L.A. Times Column: Deficit hawks' 'generational theft' argument is a sham

Los Angeles Times ^ | 02/27/2013 | Michael Hiltzik

[SeekAndFind]

[SNIP]

So here's the truth about the "generational theft" theme: It's wrong on the numbers and wrong on the implications.

Let's start with that 7-to-1 spending ratio on seniors versus children. Among the flaws in the calculation is that the vast majority of government dollars spent on children comes from state and local governments, which pay most of the cost of education. On a per capita basis, state and local spending on kids swamps the federal government's spending 8 to 1.

Moreover, there are twice as many children 18 and under as seniors 65 and over (this 2008 figure also comes from the Urban Institute report). Put the numbers together and you discover that spending by governments at all levels in 2008 came to about $1 trillion on seniors and $936 billion on children. In other words, very close to 1 to 1.

The notion underlying the comparison of spending on seniors and children is that "if you save a dollar on Social Security it would be transferred automatically to children," observes Theodore R. Marmor, an emeritus professor of public policy at Yale and a long-term student of social welfare programs. He traces this notion to deficit hawks and dismisses it as "not naive, but cynical."

That's because most of the spending on seniors is in Social Security and Medicare, and therefore has been largely paid for by those very beneficiaries over the course of their working lives.

Payroll taxes have more than covered what today's average retiree will receive back from Social Security. They won't cover the average payout on Medicare, but that's an artifact of uncontrolled healthcare costs, not of the structure of Medicare itself. Changing the terms of that program, say by raising the eligibility age (currently 65) won't save money and may actually raise costs.

[Lancey Howard]

You can't keep increasing entitlement spending, or any spending, and not increase the money coming in.

I agree. So how do you "increase the money coming in"?
(snap!) I know!
You lower tax rates! It's always worked before.

[rottweiller_inc]

I thought generational theft was when they steal from the next generational to pay for the programs today.

[redgolum]

Sure! That works under a few conditions, but the primary one is start cutting spending! Which seems to be the issue, no on wants to cut spending.

If you run a business like that, you quickly go under.