Saturday, April 23, 2011

Selfish Seniors!



The U.S. has a huge accumulated financial debt and an equally huge current budget deficit. In other words, we owe a lot (about $14 trillion) and we are on track to owe a lot more. If we continue on this track, our country soon will be paying high interest rates on our debt and lenders will be skittish about refinancing it. Nobody will be able to "bail us out". This is very bad news, both politically and economically, for our nation and for each of us. So, what is the "right" thing to do?

For purposes of this essay, I am equating the term "right" with the term "fair"; you know, the old Golden Rule - "Do unto others as you would have them do unto you." This rule provides an excellent guide for solving the debt/deficit problem.

Before we start in earnest, a little background. Please take a quick look at the chart above, which I stole from Wikipedia. You can click on it to "embiggen".

If you can read a graph, you will quickly come to two major conclusions. First, our country steadily paid down our national debt (as a % of GDP) from its very high level at the end of WWII through the Carter administration, including "paying as you go" for the Vietnam War. Second, starting with the Reagan presidency in 1981, we've been building that debt back up in a very big way. (I'll refrain at this point to comment on the administrations that built this new debt, but you can figure that out for yourself.) This debt-building occurred during a period when our country was not dealing with any cataclysmic problems like WWII.

In my view, the citizens who could vote during the past 30 years are the ones responsible for allowing this debt to accumulate. Those of us who are currently over 45 years of age are the ones who allowed the debt to happen and also benefited from the economic growth generated by the borrowing; e.g., rising wages, pensions, and accumulated fortunes during the past 30 years.

So, our country now faces a dilemma. Who should sacrifice to pay back this debt and reduce the current deficit? Should it be those who follow us, the younger generation, or should it be those 45 and over, the latter being the citizens who elected the politicians who spent this money and the ones who benefited from it? If one is interested in being "right", being "fair", then the answer is clear - we older folks spent it, and we should pay it back. If we were the kids, would we want the adults to saddle us with huge debt that did not benefit us in the slightest? We oldsters need to face up to our excesses and make it right for the younger generation, by paying back.

Now, how should us in the "forty-five and over" group pay back the money we overspent? To be "fair", we should take back benefits that we obtained but did not pay for. First, we need to pay more for Medicare and get fewer services. Second, we need to reduce Social Security outlays, probably by cutting out cost of living increases for many seniors and by slightly raising the retirement age. Third, we need to pay higher taxes on our income and our wealth, including our pensions and estates. If we do these things, we will leave our children and grandchildren a country that might give them a future beyond working for the Chinese at very low wages.

What bothers me a lot these days is that the debt/deficit problem has become politicized; the facts get lost in the midst of all the shouting and demagoguery. The republican Medicare solution doesn't penalize those currently over 55, for example, even though these are the very same people who allowed this program to get out of control and who stand to gain the most from it. The "Tea Party" folks, many of whom are oldsters, want dramatic spending cuts - except for Social Security and Medicare, their cash cows. As I write, republican congressmen who were elected on a platform of dramatic budget-cutting now face outraged seniors who want no change to Medicare. Selfish seniors! There is just no way to pay for the benefits they demand, and they seem to have no problem passing even higher debt onto their children and grandchildren.

If I was the benevolent dictator of America, I'd put the following changes into effect posthaste:

1) I'd change the Medicare guidelines for "end of life" care, eliminating hospitalization and costly procedures for seniors with terminal illnesses or advanced mental disabilities. These persons would be referred to hospice, which is covered by Medicare. To be blunt, death by natural causes should not be postponed at great cost for those whose quality of life is marginal at best. This one change would go a long way toward saving Medicare.

2) I'd review and strengthen the qualifications for "Social Security Disability", which now provides regular incomes for many individuals who are capable of working - not truly "disabled". I'd provide funds for retraining many of these people before cutting off their SSD benefits.

3) I'd eliminate Social Security cost of living adjustments for those whose income exceeds a certain threshhold - say, $50,000 annually - and also raise the Medicare premiums for this same group.

4) I'd let the Bush tax cuts for incomes exceeding $250,000 expire, institute a 1% annual "wealth tax" on those whose net worth exceeds $1 million, and repeal the tax laws that permit individuals to evade paying a reasonable estate tax.

5) I'd cut the defense budget by 5% immediately and freeze it for the next ten years, forcing the military to fund inflation out of its current budget. I'd commit the savings achieved here to massive subsidies of new technology aimed at gaining energy independence and less reliance on fossil fuels.

6) I'd dramatically increase government support of pre-K through 12th grade education, add many technical education opportunities, and give schools far more power to deal with unruly, disruptive children. I'd also take a very hard look at funds currently spent on "special education", which I believe has gotten out of hand.

All in all, my policies would require significant sacrifices from those 45-and-older citizens who allowed politicians to create an unfunded welfare state for them. The policies would also promote the development of a future citizenry and an economic infrastructure that would be competitive in the world economy. Change is good, even if it is often painful! And, to you selfish seniors, "Man Up!" - you love to preach old time values of accountability, and now it's time to live up to them.