The Clash of Generations

[MasterBlaster]

I don't usually agree with Thomas L Friedman, but this piece he wrote comparing Greek and American, old and young future(s) is just spot on.

http://www.nytimes.com/2011/07/17/opinion/sunday/17friedman.html

 

[clifp]

Over the years I've gone from a huge fan of Mr. Friedman, to becoming less and less impressed. This piece is the stuff I wish he'd do more of.

 

[ERD50]

He made some good points (too bad he couldn't have self-edited his one partisan jab), and I really wish the young people could understand that they are the ones affected the most. But they are busy getting their lives started, and enjoying being young, as they should.

This line said it well 'But those just coming of age today will never get a bite. They will just get a bill. And they know it.' Not sure they 'know it' or not, but if they do they need to act on it.

But what about this one - 'the generation that came of age in the last 50 years, my generation, will be remembered most for the incredible bounty and freedom it received from its parents'

Aren't the biggest expenditures SS, Medicare/Medicaid and Defense? Not too many boomers are collecting SS or medicare/medicaid? I think you could make a stronger case that the earlier generations did more 'taking' in that regard, since some of them received SS and had few or no FICA deductions. And it's not like we would be saying 'whippee, let's party and spend some of our kid's money on war machines!'. And the next generation is sharing in whatever protections we gained from that defense budget.

Now, if the trend was for the younger generation to be voting to cut all sorts of spending programs, and were aggressively pushing for a tax code with fewer special interest deductions, it would be clearer. I think they are at least as guilty of letting the politicians get away with this as we are.

Just my two cents.

-ERD50

 

[clifp]

Aren't the biggest expenditures SS, Medicare/Medicaid and Defense? Not too many boomers are collecting SS or medicare/medicaid? I think you could make a stronger case that the earlier generations did more 'taking' in that regard, since some of them received SS and had few or no FICA deductions. .

-ERD50

You realize that is dangerously close to being critical of the Greatest Generation. You know the one that survived the depression, saved the world from the Nazis and the Axis. Contained communism, put a man on the moon yada yada. Of course, their crowning achievement was the founding of AARP. AARP is like the ultimate missile defense shield that prevents criticism of the revered generation.

Not saying the boomer don't deserve criticism, just agreeing with you the current fiscal problems with SS and Medicare aren't the boomers fault.

 

[Independent]

I don't agree with this:

But those just coming of age today will never get a bite. They will just get a bill. And they know it.

I grew up in the 1950's and my kids in the 1980's. They certainly "got their bite". They had stuff growing up that was unthinkable in my childhood. They've enjoyed more stuff as they've reached young adulthood, too.

The funding for SS and Medicare is all about the fact that the WWII generation had three kids per couple, the boomers had two. If we had 50% more workers, we wouldn't be worrying about these programs. So, who benefitted from those smaller families? Did mom and dad live it up? or did the kids get more stuff?

But I understand that things stagnated from the 1980's to 2000's and they've gotten worse in the last couple years. Further, given both economic realities and selfish politicians, they aren't going to get better any time soon. I don't blame the kids for being pessimistic. I agree the gov't way overspent its income, but I'm not sure that only the older generation benefited from that.

I can agree with this:

a sense that the way capitalism played out in Egypt and Greece in the last decade was in its most crony-esque, rigged and corrupt deformation, letting some people get fantastically rich simply because of their proximity to power.

I think some of that applies to the US. When we talk about generation conflict, or political issues between the middle class and the poor, I always wonder if this is an example of "Let's you and him fight". Are we looking at the other generation and blaming them for our problems, when we should be asking if the system is rigged?

 

[foxfirev5]

You realize that is dangerously close to being critical of the Greatest Generation. You know the one that survived the depression, saved the world from the Nazis and the Axis. Contained communism, put a man on the moon yada yada. Of course, their crowning achievement was the founding of AARP. AARP is like the ultimate missile defense shield that prevents criticism of the revered generation.

