December 11, 2013

What I Want for Me: Fewer Entitlements, More Taxes. It's Only Fair!

As I write, Congress is about to adopt a budget compromise that will avoid another government shutdown. But that action will only delay addressing the clash of generations. We're seeing a growing transfer of our nation's wealth from the increasingly disadvantaged young to the increasingly advantaged elderly. We're kicking this football down the field again. Some "progressive" Democrats in Congress are even proposing an increase in Social Security benefits. 

An 84-year-old lifelong liberal Democrat, I'm dismayed that many liberals insist on defending seniors' entitlements to the last dollar. It's a position that's politically expedient, but intellectually lazy. Even more stupid is the position of Republicans who vow never to increase taxes.

The Two Faces of Social Security and Medicare
Social Security was adopted because of the perception, accurate then, that the elderly were poorer and more vulnerable than everyone else. Though no longer valid, the view persists. And as senior power at the voting booth grows, politicians of all stripes fear touching Social Security and Medicare, the behemoths of federal spending.

Many seniors are poor, sick, and needy. No question: Social Security and Medicare should be preserved for them. But many of us are financially comfortable or rich, in reasonably good health, and more self-reliant than the old "elderly" stereotype suggests. Our taxes should be increased and our entitlements decreased.

Those adjustments are unlikely to happen, and -- as a result -- we're robbing our children and grandchildren who face more challenging economic conditions than we did. Those gigantic unnecessary entitlements are contrary to our country's interests; we should divert unneeded windfalls from well-off seniors and redirect the millions of dollars saved to -- just one example -- the National Institutes of Health, which is moving closer to breakthroughs on Alzheimer's, Parkinson's, cancer, and other diseases.

Poor Granddad? Check the Facts
Still not convinced we should spend less on seniors? Check out this data:
  • Social Security, Medicare and Medicaid account for 44 percent of federal spending, and thus far have been largely excluded from deficit-reduction measures. (The military takes up another 20 percent and also remains "off-limits" to budget cuts.)
  • Older Americans are generally healthier and wealthier than ever. Someone now 65 can expect to live another 19 years, an additional two years since 1990. We geezers enjoy relatively good health longer, since major disabilities now occur later and are better managed.
  • In 2012, 41 percent of those 65 and older were "satisfied" with their finances and 20 percent were "dissatisfied." Among people 35-49, only 25 percent were satisfied and 29 percent were dissatisfied.
  • The poverty rate for seniors in 2012 averaged 9.1 percent, much lower than the rate for children (21.8 percent) and lower than the overall U.S. poverty rate (15 percent).
  • Seniors also fared much better in the recent economic crisis. From 2007 to 2010, the median income for families under age 40 dropped 12.4 percent, to $39,644. For middle-aged families (41-61), the comparable decline was 11.9 percent, to $56.924. People 62 and up gained income. For those 62-69, income rose 12.3 percent, to $50,825. For those 70 and older, income rose 15.6 percent, to $31,512. Of course, family expenses drop with time: mortgages get paid off, work-related costs vanish, children leave home.
  • The young and middle-aged -- with lots of debt, and wealth concentrated in housing -- suffered huge losses from the financial crisis. With less debt and more diversified investments, older Americans fared much better. From 1989 to 2010, the median inflation-adjusted net worth of those 70 and older rose 48 percent, to $209,290. During those same years, net worth for people under 40 fell 31 percent. 
To repeat, I favor maintaining the financial and medical safety net for the elderly poor and close-to-poor. But we should gradually reduce the subsidies for seniors like me, reasonably well off or rich. 

As baby boomers enter the ranks of the elderly, our politicians will undoubtedly be even more afraid to adopt the reforms that are necessary and fair. Tragically, we'll continue to watch younger generations struggle and fail to enjoy "upward mobility," once a proud hallmark of American society.

Unlike our myth of America as a land of opportunity, data show we have lower -- not higher -- upward mobility compared with other wealthy countries.

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