Sacrificing Future Generations

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My column titled “What Handouts to Cut?” created a number of angry responses, and for the first time in my life, I had some, not much, sympathy for political cowardice. Most letters were from senior citizens angered by my suggestion that they were receiving handouts and those handouts be cut.

Federal tax receipts for 2009 totaled $2.1 trillion. The largest items in the federal budget were Social Security ($710 billion), national defense ($689 billion), Medicare ($456 billion) and Medicaid ($327 billion). The primary recipients of federal spending are seniors. Some of the letters argued that it’s unfair to characterize what seniors are getting as handouts because they worked all their lives and paid into Social Security and Medicare.

Jagadeesh Gokhale, senior economic adviser, Federal Reserve Bank of Cleveland; and Laurence J. Kotlikoff, professor of Economics at Boston University document the looming Social Security and Medicare crises in “Is War Between Generations Inevitable?”. They report that “A male reaching 65 years of age today (in 2000, the year of their study) can expect to receive $71,000 more in government ‘transfer’ benefits (of all kinds at both the federal and state levels, but mainly from Social Security and Medicare) than he will pay in taxes (of all kinds at both the federal and state levels) before he dies. A 65-year-old female can expect a net gain of more than twice that amount; she can expect $163,000 more in benefits than she will pay in taxes.”

The picture is not so rosy for people who entered the labor force in 2000. They will pay far more in taxes than they will receive from transfer programs. Expansion of elderly handouts, such as prescription drugs, will make things worse. “For example: A 20-year-old female can expect to pay $92,000 more in taxes than she will receive in transfer benefits over her lifetime. The future looks more than three times as bleak for her male cohort, who can expect to pay $312,000 more in taxes than he will ever receive in benefits.”

Why is Social Security a better deal for today’s seniors? Just look at what they paid in.

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  • brimp

    Social Security is a mechanism for transferring wealth from the poor to the rich. Senior citizens vote while the young poor citizens don't. At some time in the future, the contributors will out number the beneficiaries. Then the game is over. The way I think the government will try to resolve this is through massive inflation. Removing the cola from SS payments while inflating the money supply will cause most older Americans into poverty.

    • Paul Eldridge

      A majority of seniors are in poverty at the present. Not all are on medicaid. And a considerable number aren't on medicare. Many pay for their own drugs and go hungry or eat and do without medicine. Don't believe everything Mr. Hoosigow above says.

    • PegW

      The government spent the money over the years that should have been invested to grow by the time seniors retired. Had it been invested, there would be adequate money so the government now owes what was promised to those that need it. What makes me mad is that it goes to the wealthy also who do not need it. It was supposed to be like insurance, given to all who paid in. Since it was mismanaged every year (which is what our government does best), we must now make some changes. So stop paying anyone who has adequate income without it. What is adequate? Certainly no needs over $100,000 a year, probably much less in most parts of the country and we can all move to another part. So cut it for those who don't need it and don't you dare touch it for those who do. We must set better standards for those we reelect. We're still reelecting the same people who have messed up our country and been dishonest in their leadership of our country. Shame on us!

  • Brian

    Williams is great but why does he never complain about the 20 million federal plus 25 million state and local government work force. Eliminate them before cutting a single mom with 3 kids off welfare. Ooops…all except Williams that is I believe he still has a government job.

    • http://www.intellectualconservative.com Steven Laib

      Agreed. My plan for dealing with the federal budget deficit is to slash federal spending fonr non-national security purposes by 50% without any exceptions or qualifications. Presto, problem solved.

  • Joe Harrison

    If the government hadn't spent the surplus every year there would be no problem.

    • Dennis X

      SS is solvent until 2037 does it constitue a major problem now? 45 milllion people out of work, what a joke.

  • Gerald Marquardt

    Williams is right–i am 67 and SS must be changed or cut–

  • The_Inquisitor

    The radical solution seems to me to be the best solution. Forget the cuts and gradual solutions. Kill the beast with one quick blow.

    Return the role of government in America to that of 1850. Do it immediately and with no exception other than slavery.

    No handouts of any kind. No labor laws, no antitrust laws, no income tax, no Federal Reserve System, no OSHA, and no business regulations other than what is covered by criminal law.

    Nullification and the threat of secession would be sufficient to handle whatever is left: protective tariffs, federal financing of infrastructure, federal land ownership, etc.

    • brimp

      The people that pass the bills that become law are elected. Williams wrote of the negative email that he received for pointing out the obvious. Imagine the reaction of the spineless 'public servants' when the members of their largest voting block are going hungry? The welfare programs will continue only as long as the government has the ability to write the checks. I'd say about seven years before the complete collapse occurs. I might be optimistic.

      • The_Inquisitor

        Seven years may be right, but I'm thinking by 2016.

    • tagalog

      Even John Locke wrote that government has a duty to maintain the freedom of the market and protect competition. Therefore, my personal two cents is that antitrust legislation is legitimate.

      • The_Inquisitor

        The economic arguments for antitrust have been discredited.

        1. Monopoly pricing is a chimera. If corporations can improve net profits by raising prices they will do so. No agreement is necessary. (Never mind that businessmen conspire to fix prices; they don't understand economics much better than politicians.)

        2. The fearful specter of a mega monopoly controlling everything is a chimera as well. Any attempt at such a monstrosity will lose the ability to price their monopolized products and will fail just as socialism must fail and for the same reason.

        For a detailed examination of the foregoing read "Man, Economy, & State" by Murray Rothbard.

