it is charged on all income. The other piece to the Medicare issue has to do with doctors, how people are treated, and the overall health of the elderly. In short, if we could get doctors and the elderly in Miami to behave like doctors and the elderly in San Francisco, Medicare would be solvent forever at its current rates.
The other big thing that we spend money on is the Department of Defense. This spending is roughly at the same levels of the other 2, but there is no special tax to pay for it. That was not always the case. Our parents and grandparents paid a special tax dedicated to military spending. That tax was not paid in dollars, but it was paid in service. If we are serious about the solvency of our country, we will restore that tax in some way, shape or form. This could be in the form of a flat tax like Medicare, or it could be by reinstating a draft of some sort.
In conclusion, let’s not scapegoat the elderly due to our refusal to contribute. Or, let’s at least start paying taxes at the same rates they did when they were working.
For us to pay in at only fractions of what they paid in and then to complain that we cannot afford to take care of them is simply selfish.
Thanks, Rich. I’m assuming you are older than me. My parents are not elderly at all but apart of the baby boom generation, who paid far lower taxes than their parents and grandparents, as you put it. This likely puts me a generation behind you. When Reagan was elected in 1980 my parents were 29.
I agree that Social Security could be made solvent with a few basic changes. The closer we get to that insolvency, though, the harder it will be to do something simple to fix the problem. Some tweaks now could do it. If we wait 20 years then my parents are likely still alive and collecting Social Security while the system gets closer to insolvency.
As for Medicare, while there are aspects of ACA that I agree with, fundamentally the entire endeavor is disappointing. We have a make-shift medical system in this country that is asinine. Losing my job should not mean losing medical coverage. Insuring some Americans and not others is ridiculous. Basic medical care — at a minimum preventative and catastrophic — should be a benefit of being an American citizen. Eliminating the dividing line between “retired” and “working” when it comes to medical care would go a long way to balancing these inequities. And yes, before you ask, I would be very happy to pay extra taxes to pay for it.
Either way, Rich, thanks for commenting. I don’t write here just to hear myself talk. This kind of discourse is exactly what I hope for!
(Please note that my comment about medical coverage is not a statement about public or private insurance. I believe we could structure this whole thing in a way that makes for smart public/private policy and be uniquely American in style.)
On Tue, Dec 10, 2013 at 8:04 AM, Elia Insider
Thanks for the thoughtful reply.
It is interesting that you would focus on the specifics of generations and your own parents. I will take that into account as I refine this argument for use with other folks in other settings.
I was going for the more general point that we were given this country by the generations that came before us and that we owe it to them to take care of them. Without them, we wouldn’t have a country.
With regards to the specifics, ‘generations’ are funny things made up by marketers. I was born in 1965, and that makes me the first of Generation-X. My brother was born in 1962, which makes him a Baby Boomer like your father who was born in 1951. If you were born before 1980, then you are of Generation X, like me. Obviously, my brother & I had more similar life experiences than my brother & your father and yourself & I, but that is how the marketers decided to draw the lines.
With respect to your father, he turned 18 in 1969. He had a choice to make regarding the draft and Vietnam that future generations were spared of. I always find it fascinating to speak with people who faced that decision. To this day, they have VERY strong feelings about people who chose differently.
With regards to my brother & myself, we used to have “Air Raid Drills” when we were young. The concept of another country bombing us was still an issue, and it was considered almost certain that there would be a nuclear confrontation at some point in the future.
I think those threats of war from external forces might have reinforced this feeling of “we’re all in it together”, which does not seem to exist so much anymore.
The defining moment for my sub-generation was when the Berlin Wall fell. After that, there was a short period of time when American children felt safe in school, but then there was Columbine and that was followed by 9/11. Those events seemed to foster more of a feeling of “spy on your neighbor” than “we’re all in it together”, and maybe that helps to contribute to the ‘everyone is out for themselves’ mentality that prevails in business and government today.
I digress ;>)
With respect to Obamacare, I do agree that we could have done much better.
I very much support a comprehensive Medicare-For-All system. The only way to remove the division between “Working” & “Retired” is with a comprehensive system. The catastrophic system you propose simply would not work for older folks because they’re preventative and non-catastrophic costs are so high. That being said, the comprehensive system I favor would probably end up being mostly catastrophic and preventative for most younger folks (due to their limited needs) so we are talking about very similar systems.
I also agree that health-care is a right. I think that food & shelter are also right. These are the “Life” portion of “Life, Liberty, & the Pursuit of Happiness” that are every human’s natural rights.
That all being said, Obamacare is a VAST improvement over the system we had previously.
The new system is far from perfect, but, as a coder, I think you can relate to the fact that sometimes you need to work within certain bounds and accomplish what you can. You can always go back and refactor and fix bugs later.
Some of the biggest problems with Obamacare are due to the fact that the release was rushed out due to Scott Brown’s election. The House & Senate never really had a chance to reconcile their differences because the 60th vote in the Senate was lost. They had to pass what they had with only minor changes.
Then the GOP won the House in 2010. To this day, that has prevented any sort of refactoring or bug fixes with the law (not the website). I find it baffling that they would not want to try to make improvements, but those improvements will come at some point. It will probably never get to the level that you & I are looking for, but my app will probably never get there either ;>)
Anyway, I appreciate the blog and your receptiveness to comments.
Thanks for taking the time, Rich. I always respect well thought out comments. I try to seek out opposites because it is critical to understanding my own perspectives. (Not that yours are opposite in any specific regard.)