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An Appeal to Older People From a Millennial
I recently had a discussion with an older cousin of mine in his 50s. He was telling me he would like to see the welfare state gone, deregulation, smaller government, and all the other standard stuff Conservatives want for the future. Then he was telling me how my generation is footing the bill and tough luck for you guys. Live with it while I benefit because you guys didn’t vote the other way in very large numbers. I have heard this same line of argument or reasoning multiple times before. And I explained to him that this position towards millennials as on the hook for paying for the Boomers’ and Gen-Xers’ tab is immoral.
First off, Social Security and Medicare are the biggest welfare programs in the country. People get mad when I say it, but it is true. It was sold to the country as a government-run savings account, but that isn’t the case. People generally take out more than they put in and these programs are bankrupting the nation. Medicare alone will rise from about $615 billion at present, to a little over $1 trillion in just the next seven years. The rise in costs is far beyond anything that was put into it. This is welfare, pure and simple. It is robbing the young and their future to pay for the old. It is robbing the future of this country. That is what is happening. To complain about Uncle Sam stealing or taxing all the time while cashing these checks and enjoying medicare is hypocrisy to the 10th power.
Yes, you got fleeced. The government forcibly took money out of your paychecks for decades to fund unsustainable programs that are robbing the future of this country you hold dear, and the futures of your kids and grandkids, whom I also hope you hold just as dear. You lost that money and what was done to you is unjust. But to then turn around and fleece your progeny because you got robbed does not make it right. It makes things even more unjust and puts in jeopardy the economic well being of your progeny and this nation. I am 26 years old. These programs will not exist at all when I am old enough to be done working or can work no longer. But if I had the choice right now or in the foreseeable future, I would tell the government to keep the money they robbed from me, as I will not jeopardize or steal my descendants’ future. Many conservatives have bought into the idea that we should just accept the New Deal and Great Society as already here. I reject that, totally. The New Deal and Great Society have given us decades of nothing but highway robbery and phony promises. As I reminded my cousin, Millennials didn’t invent Social Security or Medicare, and we have nothing to do with — or to gain from — these programs that will soon break our country.
This is the evil of statism. This is the evil of collectivism. The statists create conflict and animosity between poor and rich, male and female, black and white, young and old, etc., etc. This is what happens when self-reliance is done away with and you force one generation to sacrifice their well being for that of another. To say — as my cousin essentially did — “Enjoy your future, Millennials!” is nihilistic and destructive. It isn’t Conservative. Fighting for the next tax break or reduction in corporate taxes, deregulation, or any other financial matter is a pittance compared to what ending these programs means.
So please, do everything to end your dependence on these programs. Do everything you can to shut the door on them permanently, even if it means you lose money. The future of this nation and your descendants will greatly benefit from it. It means you didn’t force your grandchildren and great-grandchildren to sacrifice their well-being long after you’re in the ground. If conservatives really stand for self-reliance and individualism, they need to stand against intergenerational redistribution and collectivism.
I have heard too many conservatives argue along the same nonsensical and nihilistic lines as my cousin did in defending these programs. That is unworthy of anyone who claims to hold the values of life, liberty, and the pursuit of happiness.
Published in Domestic Policy, Politics
There are tens of millions of Americans who have planned their financial futures around the system that exists. You’re probably related to some of them — as am I. Major changes, even if they would be wise in the long run, can cause enormous short-term dislocations and inequities.
Politically, a platform saying “abolish Social Security” would never have a chance. So this is a “very easy choice” only if you assume that you’ll soon be appointed Emperor of America.
A platform saying “let’s reform this system, shrink it, and put it on a sound financial footing” is feasible and responsible. Then future generations would be able to make their own decision about whether to maintain it, increase it, or shrink it further.
Amy, you’re right that a long slow solution is the only one that will work, as was outlined above by Arizona Patriot, but listen to what you and TCS are saying. You are saying that even though Boomers paid into the system to support their parents, you want them to forego benefits so that your generation doesn’t have to pay in. That sounds pretty self-serving too. I understand the fertility argument, but Boomers did reproduce themselves, something that is not happening now. And actually, decreasing family size was done by many as an effort to be responsible. We were told, by a GGer I believe, that overpopulation was a problem. I never believed that and had 5 children, but many thought it was their duty to have only one or two children.
