Perhaps the most mocked generation in the last century, the “Baby Boomers” have certainly enjoyed a roller- coaster ride: born in the socially constrained environs of the post-“good war” boom, saddled with an old man’s “limited” (unless you got killed or wounded) war in Vietnam, reviled and feared as drug-crazed hippies and idealistic founders of anti-war, feminist, Black Power and environmental movements, sucker-punched by the worst recessions since 1929 (1973-75 and 1980-83), revered as founders of the personal computer revolution, reviled (again) for an obsession with “me” and “getting mine,” benefactors of the Dot-Com boom of the 90s, and now, in a grey-haired botoxed frenzy over staying “youthful,” we collectively face the bankruptcy of the social welfare programs our parents have enjoyed at our expense: Medicare and Social Security.
Now it falls to us to fix the finances of our foolishly bankrupted nation. Either we sacrifice our freebies (every recipient of these programs has extracted far more than they paid in, even including accrued interest) or we leave our children and their children burdened by an impossible debt.
those people with capital and access to credit can take advantage of the many asset bubbles financialization inflates. They have a chance to do very well for themselves, if they have the presence of mind to exit the asset bubble before it deflates.
Those people who do not have capital or access to credit become poorer. That is the harsh reality of neofeudal, neocolonial financialization. Neofeudalism and the Neocolonial-Financialization Model (
The Boomer generation had a rough start in the bear market of the 70’s, but were only about 25 when it ended, so the Bull run coinciding with 20 of their core income years. Very nice.
Quick look to the right and you’ll see GenX. When did they come into their equivalent earning years? Year 2000, just as the market was cut in half
Severely burned by stocks, GenX statistically became first-time homebuyers at the age of 32, not much older than when their parents did. However, they bought their first home in 2005, not 1985. How did that work out?
Whoops! Sorry, suckers, stole your money again: your peak home-buying years coincided with another bubble! Housing was no safe-haven. Not only that, but again, the catastrophe is not the up-front losses but the 10 years of lost compounding that can never be re-made. The math says that if GenX worked until they were 80, they will NEVER recover.
Well timing is everything. And here I thought it was my baby boomer brilliance that led to my secure retirement. Yes I didn’t conspicuously consume and saved but I was vastly aided by living in the good times that I did.
Federal deficit spending and the overweighting of entitlement spending on retirees is too upsetting to discuss factually, so we don’t. But the math doesn’t work, and so the ship will sink. This was obvious 20 years ago
Those who were able to buy assets such as houses and stocks decades ago saw their net worth rise to extraordinary heights in the bubble. Those who didn’t or couldn’t buy assets before the bubble did not see their net worth rise to extraordinary heights.
Back when the program was enacted, there were around 10 workers for every retiree. The demographics and economy were different then. The economy was mostly domestic, and the bubble of the 1920s had popped. Financialization and globalization were at low ebb. Everyone assumed there would always be 10 workers for every retiree.
But people started living longer, the disabled were added to Social Security, and Medicare ballooned from a modest program to an open-ended spending juggernaut. In other words, the economy changed, demographics changed, but the system has not been changed to reflect these realities. SSA and Medicare taxes have increased dramatically, but these programs are still funded by payroll taxes paid by employees and employers.
Capital (assets, income from capital gains, speculation and investments) only pays a thin slice of Medicare via the Net Investment Income Tax (NIIT) on capital gains incomes above $200,000 for single taxpayers and above $250,000 for couples filing jointly.
Solution?
The solutions are as obvious as plugging a hole in the ship’s hull.
1) The tax burden has to be shifted from labor to capital via financial transaction taxes and ending the multi-trillion dollar exclusions on capital gains.
2) Social Security and Medicare benefits must be means tested; those collecting $10,000 a month in other pensions and investment income don’t need Social Security benefits, which should be reserved for those with no other substantive source of steady income in their retirement years.
3) The open-ended entitlement programs must be limited in some fashion, and there is no way to do this that will not upset everyone. Hard choices–triage–must be made, as doing nothing is choosing to let the ship sink.
Methinks #1 is the key solution. Just as some here on the board has suggested that the US taxation system needs to be amended to tax capital gains more heavily taxed to increase revenue & moderate the income inequality of our nation.
#2 is unworkable. If that is implemented you have just destroyed the universality fairness of the system. That is just wrong.
#3 is unworkable too. Old age programs must continue. It is the funding of them that must be solved by readjustment of government spending priorities. A trillion dollar defense spending seems a bit much. And that trillion is not about defense of the homeland but meddling throughout the world and working to become the sole remaining superpower ruling over Pax Americana.
