|The baby boom is old news
James K Galbraith
January 19, 2007 09:30 PM
The Federal Reserve noise machine is back at work, in the form of new
testimony by Chairman Ben Bernanke, grimly warning the Senate Budget
Committee of a future crisis. Needless to say, the Washington Post,
which loves these tales, slapped it on the online front page.
And what, or should I say who, is the source of this crisis? Is it
Osama bin Laden and the cost of the War on Terror? Is it the ghost of
Saddam Hussein and the two trillion dollar war in Iraq? Is it George
Bush, Dick Cheney, the past Republican Congress and their tax cuts?
No, Bernanke mentioned none of these.
So who's the villain? Why ... I am! I'm a Baby Boomer. My mother and
dad did the deed - or so anyway my brothers told me - sometime in the
backwash of the second world war. And there I've been, a demographic
disaster, a ticking time bomb, a walking road to ruin, ever since.
This is news? Bernanke should check with the Census Bureau. They will
advise, I think, that the tale of the Baby Boomers isn't exactly new.
The last of us was born, so they say, in the early 1960s. We've been
counted and schooled. We marched against Vietnam: the FBI knows about
us. We pay taxes: the IRS knows about us. We do email: the NSA knows
about us. Hell, Google knows about us. Nobody in the history of the
universe is better documented than we are.
Or Ben might ask Alan Greenspan. Did he know about the Baby Boomers
when he chaired a commission on Social Security back in 1983? I was
already 31 years old at the time; Alan and I had actually met. I'm
fairly sure he was aware, in general terms, of my existence. And his
commission, back then, knew exactly how old we'd all be when 2008 came
around and kids born in 1946 started to retire.
The Greenspan commission put the Social Security system into a
pay-in-advance mode. Payroll taxes were raised and the Social Security
trust fund built up an enormous surplus, held as US government bonds,
ever since. That surplus exists today. Social Security assets are over
four times costs right now - and are expected to remain above three
times costs for at least the next twenty years. That means interest
payments will be coming in, to supplement payroll taxes and meet the
Is there a Social Security financing crisis? No. And there won't be one, either.
Bernanke says that our "problem" is an aging population, plus rising
health care costs. The inference is that we, as a society, cannot
afford to keep our elderly in modest comfort, or to pay their medical
bills. He implies (without quite saying it) that the solution must be
cuts in Social Security, Medicare and Medicaid. And that, of course,
is what the press picks up.
Here's the truth: By any measure of living standards, we're richer now
than ever before. By any projection, we will be richer still in twenty
or thirty years. By any measure, we can afford the Social Security
program we've got now. And we can afford health care too, although
costs are a problem, and getting insurance to those who don't have it
is an even bigger problem.
The "fundamental decision" isn't over how much to spend on Social
Security, Medicare, and Medicaid. The fundamental decision is: what
should happen to today's working Americans, when we get old? For just
as my generation didn't appear yesterday, we won't disappear, either,
when pensions and health care are cut. We'll just lead poorer, sicker,
and shorter lives.
Cutting Social Security, Medicare and Medicaid should be off the
table. Now. After that, we can talk, if we must: about letting Bush's
tax cuts expire, or reforming health care, or about the money we could
save by getting out of Iraq; or, for that matter, about whether there
really is, or really will be, a federal deficit problem.