I wrote a piece on a federal retirement program that elicited some interesting comments. It was clear to me that there is already a negative bias toward the baby boomers. There is an understanding out there that the boomers are going to be sucking up a great deal of resources in the next decade or so. Some comments:
We have witnessed the unprecedented lack of fiscal responsibility from the majority “Baby Boomer” voter base.
We’ve met the enemy, and it is the emerging ‘ruling class’ pensioners of the Baby Boomer generation.
…get ready for AGE WARFARE
As if on cue, the Congressional Budget Office has thrown out some numbers to fire up this emotive issue. The CBO report confirmed (to me) that age warfare is in our future.
CBO looked at all of the scenarios regarding Social Security. They ran a total of 500 simulations that reflect the different variables of the puzzle. The analysis assumed that there would be no changes in current law on SS. The objective of the exercise was to quantify the probabilities of which generation would most likely not get the benefits they were (A) paying for, (B) entitled to and (C) expecting.
The results of the CBO analysis is that there is societal/economic trouble in front of us on this issue. It should come as no surprise to readers that if you are young, you have a problem. The CBO report defines which generation(s) will be hurt and by how much. I found their conclusions to be very troubling.
If you were born in the 1940’s the probability that you will receive 100% of your scheduled benefits is nearly 100%. The people in this age group will die before SS is forced to make cuts in scheduled benefits.
If you were born in the Sixties things still do not look so bad. Depending on how long you will live the odds (76+%) are pretty good that you will get all of your scheduled benefits. However, if you were born in the Eighties you have a problem. The numbers fall off a cliff if you are between 30 and 40 years old today. In only 13% of the possible scenarios you will get what you are currently expecting from SS. If you were born after 1990 you simply have no statistical chance of getting what you are paying for. The full CBO report can be found here. This (hard to read) chart is from that report.
Sometime next year the issue of SS will have to come up. It will be central to the recommendations from the toothless and worthless Fiscal Commission. The results of that review and the recommendations that will be made are already know. Payroll taxes will have to rise for both employers and employees, the age for eligibility will raised for those under 55 and benefits for that same group will have to reduced. If those steps are taken the promised benefits to the baby boomers (60+) can be met.
That can’t possibly work. How can we convince a 30-40 year old that they should pay much more than any other generation and at the same time get less back than their predecessors did? The boomers have a big vote, but not that big. At some point it is inevitable that there will be a backlash. Laws and tax policy that favour one (minority) age group over all others have no chance of acceptance. The only question is when and how badly it will end.
France has been ripping itself apart over a subset of this issue for the past few weeks. America’s problems are much larger than France. We just have not confronted ours as yet. In France they are burning cars to vent their anger. I don’t think it will play out like that in America. We will not burn cars. We will just grow to hate old people. Cars can be replaced. The social consequences of age warfare will last a very long time.