So we’ve got a lot of complicated stuff going on here. This generation bashing is only making the problem worse. Let’s stop that and just work together to find a long and slow solution that will require fewer funds from younger people but will not abandon poorer boomers. My goodness, if 25 years ago someone had given us the option to pay part of our FICA contribution for GGers SS bill and invest part of the money ourselves, we would have jumped at that and been much better off. That is what needs to happen now.
Thanks. Very helpful. Compared with, say, sticking your money in money market funds, those returns are abysmal for even those that they say do best. And my suspicion is that for anyone who continues to work after the age of 65, those returns get even worse.
The real point is made in one of the comments:
This makes the point that Social Security’s bankrupt state doesn’t necessarily have to do with its paying more out than it is getting in, so much as the overall fiscal irresponsibility of those running the scheme.
Look, millions are going to get screwed and have to pay for benefits they won’t get themselves. The only question is will it be Baby Boomers who’ve had their whole life to fix the system and didn’t, will it be Millenials who have yet to live their whole lives under an unfair regime, or will the pain be split?
I’m not sure why it’s surprising that both sides want maximize the pain for the others and minimize the pain for themselves.
And decreasing family size was also done because Baby Boomer women didn’t want to be infantilized, as my mother explained when I was eight and wondering why I couldn’t have a stay at home mom. Well, the result of only wanting one child, being surprised by a second, and then sterilizing oneself to prevent any more accidents is that there aren’t as many people to shoulder the load when one inevitably becomes a burden. And despite Baby Boomers’ delusions of immortality, y’all will grow old and become disabled and be a burden. If more Boomers had willingly taken on the burden of raising more children, then they would now be a lighter burden to their children. Obviously, Merina, you didn’t prioritize your own career over preparing for your future, but a lot of people did. And then lived and still live in denial about the consequences of their choices.
It may be that, for many SS beneficiaries, the benefits exceed whatever they’ve contributed over their working lives. I looked up the history of my participation and did the math, using what my employers and I have contributed since about 1965. At an annually-compounded 5% return, that money would now add up to around $600,000. My baby-boomer conscience is pretty clear based on those calculations.
I suppose someone could argue with my inclusion of the employer contribution in that figure, but I think it’s reasonable.
I don’t know about my return on investment on Medicare contributions. I suspect I may be getting a better deal on that.
OK. STOP one minute. Time to nip something in the bud….
“Social Security payouts represent “returns” only in the sense that the proceeds of bank robberies do. Even when SS receipts outstripped payouts, the surplus was spent on other government programs. It wasn’t invested* and therefore didn’t yield “returns.”
With all due respect…this is horse-hockey.
During periods when SS receipts exceed outflows, the surplus IS invested. By law, the surplus is invested in US Treasuries. It has always been thus. At NO time is the ‘surplus spent on other government programs’. Never. Ever.
So, you’re saying that the occasional Social Security surplus first makes a stop in the Treasury Department and then it’s spent on programs that need borrowed money to operate?
Hi T-Fiks
By the ‘occasional SS surplus’ I take it you mean the period covering the past 30 years or so during which the SS Trust Fund accumulated a 2.6 Trillion dollar surplus.
Again, by law, those surplusses are invested in US Treasury securities. That has been the law since the 1930’s
So if you move $20 from one pocket to the other you have $40?
Hi Guru
“So if you move $20 from one pocket to the other you have $40?”
Not following your argument.
You’re right, boomers have a pretty steady record at bankrolling the social security fund. I should have known better than the use of “occasional.”
I still don’t see how buying T-notes is substantially any different than just spending money directly on the programs that require deficit spending.
Amy, I don’t think we disagree very much. Will some people be the losers in all this? Yes. Who should it be? Wealthier Boomers and the wealthier from generations following. If we switch to a part contribution, part private investment scheme for younger people, then gradually change the age for retirement and means test benefits for wealthier people, we can gradually change the system without burdening poorer people of any age who have planned their lives depending on the system. This does not benefit the Smith family, but we’re OK with that. We actually saw this coming years ago and never planned to rely on SS money. As some have been saying here, however, medicare is a whole nother problem.
