Not many people would argue with Paul Begala’s view that the baby boomers are “the most self-centered, self-seeking, self-interested, self-absorbed, self-indulgent, self-aggrandizing generation in American history.” Since coming to power, the boomers (Americans born between 1946 and 1964) have destroyed most of what was good in America. Now it seems they have saved their best act for last: On their way off stage, they intend to bankrupt the country.
Public debt, of course, is the perfect financing vehicle for boomers. It makes money available for immediate enjoyment, while the burden of repayment is cast upon the future. The idea that you should pay for what you get never entered the boomers’ minds. Jefferson wrote in 1816 that “the tendency of all human governments” is to public extravagance: “the fore horse of this frightful team is public debt. Taxation follows that, and in its train wretchedness and oppression.” Already, two boomer presidents—George W. Bush and Barack Obama—have run the national debt up to $17 trillion. The Obama administration projects a $20 trillion debt in 2016 when it leaves office. And there is much more debt to come if we do not change our ways.
In 2008, Kathleen Casey-Kirschling, the first boomer to go on Social Security, signed up for early retirement at age 62. She has been followed by about ten million more through 2012. Over the next 20 years, some 66 million will climb on board. The boomers have moved through the country’s population like a pig through a python. There was not much ahead of the pig, and not much behind. The “not much behind” means that, as the boomers become eligible for Social Security and Medicare, there has not been much of a tax base to support them—only about two workers to every beneficiary. In 1950, the ratio was 17 to 1. And, of course, the benefits were less generous, and life expectancy was 65. In sum, the program was not designed for the situation we have. The problem is aggravated by benefit increases routinely approved by Congress over the years, the latest as recently as 2012.
Paying for the leading edge of the boomers has already created consecutive trillion-dollar deficits. Revenues from 2006 to 2013 have risen some—from $2.41 trillion in 2006 to $2.9 trillion in 2013. But spending has skyrocketed from $2.7 trillion in 2006 to $3.8 trillion in 2013. During that time, Social Security rose from $549 billion to $826 billion, and Medicare from $330 billion to $530 billion. Medicare enrollment will grow from 48 million in 2010 to 64 million in 2020, and to 81 million in 2030.
The problem, of course, is that the Social Security and Medicare promises were made with no thought of how they would be paid. Both programs are financed pay-as-you-go, a model that collapses as the ratio of taxpayers to beneficiaries gets too small. To put the system on a fiscally sound basis—i.e., to fund it—would require one generation to pay twice: once for itself, and once to fund the system. As it is, we can’t pay for it even once. And, of course, the people being asked to pay are not the ones who made the promises. Indeed, those who made the promises—with no provision for payment—are those who intend to benefit. Does the future have any obligation—legal or moral—to make the promises good? Absolutely not.
The only restraint is political. The boomers right now make up 37 percent of registered voters, which gives them working control. But none of the other generations has any reason to love the boomers, and their stronghold could be challenged. The “silents”—the group ahead of the boomers—make up 17 percent of registered voters; Generation Xers, 26 percent; and the Millennials, 17 percent.
One thing the other generations should agree on is to forget about raising taxes to pay for the pig. As Jefferson wrote, “A preceding generation cannot bind a succeeding one by its laws or contracts, these deriving their obligation from the will of the existing majority.” The succeeding generation “comes in its place with a will equally free to make its own laws and contracts.”
Some current economists, like Princeton’s Paul Krugman, tell us deficits don’t matter. The only bad feature of our rising perpetual debt, they say, is our habit of worrying about it. We’d feel better, we’d be more cheerful, they say, if we set aside our superstitions and learned to live with the debt.
To be sure, we might feel better. The problem is that even if the debt is owed to ourselves—which it increasingly is not—it makes a big difference if you are being taxed to pay interest or if you are receiving interest. The trouble with debt is you have to pay it back.
The other generations should get together and decide what income and medical help the government should provide to those boomers who have made no provisions for themselves. But these other generations should not strain themselves; they should not raise taxes on themselves, or borrow. As Jefferson said, “the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.”