t’s one of modern political life’s strange ironies that defending Social Security and Medicare is considered an “old people’s issue.” Old people are doing just fine with these programs, thank you very much — at least so far.
Anti-government hawks like Alan Simpson and Pete Peterson also made a deft (if deeply cynical) move by framing these programs as a war between baby boomers vs. Gen X-ers, since some of their cuts would hurt boomers too.
But young people will take the worst of these cuts, since their impact increases over time. When you combine this assault on “entitlements” with other forms of austerity economics, the result is a plan to hand the next generation a nation with crumbling infrastructure, collapsing government services, and bleak economic prospects. It’s an all-out assault on the future of the young.
That’s no accident. Politicians know that seniors would rise up against any politician who crosses them. And seniors vote. They’re also aware that baby boomers are a large and powerful voting bloc, not to be trifled with.
Young people, on the other hand, traditionally find it hard to imagine their own old age. On top of that, they’ve been barraged with propaganda designed to discourage them from believing these benefits will be there when they retire. That makes it easy for politicians to target them when designing their budget cuts, especially since its easier to hide their long-term impact from those they would hurt the most.
These cost cutting proposals, often described as “brave,” target young people because that’s easier and safer than taking on more politically powerful groups. Whether we’re talking about “entitlement” programs, other spending cuts, or tax giveaways to the wealthy, each proposed austerity measure is a dagger aimed at the financial future of our children.
Raising the Retirement Age: From Twentysomethings to Newborns
The Simpson/Bowles proposal, for example, would increase the full retirement and early retirement ages over a 40 to 65 year timeline, a change that would begin to affect people now in their early to mid-twenties. That’s the same generation that’s currently facing record youth unemployment.
According to reliable studies, when a person is unemployed or earns less in the early years of their working life it affects their income over their entire lifetime. As a result, many of today’s new graduates will pay less into Social Security over the course of their career. That means most of them can already expect to receive less in benefits when they retire, even under the current system.
And we’re not talking about small change, either. If the full-retirement age is changed from 66 up to 69, as many people have proposed, that will result in a 20% loss of benefits.
If these changes to the retirement age were implemented today, they’d have the greatest impact on today’s newborn babies. So the next time you see an adorable infant in a Snuggli, picture what Alan Simpson and Erskine Bowles want to do to it.
The Unfair, the Unnecessary, and the Un-COLA
Cost-of-living (COLA) increases, which have often failed to keep pace with actual out-of-pocket costs, would also be slowed down under many of these proposals. Unlike some other Social Security changes, that would also hit current retirees and baby boomers hard. Within 20 years, the average benefit would be cut by approximately $1000. Since that average benefit is less than $13,000 today (less than $10,000 for women), those are major cuts. And the effect of this rolling cut would be cumulative, becoming greater with each passing year. The younger a person is today, the more their benefit would be cut in their senior years.
But wait, as the late-night TV ads used to say. There’s more.
The Simpson/Bowles proposal, which many Democrats and Republicans have called “a good starting point” for discussions, isn’t done hammering away at the financial security of young Americans. Although two-thirds of its Social Security “savings” would come from benefit cuts, one-third would come from tax increases. But those tax increases aren’t be aimed at wealthy Americans. Instead Simpson and Bowles have proposed raising taxes on middle-class Americans , by eliminating deductions for expenses like home mortgages and health insurance.
The most bizarre thing about this fiscal war on America’s young people is that it’s completely unnecessary. Lifting the payroll tax cap would make Social Security 100% solvent for the next 75 years. But that’s off the table,. Republicans are adamantly opposed to any taxes that discommode the wealthy. And the White House embraced a “payroll tax cut” that creates a useful, if minor, stimulus effect – but at the effect of making the country’s most effective and valuable program a target for future benefit-cutters.
And we haven’t even gotten to Medicare yet. The Republican House passed Paul Ryan’s “serious” and “brave” plan, which would eliminate Medicare and then – in a move worthy of science-fiction writer Philip K. Dick – replace it with a voucher system that would be called “Medicare.” (More here.)
The Republican Party’s voucher plan would make Medicare (as opposed to “Medicare” vouchers) unavailable to anyone who becomes eligible after 2021. That means it affects anybody born after 1956, a date that eliminates a large chunk of the Baby Boom. The vouchers will cover less and less of health insurance’s real cost with each passing year. That means the younger you are, the worse this plan will be for you.
If the Ryan plan becomes law, 90% of your Social Security retirement income will be eaten up by out-of-pocket health care costs by 2037. And that’s a conservative estimate. Without the Medicare system’s built-in controls on pricing and utilization, actual health care costs could be even greater.
False Progressivity vs. Real Solutions
Many of these plans include proposals that claim to spare the “neediest” of our young people from benefit cuts in their senior years, while asking more of the “well to do.”. But most of these proposals are barely skin-deep. Means testing proposals, for example, wind up targeting people with modest lifetime earnings that can be as low as $20,000 per year (from the Concord Coalition). And by conflating social insurance programs like Social Security and Medicare with social welfare programs for the neediest among us, they’re undercutting the structure that makes these programs strong.
Social Security can be stabilized easily and cleanly, just by asking the wealthy to pay their fair share. The only way to fix Medicare is by addressing our nation’s broken health care system, which means taking on the structural flaws in our for-profit health economy.
But politicians on both sides of the aisle are reluctant to do either of these things. So they’re targeting young people instead.
Misleading the Young
Why aren’t young people protesting all this? Headlines like this one provide part of the answer: “Debt Commissioners: Baby Boomers Will Crush Social Security, Medicare.” In fact, a Google search of the phrase “Will Baby Boomers Bankrupt Social Security and Medicare?” comes up with nearly million hits.
The shrewd foxes and Fox shills who want to destroy these programs have convinced many young people they have no hope of collecting these benefits. That’s wrong. There’s every reason to expect these benefits to be available when America’s young people retire. All it takes is the political will to resist the slashers. But they’ve been trying to thwart that political will by reframing a matter of economic justice as an intergenerational war between boomers and young people.
If successful, that misdirection could cost America’s young people their financial security.
Surrendering the Future
This nation is already neglecting its young people, even though our leaders love to tell us (correctly) that they’re our future. Unemployment figures for today’s twentysomethings are truly devastating. The Economic Policy Institute reported that “in 2010, the unemployment rate for workers age 16 – 24 was 18.4% – the worst on record in the 60 years that this data has been tracked.”
The country should be rallying behind this generation by creating jobs for them. Instead we’re abandoning them to a lifetime of lowered earnings and lowered expectations, made even worse by record levels of student debt. College and post-graduate debt already exceeds credit card debt in this country and is expected to reach $1 trillion in 2012.
That’s a tough way to start your financial life as an adult. Our kids are likely to go through life with crushing debt and reduced earning capacity. And if the Simpson/Bowles/Ryan crowd has their way, they’ll also face financial fear and deprivation in their senior years.
Washington should be helping these young people find jobs. Instead, too many policy makers are abandoning them just as their work lives begin. Worse, they’re also trying to make sure they’re abandoned when their careers end, too. Enough is enough. It’s time to call these misguided austerity policies what they really are: a war on America’s youth.