The Wall Street Journal today features a review ($ paid site) of Laurence Kotolikoff and Scottt Burns’ book The Coming Generational Storm. The book is an expose of the myth of the purported retirement and medical benefits that seniors are allegedly going to receive. The review, Todd Bucholz, notes:
How did we get into this mess? We’ve spent 70 years building a pyramid scheme. When Franklin Roosevelt set up the Social Security system, the median age of a retired worker was, well, dead. It was easy to promise benefits when most people died in their 50s. A pyramid scheme works as long as you’ve got an ever bigger supply of drones to lug the bricks and blocks. Pyramids worked fine for the pharaohs until Charlton Heston led the Hebrew slaves through that river.
But now the U.S. pyramid looks like it could turn upside-down. “In 2000 there were 82 million people under the age of 20 in the United States. Their numbers dwarfed the 35.5 million seniors.” By 2080, there will be more seniors than young people. That means more walkers than strollers. We already have more golf courses than McDonald’s. And that was before Phil Mickelson inspired perennial losers to head back to the links.
According to Kotlikoff, taxes would have to rise to a 70% (average rate? not clear) to pay for these programs. But would anyone pay taxes at that rate? Would people continue to work as much as they do now if 70% was going in taxes? Do the citizens of the US have the political will to tackle this problem before the system implodes on its own? Bucholz quotes the following anecedote:
This engaging book recounts the harrowing story of Rep. Dan Rostenkowski, who pushed through a health-care plan for the elderly and then asked them to help pay for it. At one event, he was “booed and chased down a Chicago street...by a group of senior citizens.” Eventually he “cut through a gas station, broke into a sprint and escaped in a car, which minutes earlier had one of its protesters, Leona Kozien, draped over the hood.”
