The elderly are ruining America's future
The Geezers’ Crusade
The odd thing is that when you turn to political life, we are living in an age of reverse-generativity. Far from serving the young, the old are now taking from them. First, they are taking money. According to Julia Isaacs of the Brookings Institution, the federal government now spends $7 on the elderly for each $1 it spends on children.
Second, they are taking freedom. In 2009, for the first time in American history, every single penny of federal tax revenue went to pay for mandatory spending programs, according to Eugene Steuerle of the Urban Institute. As more money goes to pay off promises made mostly to the old, the young have less control.
Third, they are taking opportunity. For decades, federal spending has hovered around 20 percent of G.D.P. By 2019, it is forecast to be at 25 percent and rising. The higher tax rates implied by that spending will mean less growth and fewer opportunities. Already, pension costs in many states are squeezing education spending.
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It now seems clear that the only way the U.S. is going to avoid an economic crisis is if the oldsters take it upon themselves to arise and force change. The young lack the political power. Only the old can lead a generativity revolution — millions of people demanding changes in health care spending and the retirement age to make life better for their grandchildren.
It may seem unrealistic — to expect a generation to organize around the cause of nonselfishness. But in the private sphere, you see it every day. Old people now have the time, the energy and, with the Internet, the tools to organize.
The federal government's expenditures on children have shrunk as a share of the budget over the past 30 years. In 1960, about 20 percent of the federal budget went to programs dedicated to the health, development and education of Americans under the age of 18. Today it's 10 percent and falling.
By contrast, spending on the elderly has skyrocketed, doubling as a percentage of the budget during that time. Spending on Social Security and Medicare alone makes up close to 40 percent of the budget. In a decade, that share will rise considerably, perhaps to as much as half the federal budget. Whatever the exact percentages are - what you define as programs for children and the elderly can vary - the conclusion is clear: The federal government spends between $4 and $5 on elderly people for every dollar it spends on children.
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In fact, the contrast between what we spend on the old and the young is part of a broader problem that threatens America's economic future. Look at the economic debate in Washington: We continue to avoid dealing with the large entitlement programs and the largest domestic giveaways, such as the tax deduction for mortgage interest. No tax increases, such as a value-added tax or a gas tax, are even remotely possible. Instead, legislators make a show of cutting the budget by trumpeting the savings in the much smaller pie of discretionary spending, slashing education, infrastructure, science and other such programs.
The net effect is that the United States will continue to massively subsidize consumption and starve investment. This is exactly the opposite of what history tells us produces long-term economic growth. The American economy is already far too focused on consumption and credit. And not only will this approach have limited benefits to the budget - any fiscal discipline that does not tackle entitlement spending is a charade - but we are cutting in precisely the areas where we should increase spending. From China to South Korea to Germany, countries are making large investments for future growth at the moment we are pruning such expenditures.
Again, the reasons are clear: There is no political will to take on the subsidies and spending that are consumption-related. And yet we need to find budget cuts, so lawmakers look to the easy place to find them: on the investment side of the budget. The result, however, will be disastrous for the country's long-term health.
President Obama sounded this call for investment in his State of the Union address. His budget tries to preserve and even expand spending in key areas that will contribute to future growth. But he faces a Republican Party that is fixated by a budget-cutting mentality but refuses to propose entitlement cuts and in which a sledgehammer is preferred to a scalpel. And America's business community is sitting on the sidelines, betting its future on the growth in foreign countries (which themselves are making huge investments for their growth).
America's growth and prosperity over the past few decades have been consequences of major investments made in the 1950s and 1960s. Some of those are the interstate highway system; a public education system that was the envy of the world; massive funding for science and technology that produced the semi-conductor industry, large-scale computing, the Internet and the global positioning system. When we look back in 20 years, what investments will we point to that created the next generation of growth for the next generation of Americans?
Just because this is an awful time to discuss these questions does not mean they shouldn't be discussed. The longer we wait, the more acute our fairness dilemma grows. We can't deal with it unless public opinion is engaged and changed, but public opinion won't be engaged and changed unless political leaders discard their self-serving hypocrisies. The old deserve dignity, but the young deserve hope. The passive acceptance of the status quo is the path of least resistance - and a formula for national decline.
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