Not saying the boomer don't deserve criticism, just agreeing with you the current fiscal problems with SS and Medicare aren't the boomers fault.

I totally agree with the above statement. Each generation will always have their own perspective. I have tough time lumping all people in a generation together. As a boomer I grew up without a lot of the perks of this generation. Yet a mile away kids grew up with everything they wanted. Worked hard, saved my money and now they want to change the rules. I guess that's the way it goes. Fortunately I saved for a rainy day and invested without any major mistakes. However don't blame my "generation"

 

[foxfirev5]

Furthermore, what makes a generation great? We are all a product of our experiences. Who's to say that the boomer generation would not have reacted if faced with the same set of circumstances. To paraphase a great movie from the time, The Grapes of Wrath, " It don't take no nerve to do somethin' when you don't have a choice."

 

[Mulligan]

The funding for SS and Medicare is all about the fact that the WWII generation had three kids per couple, the boomers had two. If we had 50% more workers, we wouldn't be worrying about these programs. So, who benefitted from those smaller families? Did mom and dad live it up? or did the kids get more stuff?

US population has went from 225 million in 1980 to 308 million in 2010, so population is growing fast despite smaller families. The problem is the ratio of people actually working paying into SS and Medicare compared to amount of people drawing it has shrank considerably over the generations. I read an article the other day that the reforms in those programs in the early 80's actually accomplished what it set out to do in preparation for first wave of baby boomers. Of course the raiding of the funds was not factored in!

 

[ERD50]

Not saying the boomer don't deserve criticism, just agreeing with you the current fiscal problems with SS and Medicare aren't the boomers fault.

It wasn't meant as a criticism at any rate. Just an acknowledgment that some of them paid nothing/little into the SS system. It's OK, but it is what it is.

I don't agree with this:

But those just coming of age today will never get a bite. They will just get a bill. And they know it.

I grew up in the 1950's and my kids in the 1980's. They certainly "got their bite". They had stuff growing up that was unthinkable in my childhood. They've enjoyed more stuff as they've reached young adulthood, too.

That's a good point too. I figured I was 'middle class' when I was 10 - we seemed to have a bit more than some people in our neighborhood, and a bit less than others. But we lived in a tiny 2 bedroom house, 3 kids in a single bedroom that was smaller than any of the rooms my kids had to themselves (cue the Four Yorkshiremen!).

-ERD50

 

[Texas Proud]

It is funny that the baby boom generation is the one being blamed... as other have pointed out the biggest spending is in SS and medicare and it was just this past year when baby boomers started to get some...

Now, I do agree that the rest of the spending by gvmt has been driven more by baby boomers than others... the nanny welfare state is mostly to benefit the masses that include all groups, but was expanded during the boomers watch...

I think Greece is different than the US as they spent a lot more than we did and little on military...

 

[clifp]

The funding for SS and Medicare is all about the fact that the WWII generation had three kids per couple, the boomers had two. If we had 50% more workers, we wouldn't be worrying about these programs. So, who benefitted from those smaller families? Did mom and dad live it up? or did the kids get more stuff?

US population has went from 225 million in 1980 to 308 million in 2010, so population is growing fast despite smaller families. The problem is the ratio of people actually working paying into SS and Medicare compared to amount of people drawing it has shrank considerably over the generations. I read an article the other day that the reforms in those programs in the early 80's actually accomplished what it set out to do in preparation for first wave of baby boomers. Of course the raiding of the funds was not factored in!

I came across an early study by the social security trustee from 1945. In their pessimistic case the assumed 20% less workers/retiree by the year 2000, than we had/have and their optimistic case was just a tad more.

The fascinating thing was the population projection which the confidently predicted would be between 87 and 90 million by the year 2000.

This leads me to conclude that predicting the future is a fools errand.

 

[SteveR]

Overall, I think the current kids coming of age; 20-25 year olds will indeed get the short end of the stick from the perspective of having to pay more and getting much less over their life span for SS and Medicare if it survives.