        Add to that the disgraceful history of our antitrust laws.

        If you charge more than the market price you are guilty of monopolizing the market.

        If you charge less than the market price you are guilty of unfair competition.

        If you charge the same price as your competitors you and they are guilty of price fixing.

        Any businessman can be prosecuted under existing antitrust laws. It's a weapon politicians have to force business to bend to their will.

      • The_Inquisitor

        I had a reply, but apparently the site admin doesn't want you to see it.

      • The_Inquisitor

        The economic arguments for antitrust have been discredited.

        1. Monopoly pricing is a chimera. If corporations can improve net profits by raising prices they will do so. No agreement is necessary. (Never mind that businessmen conspire to fix prices; they don't understand economics much better than politicians.)

        2. The fearful specter of a mega monopoly controlling everything is a chimera as well. Any attempt at such a monstrosity will lose the ability to price their monopolized products and will fail just as socialism must fail and for the same reason.

        For a detailed examination of the foregoing read "Man, Economy, & State" by Murray Rothbard.

        Add to that the disgraceful history of our antitrust laws.

        If you charge more than the market price you are guilty of monopolizing the market.

        If you charge less than the market price you are guilty of unfair competition.

        If you charge the same price as your competitors you and they are guilty of price fixing.

        Any businessman can be prosecuted under existing antitrust laws. It's a weapon politicians have to force business to bend to their will.

    • bph

      PERFECT! Someone who has the courage to say what really needs to be done…

  • Chezwick_Mac

    People still don't get it. We're swimming in a tidal wave of debt. We don't just have to cut the deficit, we have to produce years of surpluses to pair down the principle on the debt. The days of the good life are over, except that no one wants to face it. We don't need tinkering, we need radical surgery.

    If we do the RIGHT thing, we're going to see aspects of poverty that we haven't seen in decades. The alternative is the social-revolution that awaits us when we finally go belly-up. It will be young rebelling against old, hispanic against anglo, left against right. And the great American experiment will die.

    It's a bleak picture, but an accurate one. Where is our Churchill?

  • tanstaafl

    Since I am approaching the "senior citizen" category, perhaps my statement would be more valid since it would effect me as well.

    If our country goes down the tubes, Social Security recipients will go down the tubes as well.

    Raise the retirement age to life expectancy. Limit the percentage of Social Security taxes that new wage earners pay. Take that revenue and divide it equally among Social Security recipients.

  • pianoforte54

    I am at retirement age too and plan on working until I drop. I would LOVE to opt out of paying SS and Medicare but I can't. Isn't it a crime to take someone's money by force?

  • pianoforte54

    And an afterthought… I would like to see all of these programs to help poor(?) seniors (or anyone else for that fact) to pay their bills…when you don't have to pay your water bill, you use as much as you want…when you don't pay your electric bill, you keep everything burning and the a/c at full tilt. When there is help available, people take advantage of it regardless whether they need it or not. I have heard people call a company about not being able to pay their whatever and in the next breath are telling a friend they can't wait until their 50 inch plasma tv arrives. Where is the need there?

  • tagalog

    I am of Social Security age right now. I will be claiming the money I paid in when I reach the age of 66. Social Security, when I receive it, will in fact be a handout, since the United States governnent has long since spent the money I paid into the Social Security trust fund in FICA taxes. Franklin D. Roosevelt said the trust fund was a ruse before he signed the Social Security Act into law back in 1935.

    A story: my mom thought FDR was a communist. She received Railroad Retirement, a Social Security retirement scheme, when she retired, but she was so PO'd at the government for taking the money from her during her working years, she refused to cash the checks, maintaining that she would not be complicit in a communist scheme to take one person's money and give it to another person just because they were no longer working. She said that if Congress and the President were going to steal her money, they should have the integrity to keep it for themselves and not presume to decide when their victims could have it back. Unfortunately, I don't have my mother's uncompromising stiff neck.

  • USMCSniper

    Secretary Sebelpus says we all need to be reducated n Obama Healthcare. Hmmmm "reducation camps" ahhhh Yessss "All submit to glorious re-education camp sponsored by Kommissar Sebelius and other members of the Politburo for the greater glory of Chairman Obama."

    • Gman

      The original SS document promised 3% intrest on your money and it was suppose
      to be in a lock box. No one would ever outspend the money they put in if Congress would have let it alone. SS to me is not a hand out it's our money period, Congress
      is the blaim. You compund 3% intrest for 30 to 40years and the number will spin your
      head.

      • johnnywood

        I will never forgive the "bottom feeders" in Washington for not semi-privatizing SS forty years ago.

        • bubba4

          yeah that would have worked out great during the crash and subsequent recession. You remember 2008…it was a long time ago, Ill admit.

  • Conservative

    I agree with Gman. SS was suppose to be used only for social security, NOT transferred to the general fund, and place IOU notices into the SS Fund. If we dropped SS right now, then those who counted on SS for their retirement years, and don't have enough saved up or invested will HAVE to get hand outs from the government or DIE!!!. Do you think the gov't will allow that to happen? I don't think so. They are a major voting block. So one way or the other, the gov't will have to give them money to survive whether it's through food stamps, free medical care, welfare, or a huge stimulus package to those who lost their SS checks because of it's shutdown.

    I say, don't let Congress steal from the SS Fund, and allow it to compound in interest, and not allow Congress to steal itand put it into the general fund and place IOU's in it's place. THEN slowly drop SS so the people will have a chance to put money into savings and investments and IRA's so that they don't have to rely on government handouts.