The SSTF is an investor in US Treasuries. Ask any investment advisor … You have money to invest and you absolutely positively cannot lose a nickle of your principal … what are they going to advise you to buy? US Treasuries.
Same with the SSTF. If they have a surplus and need to invest it and absolutely positively cannot lose a nickel of the principal what do they buy? US Treasuries. Same idea as any other longterm very conservative investor. Only real difference between the SSTF and and the PIMCO Total Return Fund is that SSTF is prohibited from selling their holdings in the market.
OK so you take $20 dollars out of your pocket and say “self, I promise to pay myself $20 dollars in the future”, and put it back in your pocket, do you have $40?
OK, so you decide to pay yourself back for the $20 dollars, so you take $20 dollars out of your pocket and put $20 dollars back in your pocket. Oh dont forget the interest on your “investment,” so you need to take a quarter out of your pocket and put it back into your pocket.
These aren’t investments, they’re fraudulent accounting gimmicks. There is absolutely no transfer of value.
The last Republican president spent a huge part of his second-term political capital trying to partially privatize Social Security. Those efforts were politically crushed by the usual suspects, including labor unions and — to be fair — RINOs in Congress.
Hi Guru. Read my post above. Not accounting gimmicks. Not counted twice. Is the money held by other private investors in US Treasuries ‘accounting gimmicks?’
That’s another problem with this analysis. I am a late boomer, like Jeffery. It’s really the early boomers who changed the culture and reaped all the financial and professional benefits of being the wave that broke over America. Those of us who came later didn’t have to face Vietnam, but we didn’t have the same opportunities or political power, either. The early boomers pretty much climbed into the party bus and pulled the door shut after themselves, and we’ve been living in the aftermath of their good times for fifty years.
I was born several years before Jeffery, but I don’t feel like a boomer, either.
Mr. Steak-
I published this on my own blog back in 2013, and here’s the update (No Social Security or Medicare for me).
I am almost 66, which is my full SS retirement age. Still working full-time and have NO intention of ever retiring. And if, as someone else above posited, Medicare is mandatory, they will just have to come and get me and put me in jail, because I will NOT go on the public dole.
You’re welcome.
P.S. Most of my friends think I’m crazy.
putting money into someone else’s pocket is entirely different than moving money between your own pockets.
The government could pay back the entire “trustfund” full of “treasuries” with a single penny if it wanted too. Because they aren’t real. They’re fraudulent.
Hi Guru.
“The government could pay back the entire “trustfund” full of “treasuries” with a single penny if it wanted too.”
I Don’t think that’s the case. The Treasuries in the SSTF are just as much ‘full faith and credit’ instruments as any Treasury instrument held by PIMCO or any other investor. The US is Constitutionally prohibited from defaulting. 14th amendment sec 4
Again, if they were real non fraudulent instruments sure.
Let me take you through the lifecycle of the supposed treasuries in the trust fund.
They have the following entries in their books
– Cash + Asset (purchase)
+ Liability +Cash (sale)
The cashes cancel out and the value doesn’t change, and the asset and liability cancel out. They aren’t real, its an accounting gimmick.
They can perform any number of these as they want, and it doesn’t change anything except burn calories and/or electrons.
So using a penny
+ Cash – asset (receiving payment)
-liaibility -cash (Paying)
Again the cashes cancel each other out, as does the liability and asset.
Do that a few trillion times serially and the trust fund is paid off. Easy Breezy. Again, costs nothing except calories and electrons.
You can’t be both parties to a transaction. (moving cash from one pocket to the other, and claiming to have $40)
If you still don’t believe me go into your living room (this experiment is safe for the home), and sell yourself your lamp. Do you still have your money and your lamp?
Merina,
Based on what I am hearing on this thread is that we will not be much of a problem. The solution is already built into the O Care that was passed with the help of the Millennials that felt that Yes we Can! If that is not enough to solve the problem, perhaps we will have an event that helped the French with there little demographic problem.
