The Generation Gap (Social Security)

U.S. News & World Report ^ | 23 May 2005 | Lou Dobbs

[weegee]

I'm feeling a little guilty these days. in fact, President Bush sometimes makes me feel awful. He and I both hail from Texas, we've both been Republicans, and we're about the same age. But he's constantly reminding all of us baby boomers that when we first started working each of us was 1 of nearly 7 workers paying Social Security taxes for every retiree. By the time we retire, however, there will only be two workers supporting each of us. As we say in Texas, that ain't right.

But I do wish the president, with a lot of heavy burdens that come with his high office, wouldn't be quite so concerned about us baby boomers. After all, Bush has a lot to worry over: a war against radical Islamist terrorists, wars in Iraq and Afghanistan, a record $412 billion budget deficit, a $617 billion record trade deficit, and of course he has a bunch of economic advisers I wouldn't put in a posse. I sure don't want to be a further burden to the president or anyone else, and I'm sure a lot of my fellow baby boomers feel the same way.

For one thing, we're not quite in the fix the president seems to think: In fact, we boomers are pretty well fixed. Our total net worth is estimated to be $17.5 trillion, and we've got retirement assets of $2.8 trillion, according to the Census Bureau. And while we may be getting older, we're not exactly folding up. In fact, a recent Merrill Lynch survey shows that more than three fourths of us plan to keep working in retirement. We may not make as much then, but we'll continue to earn and add to those boomer billions.

The president and all the rest of us who will be moving into retirement in the years ahead might do a lot more head scratchin' about those young folks who might have to take care of us. They'll have to face the tremendous debt we've built up for them as a result of our budget and trade deficits, our failure to invest in our public education system, and the startling decline in the national savings rate and employer-sponsored retirement options like pension plans. They're the ones who'd better be checking for snakes in their bedrolls.

Baby boomers are not the ones going bankrupt. In fact, Americans between the ages of 25 and 34 now have the second-highest rate of bankruptcy. In first place are those ages 35 to 44.

"It's taking much longer for gen X-ers to achieve financial security, to get out of the rough-and-tumble 20s into real financial stability on the path to savings," says Tamara Draut, director of the Economic Opportunity Program at Demos, a nonpartisan research group. "For a lot of young people, that's just not going to happen at all. They will still be living paycheck to paycheck well into their 40s, even at the upper end of the income spectrum."

Unschooled. Our generation ranks first among all industrialized nations in the number of high school diplomas held by those between the ages of 45 and 64. Our 35-44 age group, however, is in fifth place, and our 25-to-34-year-olds place 10th. Considering that a large percentage of new jobs will require some level of postsecondary education, this is an extremely troubling trend.

The portion of Americans who hold at least a bachelor's degree has risen from 17 percent three decades ago to 28 percent. But those graduates who are completing college are finding that a degree isn't an automatic ticket to financial stability. While more people are attending college, they're leaving school saddled with an average debt of nearly $19,000. Recent college graduates owe 85 percent more in student loans than did their counterparts of a decade ago, according to the Center for Economic and Policy Research. What's more, their annual earnings may be higher than those of high school graduates, but they aren't rising faster than inflation.

The president might want to pull up on privatizing Social Security, too. That won't help the program. Means-testing will, and a bunch of us who don't need Social Security would understand giving up a little for our fellow citizens. And younger Americans may need more help than we older folks do. The Center for Economic and Policy Research estimates that under the proposal to change the indexation formula for benefits, an average worker now in his or her early 20s would receive $152,000 less than the currently scheduled benefits.

Instead of wasting time figuring out how future generations will support the baby boomers, it just might be we boomers who end up supporting America's youth. Now I reckon that's what we'd call a real retirement crisis.

[weegee]

The Me Generation continues to be focused on self.

Fixing Social Security when 2 workers will be supporting every retiring boomer is about protecting the workers more than it is about protecting the Boomers ("In fact, we boomers are pretty well fixed.").

"Means testing" just proves that SS has been just another tax all along. I thought there were oppositions to cutting peoples' social security. Denying some (who are "too well off" does just that).

