You know the expression “OK, Boomer”? Better said as “Boomer OK.” That’s because the social safety net in the United States is increasingly favoring the old over the young. And this affects our political views and the security of future generations.
Younger Americans have valid reason for disgruntlement: Big shifts in income and wealth are dramatically favoring their elders. Under almost every president since 1980, 80 percent of the real growth in domestic spending has gone to Social Security and health care, with Medicare the most expensive health program, according to calculations based on federal data. As a share of GDP, all other domestic outlays combined have declined.
Our current tax system also largely does not help Americans, most of whom are younger, pay for their higher education. That wasn’t as big a deal in the 1960s or 1970s, when the average college graduate most likely had little or no student debt. Today, the average taken out each year is about seven times that in 1971, in part because state governments have stripped colleges and universities of funding. This is happening at a time when owning a house is increasingly out of reach. The median price has risen from about 3.5 times median annual income in 1984 to 5.8 times in 2022.
So it shouldn’t come as a surprise that today, younger generations are more likely to fall into lower-income classes than their parents or grandparents. Nearly a half century ago, it was the reverse. And in 1989, the median net worth of Americans aged 35 to 44 was nearly 75 percent of those aged 65 to 74. By 2022, that ratio had fallen to one-third.
The why is simple. Unlike most other spending, Congress effectively designed Medicare in 1965 and Social Security in the 1970s in such a way that outlays would increase forever faster than our national income. That’s partly because Medicare costs keep rising along with medical prices and new treatments and because Social Security benefits are designed to increase for each new generation along with inflation and wages. And we’re living longer, which means more years of benefits.
Today, tax revenues are so committed to mandatory spending, largely for older Americans, and to interest on the national debt (which has quadrupled as a share of G.D.P. since 1980) that few revenues are left for everything else. So, unless we borrow to pay for it, there’s little for education, infrastructure, environment, affordable housing, reducing poverty, or the military.
It’s not hard to figure out which generation has benefited most. Picture the older folks parading in golf carts for Donald Trump (and some for Kamala Harris) in The Villages this summer. Then picture twentysomethings paying onerous student loans and living with their parents because they can’t afford a house.
All of this may explain why so many young people are expressing disenchantment with politicians both Democratic and Republican, becoming more vulnerable to extremist rants on social media, and deciding not to vote at all. A recent report in The Lancet Psychiatry suggested that economic trends might even be partly to blame for the mental health crisis crushing many young people.
Most of the taxes we pay for Social Security and Medicare are not reserved for our own retirement but rather pay for current beneficiaries. Like some adolescents who don’t appreciate how much their parents pay to support them, many older Americans don’t seem to appreciate how much more they are taking out than they are putting in. A 65-year-old couple with average life expectancy and average household income (about $90,000 in 2023) who retires in 2025 would require $1.34 million to finance their benefits, even though they had paid only $720,000. (Numbers are adjusted for inflation.) Younger generations are making up that difference.
What’s more, the decline in the birthrate means fewer taxpaying workers to support the increased costs. The result: a rising burden and a budget with ever less left for them. Listening to Kamala Harris’s plan to help struggling Americans, we can’t help but wonder: How will she pay for it?
What to do? Many argue that raising taxes on the wealthy and on successful businesses would help. But that would not be nearly enough to meet these obligations. So we must also consider other changes.
“Old age” must be redefined and retirement ages raised so that living longer doesn’t mean retiring longer on workers’ taxes, particularly for wealthy retirees. After all, longer lives for most people should mean more productive years.
Furthermore, we must slow the rate of increase in lifetime benefits for future retirees, who are now scheduled to receive substantially more than the Boomers do, after adjusting for inflation. For example, Social Security and Medicare benefits will exceed $2 million for a Millennial couple with average earnings — and will be significantly more for those with higher incomes.
Because many lower-income older Americans depend so heavily on these programs, benefits for the wealthy could be the first target. And some of those savings could go to the neediest retirees, as well as programs for the young.
We must also repair our immigration system so that new Americans can help support benefits for older ones.
Four of the past five presidents (all except Joe Biden) the past 32 years and many members of Congress have been Baby Boomers born between 1946 and 1964, as are the candidates Trump and Harris. Unless generations younger than us 70 million Boomers become more politically engaged in addressing these problems, they will squeeze out even more of what the government provides for their own children and grandchildren.
Politicians tend to avoid discussing this hard reality, recognizing how unpopular the solutions are. But something has to give. It’s time for us all to grow up.
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