Part of the problem is pay out more than these systems take in. During some of my genealogy projects I have been working on I have run across numerous instances of the pre-Greatest Generation (their parents), who died with SS benefits but paid next to nothing into the system. Add to that the later generation (baby boomer parents) who paid in far less of their income than they are now taking out of the system. My mother is a great example. Her SS payments are many times greater than her (and employer share) inputs during her working career. Add to this our current problem with illegal aliens taping into the system in various ways and you have a system that is destined to cost many times more than was ever dreamed of.

The fault is the lack of ownership by our government and their desire to not be the ones to have to modify the system to the detriment of the current generation using the system the most. "Don't touch my SS or Medicare" is a cry from a generation that have taken out many many times more $$$ than they put into the system. The baby boomers will do the same but on a different scale; they put a lot more in but due to their numbers and financial success, will also take out more than they put in. Who makes up for this difference? Everybody that works.

One thing about Medicare that some folks fail to understand is that it is REQUIRED, even if you have full coverage by private insurance, as we are. The annual monthly payment for medicare which is deducted from SS payments is means tested. Higher incomes require higher payments. Add to that the need to maintain private insurance with their ever increasing payments and co-payments and the current retiree of better than average means may well pay well over twice a much for their insurance as it they had only one organization responsible for their medical coverage. Now they get the same or even a reduced benefit but pay more than twice as much and also create a paperwork mountain due to dual (not really) coverage and claims reporting.

Seems to me those that are covered by private insurance should be able to stay out of Medicare and let their insurance company carry the freight for them into retirement instead of acting as a catastrophic health event payment angel (with limitations) and RX coverage.

Raising the top level of income to pay for the shortage in these systems will eventually happen...probably should have happened years ago but no one wanted to push for it enough to make it happen due to political fallout. Means testing for monthly payments into Medicare will continue to create higher and higher payments too. My guess is that most successful babyboomers will be footing a lion's share of their own coverage through these higher monthly payments.

My two sons are 6 years apart and the differences in their outlook for their working lives and eventual retirement are different. The older Gen X child benefited from the higher standard of living and got more than his fair share of "toys". The younger child was at the tail end of this gravy train (mostly due to divorce and lower standard of living for both parents). He is hitting brick walls on finding good careers...not just a crappy job but a true career. His financial issue are huge for a kid of 27 and his own view of his career is dim. The older child in his 30's is more settled in his career and seems more like the baby boomer generation than his younger brother. Some of it is absolutely individual circumstances but the current and future financial issue the world faces will be a major drag on the economy for many years to come...perhaps for the foreseeable future.

I am glad my w*rking career is behind and not in front of me in this day and time.

OBTW, China will collect on the IOUs we have been writing them sooner than later and we will be on the short end of that arrangement. Any idea what that means for this country?

 

[chinaco]

I think you can read this article and see comments that would lead one to interpret it in many ways... whatever the political persuasion!

He tries to make some connections about what is happening over there and in the US. There are some similarities but there are also major differences!

The US... is in a different state (better off) and the debate.... Well there is high unemployment (but not in the number you see over there)... and there is not an imminent crisis (unless our politicians create one)...

Right now it is a bit of a philosophical debate... and a bit of a practical debate.

Unemployment issue aside... which is not completely controllable by anyone...

It is about how much funding will be made for certain types of programs and how to pay. This runs the entire range from a bloated and wasteful defense budget (including 2 wars), Education, Safety Nets for the poor all the way to SS and Medicare.

Voters will be making some fundamental decisions with their votes this next election that will shape their futures in several ways.

 

[ERD50]

I think I used this perspective before - we currently overspend revenues by ~ 1.6x. So if we move much closer to balancing that, it means roughly 30% higher taxes with 30% less spending. That's a hit to the future standard of living, but it doesn't turn us into a third world country either.

And a portion of that is waste, so that has no negative effect.

We gotta do it. I forget what the practical limit for borrowing is for the US, but at 1.6x, it's growing at a fast rate.

-ERD50