[thoughtomator]

What do the baby boomers expect? They've known their entire lives that they were providing for their parents with money stolen from their children. Of course they're set - they didn't have to pay for any of the things that they foisted off to the following generations, they just "borrowed" it from posterity knowing it would be someone else who would have to pay it back. They almost deserve confiscatory socialism.

[Go_Raiders]

Gee, it turns out Lou knows even less about Social Security than he does about the Stock Market.

What a tool...

[foofoopowder]

Social Security should be closed down. Everyone should be given the option of taking a lump sum cash settlement, right away. This would equal aggregate employee and employer contributions, plus some interest (maybe 2.5% annual rate). After all, we Do have an account balance, right? :)- If this were done, most people under about 40-45 years old would bail out. Those approaching or in retirement would stay with it. More debt would fund the payments, which is the cost of the "reorg". (Any solution will involved more debt, except maybe Higher and Higer Taxes!) The Socialist redistribution of income would eventually die, as retireees die and the Ponzi scheme is closed to new suckers. (This still leaves Medicare/Medicaid to be changed/terminated, before the cost destroys the U.S.)

[porte des morts]

(This still leaves Medicare/Medicaid to be changed/terminated, before the cost destroys the U.S.)

IMHO, Medicare/Medicaid is going to be a problem that makes the SS scenario look like a walk in the park.

[toothless_elk]

What do boomers expect??? I'll tell you snapper- when I retire
I will have paid SS taxes for over 50 years ! You bet your *ss
that I expect to get something in return !

I didn't set up this system, so don't paint all "boomers" with
a broad brush.

[thoughtomator]

When I retire I will get $0 because the system will long be bankrupt - in large part because the baby boomers will have voted to maintain the status quo in the full knowledge that it was unsustainable. I expect nothing in return for my SS taxes... I view it as just another add-on to my income tax.

[weegee]

Social Security is a scam on several counts.

Privatization means that the government (A) could not borrow the funds anymore for pork projects and (B) could not play up to the voters by promising to "save" it or get them "higher" checks.

The current talk of privatization would permit those who want to keep with this government system to do so. They should not be permitted to hold everyone else back.

[weegee]

Getting you to accept the concept that you won't get the money is just the first bit of the bad news. Candidate Jerry Springer was also pushing for exempting the poor from paying into Social Security.

Expect your share of the SS tax to go even higher in future decades.

[Niuhuru]

Half the reason we'll lose out on SS is the leeches and parasites. So I have a plan: shoot and/or deport the illegals, sterilze the chronically promiscuous so we don't have to pay for their damn brats, then stop sending money to foreign pissholes like Africa. Then, and here's something I doubt our politicians have thought of, cut the pork and figure out a way to penalize companies who ship our jobs overseas. Oh, and instigate a double tax on those who hide money overseas in tax havens. I know it's their money, but they should be paying their rightful share if they advocate it to others.

[Luke]

Almost had me going there... until "The president might want to pull up on privatizing Social Security, too. That won't help the program. Means-testing will, and a bunch of us who don't need Social Security would understand giving up a little for our fellow citizens.

Sounds like it comes right out of the Liberal handbook.

[ThinkDifferent]

"Means testing" just proves that SS has been just another tax all along

Well yeah, that's exactly what it is. And it's a regressive tax at that, a primary effect of which is to make it much harder for low-income workers to save anything.

[ACDSWIZ]

And where would they get the cash for the lump sum? Steal it from someone else?

[two134711]

Ditto. They can keep every penny I've put into SS for the past 9 years (I'm only a lowly 27 year old so perhaps my opinion has little merit). Let me invest the money I make in real estate, adult stem cell technology and funeral homes; I think I'll do fine without SS.

[ThinkDifferent]

But he's right. There are exactly three solutions for Social Security: raise taxes, cut benefits, or increase the deficit. Private accounts are nothing more than a combination of benefit cuts and tax cuts, with the stipulation that you can only invest the money from the tax cut in government-approved ways.

It seems obvious to me that cutting benefits is much better than raising taxes or increasing deficit spending. And as a practical matter, you're not going to be able to cut benefits for those for whom SS is their only source of income. Ergo, means testing.

[foofoopowder]

As I said, "More debt would fund the payments, which is the cost of the 'reorg'".

There would be no future, additional obligation to those who have (wisely) taken the lump sum payment. And they would stop paying SS taxes, leaving them free to save and invest more on their own.

