According to assorted finance pundits as well as other nattering nabobs of negativity, the Baby Boomers are about to usher in the fall of civilization as we know it. From Arch-Boomer nemesis, Robert Samuelson (in his assorted past screeds in Newsweek) – who blames “entitlements” for an approaching fiscal train wreck, to a spate of authors – including David Willets (in his book, ‘How the Baby Boomers Took Their Children’s Future and Why They Should Give It Back’)
Samuelson for his part has gotten plenty of regular column paychecks (at Newsweek and WaPo) for endlessly carping about Boomers and their entitlements – like Social Security and Medicare, and how they stand to trigger a financial train wreck for the country. But as I pointed out to him in one email, the Boomer solution for Social Security was essentially solved in 1983 when Alan Greenspan instigated an increase in the FICA taxes (to 6.2%) to pay for the Boomer onslaught predicted.
So what happened? Well, as usual – because no “lockbox” was instituted at the same time, which would have prevented Social Security $$$ and general revenues to mix – the politicos raided Social Security like drunken sailors on a ten year binge. Reagan, for his part, deftly used SS monies for military expenditures to conceal their true cost and the size of the deficits. (Recall it was during Reagan’s illustrious tenure that this nation went from being a creditor to a debtor.)
The result was that the Social Security funds generated by the enhanced FICA were bled down for other purposes, most notably a host of ill-conceived and undeclared wars- from the Contra incursions in Nicaragua in the 80s (against the Sandanistas), to the Gulf War in 1991, to Afghanistan in 2001 (still going on like an endless drain) to Iraq in 2003. The total cost estimated for all these adventures – NONE of which saw increased taxes to help pay for them – is conservatively around $6 TRILLION. Iraq alone is estimated to come to around $3 trillion when all costs are added up, including the costs of medically attending to all the soldiers returning. That $6 trillion could have funded a national health reform proposal as well as eliminated Social Security’s shortfall. Instead it was worsened to over a $7 trillion debit – when one added in George Bush’s 2001 and 2002 tax cuts.
But instead of enforcing a Social Security lockbox, all we have heard for “solutions” are cockamamey schemes such as allowing more immigrants to enter the country to help pay for the Boomers’ entitlements, or getting Americans to have more children. Both are stupid and ill-advised. Neither can work. As noted in yesterday’s Financial Times, the 8.5 million still unemployed as a result of the recession, is actually around 11 million, when increase in population is factored in. After all, people get born and as they mature – will need jobs. The problem is that jobs are not being produced at the rate to accommodate them. Thus, ADDING more people will not solve the problem, it will merely add more surplus labor to what is an existing jobs deficit that the FT estimates will take at least 10 more years to correct (at least to reach the 8.5 million goal)
The ONLY workable solution, which ought to be obvious to the most menial and defective intellect, is to halt the raids on Social Security monies. That means enforcing a lockbox provision. (In fact, one already exists in the ‘Budget Enforcement Act of 1991’ but our weakling congress has never allowed enforcement). All this idiotic carping about have only one worker for every retiree totally misses the central point that even having ten workers per retiree will not alleviate the problem of a growing SS shortfall if the congressional thieves continue raiding the Social security piggy bank.
Thus it is time for all these whiners to get a grip for once and digest some reality. Do the Boomers make easy targets? Sure they do, being the largest generational demographic in recent times- altering everything from culture to religious choices. But hey – I hate to say this – but none of us asked to be born! Nor did we ask to be born within a small window of about 14 years! Thank all the WWII GIs who returned from “the Greatest War” and had postponed their lusts and love for years, spawning millions of us in short intervals as opposed to rationing the numbers. But then for most of these guys, birth control was still unheard of.
Seriously, the causes of multi-nation financial meltdown are a lot more obvious than picking on one highly visible demographic. If you want the supreme distillation it can basically be summed up in two parts: 1) trashing the Bretton Woods Global Finance Agreement (1973), and 2) Launching numerous wars of choice which have not only cost blood but enormous treasure.
In the case of Bretton Woods, while it wasn’t perfect it did provide a more equitable global basis for competition and trade than what’s in place now – based on such travesties as G.A.T.T., NAFTA and World Trade Organization fiats. Worse, with the collapse of Bretton Woods, global currencies went from a fixed exchange rate system to a floating system. Only years after did many of the creators of the latter realize what an error they had made, and how much they facilitated currency speculation –especially in the carry trade. Since the Asian crisis in 1997, currency raiders have splattered the reserves of a number of nations as governments have watched helplessly. Only most recently, this piracy has reached new heights via the used of “naked credit default swaps” for speculators to bet on national collapse (as in Greece) with NO money on the table of their own.
If one now factors in how things have changed since 1973, one begins to see why the “younger generation” has been placed in economic peril – and it isn’t from the Boomers! For one thing, floating exchange rates and currency raids have allowed the dollar’s strength to deteriorate. This is called “currency debasement” and it’s been used over and over in recent decades for not very salutary purposes. For example, the Bush government used it to make the cost of domestic goods cheaper (via a cheaper dollar) to try to reduce the U.S. trade deficit.
Then again, the global market tyranny that has replaced Bretton Woods, has enabled millions and millions of high paying, relatively secure jobs (especially in manufacturing, but more recently in computer software specialties) to be shipped offshore to places like Bangalore and Beijing. Minus those higher benefits, higher paying jobs, Americans have barely been able to make ends meet – and this partly explains their stupendous reliance on credit cards – to make up for their eviscerated incomes. Young people, caught in this vortex, will obviously not see the same economic security as their parents who held steady, good paying jobs with top benefits over decades, to the extent that one spouse could even afford to stay home. The now (nearly extinct- except amongst the rich) single income family!
Now, to this, add in all the wars which have bled down the national treasury (as I noted by an estimated $6 trillion – not even counting whacked out “defense” spending such as the $2.1 trillion under Reagan) and you have the basis for an economic Armageddon. Because make no mistake, SOMEONE had to pay or will have to pay, for those wars. Who is holding most of the bonds right now? Chinese and Japanese bankers – to the tune of nearly $2 trillion. Who will get the bill in the future? Our kids and grand kids, because their cowardly government didn’t have the brains or insight not to try to act like the world’s cop – and especially (in the Bush years) launching a full scale war against robed lunatics when a localized police or intel action could have been effective.
They preferred to bankrupt us, as Osama bin Laden always wanted – playing into his hands. Nor did they have the inner fortitude, given they got their war vote (by reconciliation no less) , to at least mandate the taxes to pay for it. They preferred instead to use future taxes (and higher interest rates) to pay for it, but on the backs of future generations.
Yet now the smarmy asses in congress that voted for these war travesties and their humongous costs, want to say we haven’t the money for decent health care reform.
No, the Boomers are not the ghouls they’re made out to be by the likes of David Willet, who even blames us for having fewer children than our children- thereby increasing our wealth (since we have fewer outlays to make, for food, clothing, education etc.) relative to the young sprats. But – last I checked – no one is forcing anyone at the point of a gun to have kids. If you can’t afford kids, then you have no business having them, and birth control has been around since the 1960s.
People need to wake up, stop their blame game, and examine who the real culprits are in this forlorn multinational debt miasma. One thing for sure: Boomers do not need to “give back” anything to the next generation. What we do have to offer is our insight, and best advice. It’s up to the young ‘uns to take it or leave it, but if they leave it – don’t blame us for their predicament and lack of political smarts.
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