Not Burdening Our Children

**Shek** · 02-03-2008, 07:41 AM

A good look at how much it costs us for Social Security (too much), the advances in medicine, and the fork in the road that we are facing in terms of government spending.

Quote:

http://www.nytimes.com/2008/02/03/business/03view.html

My Birthday Wish: Not Burdening Our Children
By N. GREGORY MANKIW

IT’S official. As of today, at 6 a.m., I am a half-century old. Special thanks go to my mom for bringing me into the world back in 1958 and for looking after me all these years. But she doesn’t need to worry about me anymore. My welfare now falls within the mission statement of AARP.

Some years ago, I read on a birthday card that you know you are old when you spend more time thinking about money than sex. If so, we economists must age prematurely. After all, it’s our job to think about money, both our own and other people’s.

As I reach this particular milestone, it is hard not be worried about the economy. No, I am not talking about the subprime meltdown and the possible recession that looms on the horizon. I am confident that the team at the Federal Reserve can contain that problem.

Moreover, from the broad vantage point of history, the next recession, whenever it occurs, will likely be a minor blip. My guess is that it will be similar to the recession that was enveloping the economy the day I was born.

Don’t remember the recession of 1957-58? Most people don’t. It was a garden-variety slump — painful to those who lived through it, but short-lived and leaving few lasting scars. Today it is remembered only by the few experts who crunch the numbers in the study of macroeconomic history. My parents’ recession is not my problem, and our next recession will not concern our children when they reach adulthood.

What worry me are the problems that we will bequeath to our children.

Long before I was born, Franklin D. Roosevelt established a compact among the generations. Families had long cared for their elderly members, but Roosevelt federalized that responsibility in the form of the Social Security system. Social Security is sometimes viewed as a pension plan, but it is mostly pay-as-you-go. The working-age population taxes itself to support its parents, in the hope and expectation that its children will do the same. On the day of my birth in 1958, the payroll tax to pay for this program, including both the employer and employee shares, was 4.5 percent.

Around the time I started grade school, Lyndon B. Johnson expanded the generational compact to include health care for the elderly. The Medicare system increased the payroll tax, but only modestly at first. Health care technology was far more primitive back then and, as a result, less expensive. By 1968, when, like my younger son today, I was in third grade, the payroll tax for both programs had risen to 8.8 percent.

Today, the payroll tax for these programs is 15.3 percent, far higher than the programs’ creators ever imagined. More worrisome is that this 15.3 percent is nowhere near enough to maintain solvency in the future. When my generation of baby boomers retires in large numbers and starts claiming benefits, spending on these programs will far outstrip revenue at the current tax rate.

Two problems are working in concert. The first is demographic. Because people are having fewer children and living longer than past generations, the number of working-age people supporting each elderly person has fallen and will continue to fall. (But I am doing my part to fix this: I have three children.)

The second problem is that the cost of health care has risen significantly and is expected to continue rising.

From one perspective, these problems are really blessings. Life expectancy in the United States has risen by about eight years over my lifetime — a fact that I appreciate more with every passing year. Part of this improvement is attributable to technological advances in medicine, which sadly do not come cheap. But they are worth it nonetheless. I doubt that many people would give up modern health care at today’s prices in exchange for 1958 health care at 1958 prices.

THE big question for the green-eyeshade crowd is how to pay for these blessings. It is an issue that no presidential candidate has taken up in earnest.

Republican candidates are fond of saying we should cut tax rates because doing so would incentivize more rapid economic growth (true) and raise tax revenue (wishful thinking). But unless we figure out a politically acceptable way to reduce the benefits now promised to future retirees, taxes are going up in the coming decades. The national debate will have to shift from which tax cuts do the most good to which tax increases do the least harm.

Democratic candidates like to talk about expanding the social safety net with universal health insurance. But they blithely ignore the fact that the safety net we already have was bought on credit and that the bill is almost due.

The Democrats claim fiscal responsibility by advocating taxes on the rich, but the numbers don’t back up the rhetoric.

The campaign of Hillary Rodham Clinton, for example, wants to raise income taxes for those making more than $200,000 a year. Even by the campaign’s own reckoning, however, this tax increase would bring in only $52 billion a year — a mere one-third of 1 percent of G.D.P. And if higher taxes on society’s most productive members discourage economic growth, even this tiny number is an overestimate.