[CompSciGuy]

I agree, I am a Gen X'er, I figure I am not going to get any money. Let's kill the scheme and not indoctrinate any more suckers. Let the Boomers take SS with them to their graves, Ponzi scheme it is...
Cheers,
CSG

[qam1]

Xer Ping

Ping list for the discussion of the politics and social (and sometimes nostalgic) aspects that directly effects Generation Reagan / Generation-X (Those born from 1965-1981) including all the spending previous generations (i.e. The Baby Boomers) are doing that Gen-X and Y will end up paying for.

Freep mail me to be added or dropped. See my home page for details and previous articles.  

[ex-snook]

"By the time we retire, however, there will only be two workers supporting each of us. As we say in Texas, that ain't right."

The workers are still there only now they are in China. If Clinton-Bush had not exported the jobs for the workers, the ratio would be in good shape. The answer is put to a SS tax on imports.

[Army Air Corps]

I have thought that the SS system was a joke since I was in middle school lo the many moons ago. If a kid in junior high can see that it is a joke, then the emperor truly has no clothes.

[xrp]

Means testing should include an assessment of a would-be retirees entire financial history. For instance, did the individual earn $35,000/year for life and buy $5,000 in booze and cigarettes yearly as opposed to someone who earned $35,000/year for life and bought only $500 in booze and invested $4,500 wisely. If person #1 squandered potential investment money, that person shouldn't get a leg up on anyone else.

It is pathetic that I should have to pay for someone who doesn't plan well for life. Why should I have to subsidize all the fat, lazy, careless, stupid people in America?

I exercise frequently, eat healthy and use a good financial advisor to make sound investments and build my financial portfolio. Why am I being punished?

[dakine]

Life's not fair...pay-up!

[Nick Danger]

This article is just anti-Bush spear-throwing written for stupid people.

When he's trying to make it sound like Social Security doesn't need reform, Dobbs tells us that "we boomers are pretty well fixed. Our total net worth is estimated to be $17.5 trillion, and we've got retirement assets of $2.8 trillion."

In the next paragraph he's trying to foment a little generational class struggle, so he talks about the "startling decline in the national savings rate and employer-sponsored retirement options like pension plans."

Now if you're stupid, you don't notice that the same guy just told you that the boomers are 'pretty well fixed' because they have $20.3 trillion accumulated, and then turned around and said that the savings rate sucks.

If you're not stupid, you think right there, "Aww, this guy's just throwing spears to throw spears. He isn't making any sense."

Furthering the class struggle theme, Dobbs tells us that those poor X-ers "will still be living paycheck to paycheck well into their 40s, even at the upper end of the income spectrum."

If you're stupid, you read that and think, "That is so unfair." But if there are brain cells between your ears, you ask whose fault it is if you're at the upper end of the income spectrum and you're still living paycheck to paycheck. Hello? Maybe you shoulda gone with the Ford instead of the 666i.

And no offense, but speaking as a boomer with brains between his ears, I do not want to hear one frigging word from some media liberal about "our failure to invest in our public education system." Not one word. Money is not the problem with the public education system. Liberals are the problem with the public education system.

[kabar]

IMHO, Medicare/Medicaid is going to be a problem that makes the SS scenario look like a walk in the park.

That's not just an opinion, that's a fact. The unfunded liability of Medicare is a factor of four compared to SS and the collapse will come sooner. I predict health care will be the big issue in 2008, not immigration or SS.

[kabar]

The workers are still there only now they are in China. If Clinton-Bush had not exported the jobs for the workers, the ratio would be in good shape. The answer is put to a SS tax on imports.

Even if we had the jobs, we wouldn't have the workers unless we imported them. It is a matter of demographics. We have a huge baby boomer cohort that is getting ready to retire. Approximately 46 million Americans receive SS checks (32 million retirees, 7 million survivors, and 7 million disabled workers.) By 2030, there will be 70 million Americans of retirement age--twice as many as today. We are an aging population with a birth rate just above replacement.

When SS started in 1937 we had more than 40 workers per retiree, in 1950, there were 16, and now we have 3.3 workers. In 2030 there will be two workers for every retiree.

