DadTalk

Boomers Robbing Children to Pay for Retirement, Columnist Warns

New York Times Op-ed columnist Nicholas Kristof must be channeling my spirit. The baby boomers are so focused on impending retirement that they have forgotten America’s children, he writes in a column called The Greediest Generation. I swear, I’ve never talked to the guy.

While things have been getting better for the elderly in this nation for decades, it hasn’t improved at all for children. Kristof writes:

Traditionally in America, the people most likely to be poor were the elderly. As recently as 1966, for example, 29 percent of Americans over 65 were below the poverty line, compared with only 18 percent of American children. …

As of 2003, the share of elderly below the poverty line had fallen by two-thirds to 10 percent – representing a huge national success. Retirement in America is no longer feared as a time of destitution, but anticipated as a time of comfort and leisure.

Well, under President Bush’s new social security plan, I’ll be working my entire life. No way I’ll ever be able to afford retirement under that scenario. But here’s the kicker:

On the other hand, the proportion of children below the poverty line is still 18 percent, the same as it was in 1966. And while almost all the elderly now have health insurance under Medicare, about 29 percent of children had no health insurance at all at some point in the last 12 months.

Actually, conditions have worsened for America’s youth:

One measure of how children have tumbled as a priority in America is that in 1960 we ranked 12th in infant mortality among nations in the world, while now 40 nations have infant mortality rates better than ours or equal to it.

Yet with boomers planning their retirements, both on the federal and personal levels, America’s children may face even greater problems:

With boomers about to retire, I’m afraid that national priorities will be focused even more powerfully on the elderly rather than the young – because it’s the elderly who wield political clout.

“The elderly are retired, and it’s easier to get them to go to rallies or write their congresspeople,” notes Heather Boushey of the Center for Economic and Policy Research in Washington. “Children can’t vote, don’t give money and have no power, and neither do their parents.”

What Kristof doesn’t mention here are schools. As boomers retire, they have less and less incentive to fund public schools. When I lived in Arizona, retirement communities repeatedly defeated school bonds even though the cities they were a part of were growing at double digit rates. Some incorporated retirement communities exist just so the elderly don’t have to pay taxes into school systems.

These communities are not isolated to Arizona; they have been springing up around the nation as boomers reach early retirement. These communities don’t even like kids, as this Del Webb policy illustrates:

Your friends and family are always welcome to visit, and in most communities, visitors under the age of 19 are able to stay with you for up to 3 months each year. A Sales Associate can provide you with more specific details.

Even worse, Kristof writes, the boomers are robbing the economic future of our children to pay for their retirements:

We boomers are also preying on children in a more insidious way: We’re running up their debts, both by creating new entitlement programs and by running budget deficits today. Laurence Kotlikoff, an economist and fiscal expert who with Scott Burns wrote the excellent and scary book “The Coming Generational Storm,” calls this “fiscal child abuse.”

Kristof’s admonishes today’s leaders to take action now:

The solution is not to force the elderly to get by on cat food again. But we boomers need to resist the narcissistic impulse to ladle out more resources for ourselves. Our top domestic priorities should be to ensure that all children get health care and to get our fiscal house in order.

Otherwise, we boomers may earn a place in history as the worst generation.

Here, here, Nicholas Kristof. This generation controls virtually all the major levers of today’s society, which range from business, to the government, to the media, to advertising, to the nation’s universities. While the generations following boomers are just coming into their own, they are completely outnumbered and have made only shallow inroads into the nation’s leadership positions. So for the foreseeable future, we’re in the hands of the baby boomers. Why does that leave me worried?

Think Hard About Bush Plan for Social Security

I’m still trying to wrap my mind around President Bush’s latest Social Security proposal. I would love to argue the specifics, but the plan is so complicated it may be weeks before I fully understand it. (I still have a full-time job and a family to worry about, you know.)

I do have a generalized understanding of the proposal, which involves something called “Progressive Price Indexing.” That means benefits would decline for everyone except the lowest economic class, reports the Center on Budget and Policy Priorities.

Conceivably, Americans from all walks of life eventually would wind up with the same benefit under the Bush plan. I say eventually, because benefits for those over 55 would not be touched, reports The Washington Post.

To give you an idea of how this would effect a person making $90,000 a year today and retiring in 2025, consider this table I derived from the Center on Budget and Policy Priorities:

Annual Social Security Benefits
For employee making $90,000 in 2005
Year || Current Plan || Bush Plan
2025 || $25,929 || 22,999
2045 || 32,153 || 22,829
2075 || 44,236 || 22,428
2100 || 58,150 || 22,428

As you can see, an upper middle class family would make considerably less under Bush’s proposed plan, but a middle class family would be hit even harder, because of a heavier reliance on Social Security dollars:

Annual Social Security Benefits
For employee making $58,411,000 in 2005
Year || Current Plan || Bush Plan
2025 || $21,228 || 19,190
2045 || 26,302 || 19,858
2075 || 36,254 || 21,100
2100 || 47,658 || 22,428

If you are younger than 55, you must sense the irony here: Bush is trying to pit the old against the young, parents against children. It’s an impressive sucker punch that may leave the younger Baby Boomers and all who follow paying for our elders retirement with nothing to show for ourselves.

That’s where private investment accounts come in. The plan Bush is proposing fits perfectly with private investment accounts, which would be the carrot demanded by the younger generation for accepting these huge cuts in their benefits.

That leaves one piece unspoken: the trillions of dollars the federal government would need to borrow to start the private investment accounts. More on that will come out later as a formal plan starts to wend its way through Congress over the next few months.

In the meantime, Americans need to think long and hard about this plan. With much of the safety net under the Middle Class already removed, do those under 55 have enough for their retirement years, even with private accounts? I suspect not, but that’s not how the Libertarians see it.

“What you’re going to see is an effort to scale back middle-class entitlements that many people do not need and to become more focused on the antipoverty aspects of these programs,” Michael Tanner, an expert on Social Security at the Libertarian Cato Institute, tells the Los Angeles Times. “We’re going to tell non-poor Americans that they are going to have to save more on their own and not depend on a transfer from government.”

What transfer? We pay in, we should get paid back. But then, that’s the type of fight Bush is hoping we sink into, because it strengthens his argument that private investment funds are needed.

Keep in mind, the new plan transforms Social Security from a retirement fund into more of a welfare program for only the poorest. But here’s the price in a nutshell: If you make middle class wages all your life but the bottom falls out of your 401k and pension plans, you could wind up as poor in retirement as those who spent their entire life at the bottom. Think it can’t happen? Ask retirees at United Airlines who have essentially lost their pensions and their company stock-based retirement funds.