Inside the Beltway, meanwhile, in a rare outbreak of election-year bipartisanship, checks are being prepared to send to voters nationwide. If all goes as planned, a few months before the November elections, a typical family of four will get a windfall of $1,800. Whether the economy needs a short-run fiscal stimulus is debatable. But there’s no doubt the stimulus will add to the national debt we are passing on to future generations of taxpayers.

My birthday wish is for all of us to stop asking what the government can do for us today. Instead, we should focus on what we can do together to prepare the economy for our children and grandchildren. That means getting ready to care more for ourselves in old age, perhaps by retiring later, perhaps by saving more. I hope that when I celebrate my 100th birthday in 2058, my descendants won’t look upon Grandpa and his generation as the biggest economic problem of their time.

N. Gregory Mankiw is a professor of economics at Harvard. He was an adviser to President Bush and is advising Mitt Romney, the former governor of Massachusetts, in the campaign for the Republican presidential nomination.

GVChamp · 02-03-2008, 19:30 PM

I tend to agree with Mankiw's opinions on this issue, but there are three major points that he tends to not address:
1. There is no "right to healthcare." It's a good like any other, except that the problems of scarcity in medical care are even worse than in other sectors: that means that we can't run around offering heart transplants to everyone. We have to prioritize our treatment.

2. There is no right. When Social Security was introduced, the average life expectancy was 63. The flip-side of our longer lives means that we also have longer productive lives, and the government should not be encouraging people to waste these years.

3. The increasing payments in the futures will be a balloon payment that will eventually pass. GenX is a lot smaller than the Baby Boomer generation.

jame$thegreat · 02-04-2008, 22:26 PM

Do you mean that social security that I keep paying into and won't ever recieve? That social security?

gunnut · 02-04-2008, 22:36 PM

Quote:

Originally Posted by jame$thegreat

Do you mean that social security that I keep paying into and won't ever recieve? That social security?

Pretty much. I plan my retirement without social security. I do not expect receiving payment from it at all. It was a scam to begin with and it is a scam now. The thing about a scam is it will eventually collapse.

Start your retirement planning early. Take control of your assets. Invest your retirement funds wisely. If I remember correctly, you're still young. Plan early. I wish someone was there to tell me these things a few years before I took control of my own investments.

bonehead · 02-04-2008, 23:16 PM

SS will rise again when the last baby boomer croaks. SS has done a good job of assisting, and in some cases being the only retirement of millions of Americans throughout the decades. I would gladly take that "scam" over the B.S. that ENRON and its ilk have done. Still, if we can fund all the pork in our government, we can keep SS afloat.

In this day and age you can not be too careful with any retirement plan. There are too many greedy people out there who would love nothing better than to take your hard earned money and line their own pockets with it.

gunnut · 02-04-2008, 23:24 PM

Quote:

Originally Posted by bonehead

SS will rise again when the last baby boomer croaks. SS has done a good job of assisting, and in some cases being the only retirement of millions of Americans throughout the decades. I would gladly take that "scam" over the B.S. that ENRON and its ilk have done. Still, if we can fund all the pork in our government, we can keep SS afloat.

I love the Enron comparison. Many democrats I talked to always whip out the Enron card.

Here's the difference: Enron scums are in jail; scumbag politicians are not. You can't even sue them.

I have the freedom of not invest in Enron. Where's my freedom of not investing in social security. That, is the scam.

bonehead · 02-05-2008, 00:36 AM

Quote:

Originally Posted by gunnut

I love the Enron comparison. Many democrats I talked to always whip out the Enron card.

Here's the difference: Enron scums are in jail; scumbag politicians are not. You can't even sue them.

I have the freedom of not invest in Enron. Where's my freedom of not investing in social security. That, is the scam.

When politicians cross the line they can visit the greybar motel like anyone else. You can also vote out the scum bag in the next election. ANY company can take the money and run. Enron is only one very good example and that is why it is used so much. The way companies hide their wrong doings from investors it is extremely difficult to invest in a "good" company. What you do not have is the freedom to know all the facts of said company before you invest in it. Hell, the way big money runs congress is there really any difference between scum bag politicians and scum bag CEO's?

tankie · 02-05-2008, 02:00 AM

Take it and run = Robert Maxwell , the renound swimmer

, Fraud = Lord (still ), the renound olympic runner , Archer .

