Sorry, Kids. We Ate It All.
October
15, 2013 By THOMAS L. FRIEDMAN
Eventually
this shutdown crisis will end. And eventually the two parties will make another
stab at a deal on taxes, investments and entitlements. But there’s one outcome
from such negotiations that I can absolutely guarantee: Seniors, Wall Street
and unions will all have their say and their interests protected. So the most
likely result will be more tinkering around the edges, as our politicians run
for the hills the minute someone accuses them of “fixing the deficit on the
backs of the elderly” or creating “death panels” to sensibly allocate
end-of-life health care. Could this time be different? Short of an economic
meltdown, there is only one thing that might produce meaningful change: a mass
movement for tax, spending and entitlement reform led by the cohort that is the
least organized but will be the most affected if we don’t think long term —
today’s young people.
Whether
they realize it or not, they’re the ones who will really get hit by all the
cans we’re kicking down the road. After we baby boomers get done retiring — at
a rate of 7,000 to 11,000 a day — if current taxes and entitlement promises are
not reformed, the cupboard will be largely bare for today’s Facebook
generation. But what are the chances of them getting out of Facebook and into
their parents’ faces — and demanding not only that the wealthy do their part
but that the next generation as a whole leaves something for this one? Too bad
young people aren’t paying attention. Or are they?
Wait!
Who is that speaking to crowds of students at Berkeley, Stanford, Brown,
U.S.C., Bowdoin, Notre Dame and N.Y.U. — urging these “future seniors” to start
a movement to protect their interests? That’s Stan Druckenmiller, the legendary
investor who made a fortune predicting the subprime bust, often accompanied by
Geoffrey Canada, the president of the Harlem Children’s Zone, of which
Druckenmiller is the biggest funder. What are they doing on a Mick Jagger-like
college tour where they don’t sing, don’t dance, and just go through a set of
charts showing young people how badly they’ll be hammered if our current taxes,
growth rates, defense spending and entitlements stay where they are?
“My
generation — we brought down the president in the ’60s because we didn’t want
to go into the war against Vietnam,” Druckenmiller told an overflow crowd at Notre
Dame last week. “People say young people don’t vote; young people don’t care.
I’m hoping after tonight, you will care. There is a clear danger to you and
your children.”
Whenever
Druckenmiller (a friend) is challenged by seniors, who also come to his talks,
that he is trying to start an intergenerational war, he has a standard reply:
“No, that war already happened, and the kids lost. We’re just trying to recover
some scraps for them.”
With
graph after graph, they show how government spending, investments, entitlements
and poverty alleviation have overwhelmingly benefited the elderly since the
1960s and how the situation will only get worse as our over-65 population soars
100 percent between now and 2050, while the working population that will have
to support them — ages 18 to 64 — will grow by 17 percent. This imbalance will
lead to a huge burden on the young and, without greater growth, necessitate
cutting the very government investments in infrastructure, Head Start, and
medical and technology research that help the poorest and also create the jobs
of the future.
Druckenmiller
is not looking to get his taxes cut. He considers Social Security and Medicare
great achievements for how they’ve reduced poverty among the elderly. He and
Canada are simply convinced that only a Vietnam-war-scale movement by the young
can break through the web of special interests to force politicians to put in
place the reforms that would actually secure both today’s seniors and future
seniors, today’s middle class and the wanna-be middle class. (Watch their
N.Y.U. presentation: http://www.youtube.com/watch?v=fbgIiAnpcPc).
Druckenmiller
urges young people to design their own solutions, but, when asked, he
recommends: raising taxes on capital gains, dividends and carried interest —
now hugely weighted to the wealthy and elderly — to make them equal to earned
income taxes; making all consumers more price sensitive when obtaining health
care; means-testing Social Security and Medicare so they go to those most in
need; phasing in higher age qualifications for entitlements and cutting
corporate taxes to zero, so the people who actually create jobs will have more
resources to do so.
At
the Harlem Children’s Zone, explains Canada, “we have made a promise to all of
our children: you play by the rules, do well in school, avoid drugs, gangs,
crime and teenage pregnancy, and we will get you into college and on your way
down the path of the middle class” and toward a future of financial security.
But, he adds, “the current spending on my generation — I’m 61 — if it continues
unabated, will erase any chance my children will have the safety net of social,
education and health services they will need. It seems deeply offensive to me
that we will be asking these poor children from Harlem to subsidize a
generation that is, by and large, more well-off than they are, and then leave
them deeply indebted in an America that had eaten the seed corn of the next
generation.”