[rolling_stone]

It is pathetic that I should have to pay for someone who doesn't plan well for life. Why should I have to subsidize all the fat, lazy, careless, stupid people in America?

I exercise frequently, eat healthy and use a good financial advisor to make sound investments and build my financial portfolio. Why am I being punished?

Amen to that! Social Security is nothing more than a pyramid scheme and its promoters belong in jail. Give everyone the option of being in or out of SS and you will see a split right down self responsibility lines. It wasn't totally bad when first implemented, but it was like opening Pandora's box since then...the time of reckoning is getting closer starts in 2009...means test fails to recognize exactly what you point out..those that take personal responsibility for their lives and future and would punish them for their being responsible..not a good message to send...its kinda like amnesty for illegals..another Brilliant idea from the Texas Cowboy.

[auboy]

Thank you for expressing what I wanted to say. I'm sick and tired of generational warfare. Any American who has ever paid into SS should direct their wrath and throw their spears at the real culprits, the US Congress, especially the Democrats. They've had approximately 70 years to "fix" it.

From some FReepers' comments, you would think that boomers have enjoyed paying FICA taxes for 45 years. Well, I have never enjoyed it. Liberals started SS, and have guarded it like it was the family jewels. They still are.

[kabar]

Dobbs is right about one main point. We have seen a major transfer of wealth from the young to the old. SS, Meidcare (including the new perscription drug beneftit,) and other entitlement programs are running amok with no controls. They are on automatic pilot with rate increases tied to COLA, not our ability to afford them.

Social Security pays more than $450 billion in benefits each year. If nothing is done, by 2060, the combination of Social Security and Medicare will account for more than 71 percent of the federal budget.

The national debt has now passed $7.50 trillion. Thus,the ceiling imposed on the national debt by the Congress has just had to be raised to $8.18 (actually 9 now)trillion. Because of the Treasury's financial legerdemain, the real number is slightly above this ceiling. Per capita, this is more than $25,300 for every man, woman and child in the United States. Federal taxes in excess of $1,140 per year must be collected for every man, woman and child in the United States simply to pay the interest due on the national debt. Our annual appropriations for virtually all other Federal activities pale in contrast with the line item for Federal debt service.

Approximately 17 cents out of every dollar of total tax revenue collected is immediately used merely to pay the burgeoning interest on the Federal debt. This is now surpassing the costs for our entire defense establishment, and it is exceeded only by the revenues needed to fund the total Medicare and Medicaid programs. (Ostensibly, Social Security is funded independently.) We are held hostage by this horrendous debt; 17 cents is the ransom to be paid out of every dollar we must cough up in taxes.

We are headed for a big train wreck. Something needs to be done about these entitlement programs sooner rather than later. Germany and Russia are cutting benefits to the elderly now. We could find ourselves in a similar position.

[weegee]

The story of the Ant and the Grasshopper has been lost for the ages. Now the ant colony is considered racist and greedy.

[weegee]

Birthrate would have been millions higher. There has been a mass slaughter of babies in the decades since abortion was legalized. Enough dead to make Stalin blush.

[k2blader]

Getting rid of SS is the only way to fix it. If only the older folks would think of their children and grandchildren.

[Mears]

"including all the spending previous generations (i.e. The Baby Boomers) "

---

Hey,can those of us from The Silent Generation participate? We are a "previous generation" too, or are we being excluded by the Boomers?

[kabar]

Birthrate would have been millions higher. There has been a mass slaughter of babies in the decades since abortion was legalized. Enough dead to make Stalin blush.

True, but it is not something you can reverse quickly. It is like turning an aircraft carrier around. An increased birth rate won't help us for the forseeable future.

[kabar]

Getting rid of SS is the only way to fix it. If only the older folks would think of their children and grandchildren.

Older folks vote in greater numbers. The young aren't as politically involved. If they want to change things, they will have to become politically active. Otherwise, they will pay and nothing will be there by the time they get ready to retire.

[LibertarianInExile]

Actually, I don't think his point was that Bush was wrong about SS, just that Gen X is getting screwed hard, and that Bush should play to that field instead of the Boomers.

What you should have said is 'it turns out Lou knows even less about POLITICS than he does about the stock market.' Because the Boomers are still bigger voters than Gen X, unfortunately.