As you may or may not know B/H , Archer got time , in an open prison of course and was allowed out for xmas and still sits in the house of Lords , B/Sh1t ,,,awwwww bless him huh . And Maxwell tried to do a John Stonehouse impression ( allegedly )

So you see boys n girls in the USA , it aint just over there , its everywhere.

gunnut · 02-05-2008, 03:31 AM

Quote:

Originally Posted by bonehead

When politicians cross the line they can visit the greybar motel like anyone else. You can also vote out the scum bag in the next election. ANY company can take the money and run. Enron is only one very good example and that is why it is used so much. The way companies hide their wrong doings from investors it is extremely difficult to invest in a "good" company. What you do not have is the freedom to know all the facts of said company before you invest in it. Hell, the way big money runs congress is there really any difference between scum bag politicians and scum bag CEO's?

Unfortunately they buy votes with our tax dollars. Look at any and all government "programs." They are there to secure votes that will keep them in office so they can legally steal from us.

I may not know all the facts about the companies I invest in, but at least I can walk away.

I cannot walk away from the government even if I know all the facts.

jame$thegreat · 02-05-2008, 19:29 PM

Quote:

Originally Posted by gunnut

Pretty much. I plan my retirement without social security. I do not expect receiving payment from it at all. It was a scam to begin with and it is a scam now. The thing about a scam is it will eventually collapse.

Start your retirement planning early. Take control of your assets. Invest your retirement funds wisely. If I remember correctly, you're still young. Plan early. I wish someone was there to tell me these things a few years before I took control of my own investments.

I am still young, 16 as of a few weeks ago. I already know how I intend to retire, federal pention. Plus I will most likely work for a second pention.

I'm already starting to get into the stock market, I will most likely try to invest in some safe long-term companies as well for retirement.

bonehead · 02-05-2008, 23:06 PM

Quote:

Originally Posted by gunnut

Unfortunately they buy votes with our tax dollars. Look at any and all government "programs." They are there to secure votes that will keep them in office so they can legally steal from us.

I may not know all the facts about the companies I invest in, but at least I can walk away.

I cannot walk away from the government even if I know all the facts.

You sure can walk away from the government. You are free to explore other nations until you find one that has a government more to your liking. You are also free to begin a grass roots movement to reform our government. In the mean time you just have to get used to the fact that the fat cat CEO's and our government reside in the same den of thieves.

Remember when we used to get cheaper medicine from other nations, namely Canada, until our government put a stop to it? Who do you think was pulling the strings and lobbying congress to close the "loop holes" that allowed less expensive medicine for the common man? Some companies are more difficult to walk away from than you might think.

**Shek** · 02-05-2008, 23:12 PM

Quote:

Originally Posted by bonehead

Remember when we used to get cheaper medicine from other nations, namely Canada, until our government put a stop to it? Who do you think was pulling the strings and lobbying congress to close the "loop holes" that allowed less expensive medicine for the common man? Some companies are more difficult to walk away from than you might think.

Bonehead,

Reimportation is good in the short run, but very bad for the long run. Profits is what fuels R&D for new drugs, and so destroying profits is equivalent to destroying future drugs.

gunnut · 02-05-2008, 23:27 PM

Quote:

Originally Posted by bonehead

You sure can walk away from the government. You are free to explore other nations until you find one that has a government more to your liking.

How hard is it for me to walk away from a bad corporation? Simple. I don't patronize its business. How hard is it for me to walk away from a bad government? I have to move to another country. I can't just not patronize our government's request for my hard earned dollars.

Quote:

Originally Posted by bonehead

You are also free to begin a grass roots movement to reform our government. In the mean time you just have to get used to the fact that the fat cat CEO's and our government reside in the same den of thieves.

I vote.

Fat cat CEOs have offered more jobs and came up with more innovations to better mankind than politicians.

Quote:

Originally Posted by bonehead

Remember when we used to get cheaper medicine from other nations, namely Canada, until our government put a stop to it? Who do you think was pulling the strings and lobbying congress to close the "loop holes" that allowed less expensive medicine for the common man? Some companies are more difficult to walk away from than you might think.

