Why are we in this debt fix? It’s the elderly, stupid.
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By Robert J. Samuelson, Published: July*28
If leadership is the capacity to take people where they need to go — whether or not they realize it or want it — then we’ve had almost no leadership in these weeks of frustrating and maddening debate over the budget and debt ceiling. There’s been an unspoken consensus among President Obama, congressional Democrats and Republicans not to discuss the central issue underlying the standoff. We’ve heard lots about “compromise” or its absence. We’ve had dueling budgets with differing mixes of spending cuts and tax increases. But we’ve heard almost nothing of the main problem that makes the budget so intractable.
It’s the elderly, stupid.
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Robert J. Samuelson
Samuelson writes a weekly column on economics.
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By now, it’s obvious that we need to rewrite the social contract that, over the past half-century, has transformed the federal government’s main task into transferring income from workers to retirees. In 1960, national defense was the government’s main job; it constituted 52 percent of federal outlays. In 2011 — even with two wars — it is 20 percent and falling. Meanwhile, Social Security, Medicare, Medicaid and other retiree programs constitute roughly half of non-interest federal spending.
These transfers have become so huge that, unless checked, they will sabotage America’s future. The facts are known: By 2035, the 65-and-over population will nearly double, and health costs remain uncontrolled; the combination automatically expands federal spending (as a share of the economy) by about one-third from 2005 levels. This tidal wave of spending means one or all of the following: (a) much higher taxes; (b) the gutting of other government services, from the Weather Service to medical research; (c) a partial and dangerous disarmament; (d) large and unstable deficits.
Older Americans do not intend to ruin America, but as a group, that’s what they’re about. On average, the federal government supports each American 65 and over by about $26,000 a year (about $14,000 through Social Security, $12,000 through Medicare). At 65, the average American will live almost 20 more years. Should these sizable annual subsidies begin later and be less for some? It’s hard to discuss the budget realistically if you ignore most of what the budget does.
That’s been our course. Obama poses as one brave guy for even broaching “entitlement reform” with fellow Democrats. What he hasn’t done is to ask — in language that is clear and comprehensible to ordinary people — whether many healthy, reasonably well-off seniors deserve all the subsidies they receive. That would be leadership. Obama is having none of it. But the shunning is bipartisan. Tea Party advocates broadly deplore government spending without acknowledging that most of it goes for popular Social Security and Medicare.
I have written about these issues for years. But facts are no match for the self-interest of about 50 million Social Security and Medicare recipients and a natural sympathy for older people and for people who eagerly look forward to retirement. Public opinion becomes contradictory. While 70 percent of respondents in a Pew Research Center poll judged budget deficits a “major problem,” 64 percent rejected higher Medicare premiums and 58 percent opposed gradual increases in Social Security’s retirement age.
What sustains these contradictions is a mythology holding that, once people hit 65, most become poor. This justifies political dogma among Democrats that resists Social Security or Medicare cuts of even one dollar.
But the premise is wrong. True, some elderly live hand-to-mouth; many more are comfortable, and some are wealthy. The Kaiser Family Foundation reports the following for Medicare beneficiaries in 2010: 25 percent had savings and retirement accounts averaging $207,000 or more; among homeowners (four-fifths of those 65 and older), three-quarters had equity in their houses averaging $132,000; about 25 percent had incomes exceeding $47,000 (that’s for individuals, and couples would be higher).
The essential budget question is how much we allow federal spending on the elderly to crowd out other national priorities. All else is subordinate. Yet, our “leaders” don’t debate this question with candor or intelligence. We have a generation of politicians cowed and controlled by AARP. We need to ask how much today’s programs constitute a genuine “safety net” to protect the vulnerable (which is good) and how much they simply subsidize retirees’ private pleasures.
Our politicians make perfunctory bows to entitlement reform and consider that they’ve discharged their duty, even if nothing changes. We need to recognize that federal retiree programs often represent middle-class welfare. Past taxes were never “saved” to pay future benefits. We need to ask the hard questions: Who deserves help and who doesn’t? Because Social Security and Medicare are so intertwined in our social fabric, changing them could never be easy. But the fact that we’ve evaded the choices for so long is why the present budget impasse has been so tortuous and why, if we continue our avoidance, there will be others.
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Ronald Reagan: 'Everybody that is for abortion has already been born'
"I never said I was worth it. I only said I wouldn't do it for less " William F. Buckley Jr.
Last edited by Fieldmouse; 01-02-2012 at 07:10 AM.
Interesting this should come up as I was just talking with my dad who is 70 about this. He is in a financial position where he does not "need" the social security money the government has taken from him. However he feels (justifiably IMO) that it is *his* money. He worked for that money and the government took it from him with the understanding that it would be given back upon retirement. Well now my dad is of retirement age and he wants his money. It is not his fault or problem that the government spent the money.