[clyde asbury]

..when I retire I will have paid SS taxes for over 50 years ! You bet your *ss that I expect to get something in return !

If you've had homeowners insurance with the same company for years, you will go to them and tell them you expect something in return for the premiums you've paid - if you have any integrity.

Free money!

[k2blader]

I see. So it's the young folks' fault that they're going to be taxed to death by their parents, grandparents, and aged strangers.

BTW, I assume you meant the young "will have to become politically active and only vote Republican," as if somehow voting Republican will be the miraculous cure for socialism.

If only.

[kabar]

I see. So it's the young folks' fault that they're going to be taxed to death by their parents, grandparents, and aged strangers.

It is if they don't do anything about it. If they think that the old folks are going to have pity and cut back on their benefits, the young are delusional.

BTW, I assume you meant the young "will have to become politically active and only vote Republican," as if somehow voting Republican will be the miraculous cure for socialism. If only.

Regardless of party, they will have to vote their own interests. Those under 30 are very supportive of personal accounts from a carve out of SS. They need to translate that support into political action. If they are stupid enough to stay on the sidelines, they deserve what they get.

FYI: I just signed up for SS at 62. I have a generous federal pension of over $100K and now SS, which I last contributed to in 1972. It is a minimal amount, but I have no intention of giving it up. That's the way the system works.

[clyde asbury]

If they think that the old folks are going to have pity and cut back on their benefits, the young are delusional.

The younger cohorts may simply pass the bill down when they're older.

*Here's a gift from your grandparents*

[k2blader]

Well, as long as you know the SS check you're receiving is money taken forcibly from today's workers.

Your attitude is exactly why socialism is being advanced rather than conservatism.

[clyde asbury]

That's the way the system works, grandchildren. You deserve what you get.

[kabar]

Well, as long as you know the SS check you're receiving is money taken forcibly from today's workers.

Not by me. I am playing according to the rules of the game. Your contributions are appreciated. I hope there is a system for you as well.

Your attitude is exactly why socialism is being advanced rather than conservatism.

My attitude? I didn't invent SS. I paid into it for ten years. Whatever benefits I receive are based on a system established democratically by our elected representatives. I am arguing strongly for SS reform. It is a Ponzi scheme. It needs to be changed for the benefit of people like my daughter. However, if you expect me to turn down SS in the interest of the greater good, that's another story.

I don't know how old you are, but I trust that you are politically engaged in getting the system reformed. I am.

[kabar]

Excellent cartoon. It speaks volumes about what SS is all about. It should be exhibited at every Dem gathering. It would also make a great Tee shirt.

[clyde asbury]

the SS check you're receiving is money taken forcibly from today's workers.

Not by me. I am playing according to the rules of the game.

Taxes are enforced by force.

Terri Schiavo's death was such a shame.

[kabar]

No taxation without representation. I agree on Schiavo. Besides the moral issue, any parent could identify with her parents.

[clyde asbury]

I agree on Schiavo.

Generational "warfare" is an exaggeration, but not by much.

Nothing personal, but you might want to give my Schiavo comment a little more thought.

[kabar]

Nothing personal, but you might want to give my Schiavo comment a little more thought.

A little too cryptic for me. I agreed with you. It was a shame.

[cherry]

If I haven't been paying for everybody and everything all these years, I sure wish I knew where all those thousands upon thousands of dollars in taxes have gone.....I certainly don't have that money.......

Lou is right about one thing.....the younger people are having a worse time than most of us did.... some of it by their own accord.....

they pay more taxes, have to pay more and more of their own medical premiums, higher insurance rates, and there just are not that many bread and butter type jobs anymore where you could work your whole life, and get a pension.....

pensions in the private sector are out....

[cherry]

well, neither my hubby nor I have pensions, thanks to bankruptcy of his company, so we will indeed be needing that SS money, so it better be there for us.....

I don't want further deficits, but why is SS always fixed on my back....by increasing the tax and by extending the retirement age?

[cherry]

"I have a generous federal pension of over $100K and now SS, which I last contributed to in 1972."

people in your bracket should never get SS .....

federal employees who get pensions of $100K are the reason our country's national debt and deficit are astronomical.....

frankly, no one is worth that......