You hear a lot these days about the coming war between the generations.
The next young-versus-old blowup, we are told, will not be over hemlines or rap music. It will be about money: who pays and who gets.
The early skirmishes have broken out among the Washington think tanks, in certain magazines and on newspaper op-ed pages. The issue has even intruded into the generally idea-free zone that is presidential politics, thanks to a remark by Ross Perot that the would-be presidential candidate probably wishes he never made.
Reduced to basics, the fighting words are these: America has over-committed itself to its senior citizens. Unless benefit levels are reduced or eligibility curtailed, the Social Security and Medicare programs are going to impoverish the next generation of American workers. The fiscal time bomb will explode midway through the next decade, when the first wave of postwar Baby Boomers reaches retirement age.
When it happens, according to certain public policy experts, America`s young workers will rise up as one and throw off the yoke of golden age
”entitlement” programs. Why should they, the argument goes, pay for ever-increasing FICA taxes that maintain the elderly in relative affluence while their own economic fortunes are snuffed out by a lack of investment in more productive areas?
The warfare scenario was laid out in April`s edition of The Atlantic magazine by policy analysts Neil Howe and Phillip Longman:
”Today more than 60 percent of all federal benefit spending flows to the 12 percent of Americans who are age 65 or older,” they wrote. ”As long as the welfare state allocates most benefits on the basis of seniority alone, the cost will grow geometrically as the size of the elderly population increases.”
Howe and Longman wind up their statistics-filled piece with this zinger:
”A society that cannot find the resources to pay for 60-cent tuberculosis vaccinations for 10-year-olds must ask itself why it is offering subsidized health care and housing to millionaires.”
Millionaires?
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Oh yes, a central element of the Howe-Longman thesis is that Social Security and Medicare are helping cause a massive shift of wealth not only to the elderly, but also to the wealthiest of the elderly. The article is full of hot-button references to ”Gold Plan” health insurance policies, ”Palm Beach” lifestyles and hidden tax subsidies (such as the deductibility of home mortgage interest) that wealthy seniors can use to ”pay for a few days of shopping in tropical ports of call.”
A subsequent article in the June/July issue of Worth Magazine reported that senior citizens get $4 of federal ”social spending” for every $1 that goes to children.
”The result,” writes Jacob Weisberg, a moonlighting senior editor at the New Republic, ”is that 20 percent of American children live in poverty.” Perot recently threw gasoline on this inter-generational fire by suggesting that, if elected president, he could save $20 billion a year by cutting off Social Security and Medicare benefits to ”folks like me” who can take care of themselves. But some quick double-checking by federal budget analysts showed that savings on that scale could not be achieved unless benefits are stopped to all retirees with household incomes of $60,000 or more. That`s hardly ”folks” like billionaire Perot.
For my part, I disagree with those who would slap a so-called ”means test” on federal retirement benefits. For one thing, the above-mentioned magazine articles unfairly lump Social Security and Medicare, indirect insurance programs on which premiums have been paid via payroll taxes, with welfare programs such as Medicaid and food stamps.
But never mind my critique. Listen to the case made by Mrs. Arden Perhats, 63, of Barrington. She recently sent me a copy of her rebuttal to the Worth Magazine article. The letter says, in part:
”During our most productive years, when my husband and I were raising and educating (in parochial schools) our four children, we were in the 49 percent tax bracket.
”My husband, as a small-business owner, paid Social Security taxes both as an employer and employee.
”The taxes our generation paid supported the rebuilding of Germany and Japan after World War II and the fighting and winning of the Cold War. Our hard work, sacrifice and investment built much of what your generation currently enjoys.
”Your suggestion that, after a lifetime of labor, burdensome taxation and minimum opportunity to save, those of us lucky enough to have incomes of $40,000 to $50,000 per year should be means-tested and have taken from us by taxation or otherwise what we contracted for with the government is tantamount to stealing from your parents.”
Thank you, Mrs. Perhats.