Let's take away all profits from all corporations. That way we can make sure the consumers are not gouged. Meanwhile, I suggest we all work for the enjoyment of working and not ask for anything more than what is the bare minimum to survive. Together we can make this world a better place. Workers of the world, unite!

bonehead · 02-06-2008, 22:53 PM

You Californian conservatives really go off the deep end when it comes to keeping an eye on corporations. There are some good companies who have a better product and thus deserve the profit. There are also too many companies who get their profits by screwing everyone around them and/or working outside the law. As long as we have the best government big business can buy, the congressmen and the CEO's are but two turds in the toilet.

bonehead · 02-06-2008, 22:56 PM

Quote:

Originally Posted by Shek

Bonehead,

Reimportation is good in the short run, but very bad for the long run. Profits is what fuels R&D for new drugs, and so destroying profits is equivalent to destroying future drugs.

I was showing the link between congress and a big business. Secondly, if there is no real competition the cost of new drugs will be artificially high. We must keep the supply and demand ratio on an even keel.

02-03-2008, 19:30 PM	#2 (permalink)
GVChamp Patron Join Date: 08-25-06 Location: Chicago Posts: 244	I tend to agree with Mankiw's opinions on this issue, but there are three major points that he tends to not address: 1. There is no "right to healthcare." It's a good like any other, except that the problems of scarcity in medical care are even worse than in other sectors: that means that we can't run around offering heart transplants to everyone. We have to prioritize our treatment. 2. There is no right. When Social Security was introduced, the average life expectancy was 63. The flip-side of our longer lives means that we also have longer productive lives, and the government should not be encouraging people to waste these years. 3. The increasing payments in the futures will be a balloon payment that will eventually pass. GenX is a lot smaller than the Baby Boomer generation. __________________ "The great questions of the day will not be settled by means of speeches and majority decisions but by iron and blood"-Otto Von Bismarck

02-04-2008, 22:26 PM	#3 (permalink)
jame$thegreat *Senior Contributor* Join Date: 11-24-04 Location: Brooklyn, New York Posts: 1,044 Country:	Do you mean that social security that I keep paying into and won't ever recieve? That social security? __________________ Sometimes things dont end up how they should, a son, a brother, a mentor, a teacher, a cousin, a nephew, a grandson and a god in my eyes. Who knows what he more could have been... Christopher Muzykant April 9, 1976-November 4,2005 My Brother, Always and forever

02-05-2008, 02:00 AM	#8 (permalink)
tankie tankie *Military Professional* Join Date: 11-22-06 Location: u/k Posts: 2,044 Country:	Take it and run = Robert Maxwell , the renound swimmer , Fraud = Lord (still ), the renound olympic *runner* , Archer . As you may or may not know B/H , Archer got time , in an open prison of course and was allowed out for xmas and still sits in the house of Lords , B/Sh1t ,,,awwwww bless him huh . And Maxwell tried to do a John Stonehouse impression ( allegedly ) So you see boys n girls in the USA , it aint just over there , its everywhere. __________________ TANKIE , WITHOUT WAX

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02-04-2008, 23:16 PM	#5 (permalink)
bonehead *Senior Contributor* Join Date: 01-12-05 Posts: 1,913	SS will rise again when the last baby boomer croaks. SS has done a good job of assisting, and in some cases being the only retirement of millions of Americans throughout the decades. I would gladly take that "scam" over the B.S. that ENRON and its ilk have done. Still, if we can fund all the pork in our government, we can keep SS afloat. In this day and age you can not be too careful with any retirement plan. There are too many greedy people out there who would love nothing better than to take your hard earned money and line their own pockets with it.

02-06-2008, 22:53 PM	#14 (permalink)
bonehead *Senior Contributor* Join Date: 01-12-05 Posts: 1,913	You Californian conservatives really go off the deep end when it comes to keeping an eye on corporations. There are some good companies who have a better product and thus deserve the profit. There are also too many companies who get their profits by screwing everyone around them and/or working outside the law. As long as we have the best government big business can buy, the congressmen and the CEO's are but two turds in the toilet.

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