Next week’s economic reports presented by Fawad Razaqzada, Market Analyst, Forex.com....
The Coming War Over Social Security
04/20/2009 11:50 am EST
Last week I annoyed a lot of people by questioning the future of Social Security. Judging by the emails that came my way, members of the younger generation weren’t surprised at all. But I was amazed at the number of panicked people who are nearing, or already in, retirement.
They chastised me for daring to mention changes to their benefits, whether through taxation or proof of need. Many wondered whether they should start taking permanently lower benefits at age 62–before the program “runs out “ of money. And one sent a long letter trying to convince me that the government “wouldn’t let Social Security run out of money.”
Right, I responded: They’ll just print it!
It’s clearly an issue that becomes more personal when you rely on Social Security to fund your retirement. Younger generations have lived with dire warnings about the future since they started work. But baby boomers have always hoped they would get their money out of the system—because the young workers would still be paying into it.
Now we’re starting to see a divide I wrote about in my book, The Savage Number. I called it “generation warfare”!
Boomers may be unwilling to confront the dire future of Social Security. But their adult children are now watching a huge tax bite come out of every paycheck. They believe they’re likely to see little of real benefit.
Given the magnitude of the promises we’ve made about Social Security, and especially Medicare, these programs will dominate our national spending for decades to come. In fact, by 2030, the promised spending on just those two programs will consume 52 cents of every tax dollar (at today’s level of taxation).
The federal budget will be overwhelmed if we don’t change these “untouchable” programs. Add in interest on the national debt, even at modest interest rates, and there will be very little left for national defense, road building, or bailing out future Wall Street failures.
One user noted to me that the huge boomer generation will have “enough votes to make sure Social Security is not impacted.” Exactly. Get ready for generation warfare in America!
What do you think? Should we make boomers pay more for their own Social Security to lower the burden on their children? What other things can we do to prevent this kind of conflict in the future? Please have your say and join the conversation.
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