Just do not expect them to come home from vacation early though:
“That shortcomings of the nation’s health system could allow such a death toll is a matter of controversy in France. The administration of President Jacques Chirac and Prime Minister Jean-Pierre Raffarin laid the blame on families who had left their elderly behind without caring for them, the 35-hour workweek, which affected the amount of time doctors could work and family practitioners vacationing in August.”
Seriously Chuck, do you think yours is the first generation to realized what a poor deal the “New Deal” as installed by the “Greatest Generation” is? As a couple, my wife and I have contributed over 700K to SSA and Medicare/Caid (that raw buddy, no interest accrual in that value) We still have 5 to 8 years of maxing out that pot for someone. We planned on never getting a cent back because we knew it was going to blow up. What else could one do as an individual who’s vote is meaningless in a dark blue state. Feel the pain yet? See the intergeneration light?
So Do I walk from that pot to assuage what sounds like whining? I am not sure, but would you not come after the rest? Some are thinking about it….
So no whining from us, we started from the tender age of 22 by socking 10% of the gross into IRA’s, Retirement accounts, 401K’s, or whatever. No excuses, like clock work, never touched that money for the pains of today, what with kid, cars repairs, failing appliances, floods, etc. We just made believe it was not there. Why? Because we fully expected that “the kids” would vote to end Ponzi. What is your plan Chuck? Where is the revolution?
To make your life a little easier Chuck we also sent our children to private schools, thus saving the taxpayers from that little expense, and will be putting them through college without government back loans, which looks like the millennials will be next at the trough. No silver spoons here, just two college grads from a middlin state schools, working multiple jobs BC (that is Before Children).
Chuck I worked at a Burger King for 5 years, and feeding cards into a on campus computer center to pay for my college, what else do you want? We both graduated debt free. It took a little longer, but debt free, owning nobody but nothing……
P.S. Get off my lawn ;)
/rant off/
Hi Guru,
I’m sorry, but with all due respect, that explanation of ‘fraudulent’ is out of tin-foil hat land. The Treasuries in the SSTF are real. Same as any other. Full faith and credit. Not default-able.
They are real as the Easter Bunny.
I have already demonstrated how the entire trust fund can be eliminated with the use of a single penny, and the government gets to keep the penny.
Except that we (the reviled Boomers) as working tax-payers are funding your irresponsible student loans. Spare this Boomer a break from the whining, socialist complaints before I become even more disenchanted with Millenials and move my money to a tax shelter in the Bahamas.
You should do that anyway.
Guru …. You can print ’em out but the reason you can’t default is that the SSTF won’t give you 2.6 Trillion dollars for them.
SS FICA tax receipts (box 4 on the W2) are used immediately by SS to pay current benefits. A surplus exists if SS collects more in current taxes than it pays out in current benefits. That is real money. Tax receipts are real, benefits are real, surplus (if one exists for the period) is real.
That cash goes to Treasury, Treasury issues real, honest-to-God, authorized by Congress, full faith and credit Treasury securities to the SSTF.
These Treasuries are beld by SSTF until redemption at which point they surrender the certificates to Treasury and recieve cash ( not a penny) for the principal value of the securities redeemed.
Except that the recognized Government Securities Dealers are not involved, its virtuallyy the same transaction as when Treasury issues securities and sells those securities at Auction. Ditto for redemption.
Sorry, but nothing fraudulent there. Which is good. Plenty of other things to worry about with SS. Fraudulent Treasuries isn’t one of them.
Take it from this Conservative: I have not accepted the New Deal and the Great Society. These two grandiose plans are the bedrock foundation for why this society is so screwed up to begin with. To fix what are the problems with this society, these two programs must be whittled down if not out right destroyed. The only problem is that the only major, viable Party that might be the agent of that change, wets its pants at the first mention of “media” and becomes a bunch of spineless cowards.
Good point; my accountant is working on that.
Yes, you just described:
– Cash + Asset
+ Liability + Cash
The SSTF and the treasury is the same entity, and you just described 2 pockets in the same pair of pants.
The treasury could pay it all back with a penny and keep the penny if it wanted too.
like I said easter bunny