Great point Pete. Essentially we have an intergenerational moral hazard problem. I would broaden the analysis a bit though because its not a consequence of the Iraq War. We’ve had ballooning deficits starting with Reagan. Our one respite was the end of the Clinton administration where we saw surpluses thanks to judicious fiscal policy and a rapidly growing economy.
That brief respite notwithstanding, the current generation has already spent the money for my generation and those generations after me. Folks my age (31) don’t think that Social Security will be around for them, because it doesn’t look like it will be. Nonprofits will have a much harder time raising the resources necessary to operate from government and private sources if we continue on our current path.
Great to get your comment. We definitely do have an intergenerational problem. The odds are improving that Social Security likely will be around for folks your age and younger, it seems (thanks, in significant part, to the contributions of undocumented immigrants who likely will not collect. For more, see these observations by Kevin Drum (via Brad Delong: http://www.j-bradford-delong.net/movable_type/ ) and Paul Krugman (http://krugman.blogs.nytimes.com/2008/03/25/look-and-feel-15-years-younger/).
Medicare costs are a greater worry, longer term, more due to rising costs than to the retirement of the Baby Boomers.
But the larger issue about treating future generations fairly is a critical one, and one we’ve mishandled poorly to date. Eugene Steurle (http://www.urban.org/publications/310914.html) has made a compelling case that a built-in bias leads us to continually increase the share of funds we spend on seniors, and correspondingly squeeze out investment on low income children and youth. Medicare and Social Security are entitlements, so they are protected and have fairly automatic increases, while spending on low income children and youth is largely out of discretionary funds. Rising costs in defense, Medicare, Social Security and interest on the national debt may completely wipe out the shrinking discretionary funds within the next decade.
COMMENTS
BY Stephen Rockwell
ON March 26, 2008 07:05 PM
Great point Pete. Essentially we have an intergenerational moral hazard problem. I would broaden the analysis a bit though because its not a consequence of the Iraq War. We’ve had ballooning deficits starting with Reagan. Our one respite was the end of the Clinton administration where we saw surpluses thanks to judicious fiscal policy and a rapidly growing economy.
That brief respite notwithstanding, the current generation has already spent the money for my generation and those generations after me. Folks my age (31) don’t think that Social Security will be around for them, because it doesn’t look like it will be. Nonprofits will have a much harder time raising the resources necessary to operate from government and private sources if we continue on our current path.
BY Pete Manzo
ON March 27, 2008 04:11 PM
Stephen,
Great to get your comment. We definitely do have an intergenerational problem. The odds are improving that Social Security likely will be around for folks your age and younger, it seems (thanks, in significant part, to the contributions of undocumented immigrants who likely will not collect. For more, see these observations by Kevin Drum (via Brad Delong: http://www.j-bradford-delong.net/movable_type/ ) and Paul Krugman (http://krugman.blogs.nytimes.com/2008/03/25/look-and-feel-15-years-younger/).
Medicare costs are a greater worry, longer term, more due to rising costs than to the retirement of the Baby Boomers.
But the larger issue about treating future generations fairly is a critical one, and one we’ve mishandled poorly to date. Eugene Steurle (http://www.urban.org/publications/310914.html) has made a compelling case that a built-in bias leads us to continually increase the share of funds we spend on seniors, and correspondingly squeeze out investment on low income children and youth. Medicare and Social Security are entitlements, so they are protected and have fairly automatic increases, while spending on low income children and youth is largely out of discretionary funds. Rising costs in defense, Medicare, Social Security and interest on the national debt may completely wipe out the shrinking discretionary funds within the next decade.
For a little gallows humor about the Fed’s underwriting of J.P. Morgan’s liquidation of Bear Stearns, check out this photo posted at White Courtesy Telephone by Dixie Moline (http://postcards.typepad.com/white_telephone/2008/03/credit-where-cr.html).