Thanks, once again, to Los Angeles Times columnist Michael Hiltzik for providing some desperately needed truth-telling about an especially outrageous proposal backed (quietly, of course) by the billion dollar austerity lobby. It’s called “generational accounting”...long-ago debunked and discredited but revived again by Washington’s anti-Social Security and Medicare lobby as a way to fuel a crisis which does not exist while pitting young versus old. We recommend you read Hiltizik’s entire piece here, but these are some highlights:
For starters, generational accounting doesn't make a distinction between spending and investment. An appropriation to send a congressional committee on a junket to the Bahamas carries the same weight as building a schoolhouse or a bridge.
That's a real flaw. The government's decision in the 1950s to spend billions to create the interstate highway system shows up in generational accounts as a huge burden on post-1950s taxpayers. That's you and me. But we're obviously reaping economic benefits from that decision, as will our children and grandchildren.
The same goes for education, which obviously packs a lot of value for its youthful recipients, who are also the taxpayers of the future.
Kotlikoff's view of Social Security and Medicare, which is that they're devices for the old to rip off the young, is especially faulty. Middle- and high-income wage-earners are paying their own way in Social Security, as C. Eugene Steuerle of the Urban Institute has shown. According to his figures, a two-income couple who earned an average wage and retired in 2011 had paid an average $598,000 in Social Security taxes (adjusted for inflation) and will collect an average $556,000 in benefits. Sounds like they're redistributing their income to the young, not the other way around. Low-earning workers do much better, but that's a redistribution from rich to poor, not young to old.
"There's no agenda here," he says. "It's not a Tea Party agenda or a left-wing agenda for less spending or more spending. It's about truth in government operations — it's a be-honest-with-our-kids act."
That's disingenuous. For one thing, among the Inform Act's champions is an organization called The Can Kicks Back. The group bills itself as a grass-roots anti-deficit lobby for today's younger generations but actually has links to hedge fund billionaire Peter G. Peterson, whose hostility to Social Security and Medicare is a byword.
Pretty soon, this group will launch their full page ad in the New York Times and their so-called “Inform Act” will no doubt work its way through Congress, even though the deficits they claim are at the heart of their proposals continue to be reduced. Clearly the austerity crowd’s goal is to, “never let a crisis go to waste,” and they’re determined to cut benefits to middle class Americans who depend on Social Security and Medicare...regardless of the fiscal facts. The truth is, our nation still faces a system-wide healthcare crisis. Obamacare is a good start but we need to finish the job of bringing down the high cost of healthcare in America, not just in Medicare but in our private system.
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