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Interesting this should come up as I was just talking with my dad who is 70 about this. He is in a financial position where he does not "need" the social security money the government has taken from him. However he feels (justifiably IMO) that it is *his* money. He worked for that money and the government took it from him with the understanding that it would be given back upon retirement. Well now my dad is of retirement age and he wants his money. It is not his fault or problem that the government spent the money.
I agree, I'm 62 and have been paying into the system since I was 16, it's not my fault the gobberment has squandered what they've taken from me. I sure don't plan on depending on them to help me out when I decide I'm not going to work anymore.
But it should be MY CHOICE! See what they do when you owe them money, I should have the right to throw all them all in jail if my money is not there when I retire!
Sorry but the facts are the facts. The money has been spent. No matter what the government has promised is was and always has been a lie. Fact one, it was set up as a safety net. Fact 2, it was always general revenue not earmarked in anyway. Fact 3, you have no legal right to any money. Fact 4, it has always been set up as a ponzi scheme. There are no investments for good reasons. The government does a very poor job picking winners and loosers. For example, Solyndra, GM...... The best example, there is no fricking money to pay a lottery of age. Fact 5, there is no Santa Claus, Easter bunny or tooth fairy, we can't afford 26k per year just because you reached 65. That's your problem, not mine. Those costs are just part of it. The last and most important fact, you didn't pay for all of it. Medicare costs on average, 150k/ person. However, the amount paid is only 50k/ person. Already pointed out, the government is slashing the payroll tax instead of tripling it to pay for promises.
The old guys get mad at these facts and feel burying the head is a better choice. There are laws in science you can't break. One very big law in science we are about to discover is unbreakable, the laws of economics.
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John Adams “The moment the idea is admitted into society that property is not as sacred as the laws of God, and that there is not a force of law and public justice to protect it, anarchy and tyranny commence.”
Ronald Reagan: 'Everybody that is for abortion has already been born'
"I never said I was worth it. I only said I wouldn't do it for less " William F. Buckley Jr.
The money has been spent. No matter what the government has promised is was and always has been a lie.
Which is why the system should be ended (it won't be I know that). The government will not keep its end of the bargain. A free people should not have their money taken from them for a lie.
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Quote:
Originally Posted by RobertSubnet
Interesting this should come up as I was just talking with my dad who is 70 about this. He is in a financial position where he does not "need" the social security money the government has taken from him. However he feels (justifiably IMO) that it is *his* money. He worked for that money and the government took it from him with the understanding that it would be given back upon retirement. Well now my dad is of retirement age and he wants his money. It is not his fault or problem that the government spent the money.
That is the way I see it Rob and Rev. I don't feel one bit of remorse when the 4th Wednesday of each month comes along. When paying in the max for close to 40 years what kind of a moron would say I don’t want it paid back? I view the mandatory withholding as a government contract. I paid in as required and am now withdrawing as per plan design. Change it on a go forward basis is fine with me but I am reasonably sure I will still get my investment back. Since I am in such great shape I can assume I will live until 90 or better. Plenty of time to receive a small 24K per year stipend on my investment.
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That is the way I see it Rob and Rev. I don't feel one bit of remorse when the 4th Wednesday of each month comes along. When paying in the max for close to 40 years what kind of a moron would say I don’t want it paid back? I view the mandatory withholding as a government contract. I paid in as required and am now withdrawing as per plan design. Change it on a go forward basis is fine with me but I am reasonably sure I will still get my investment back. Since I am in such great shape I can assume I will live until 90 or better. Plenty of time to receive a small 24K per year stipend on my investment.
And there is the story of the poster child of burying your head in the sand. The facts don't matter. What is left behind for the next generation doesn't matter. As long as the government can force the next generation to pay up,who cares?
The good news is the gravey train will becoming to an end much sooner than you think. We will see means testing implemented with in a decade or so. The system will revert back to a safety net. If your net worth is a few hundred k or more, you need you benefits cut. Got over 3/4 of a million, cut off.
__________________
John Adams “The moment the idea is admitted into society that property is not as sacred as the laws of God, and that there is not a force of law and public justice to protect it, anarchy and tyranny commence.”
Ronald Reagan: 'Everybody that is for abortion has already been born'
"I never said I was worth it. I only said I wouldn't do it for less " William F. Buckley Jr.
And there is the story of the poster child of burying your head in the sand. The facts don't matter. What is left behind for the next generation doesn't matter. As long as the government can force the next generation to pay up,who cares?
I guess that is what they get for wearing droopy pants with their underwear showing. The problem I have is that I am only 44 in the prime of my working years, and I have a feeling I am really getting screwed.
C. Davis
__________________ Am I greedy because I don't want to give you what is mine?
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Are you greedy because you want to take what is not yours?
It's the elderly stupid!
