There is a moral issue behind most of the public policy issues at the federal, state and local levels, and even in the private sector: generational equity. Almost every decision, non-decision, deal and trend of the past 25 years has provided no reductions in benefits, or even more benefits, for older generations, while imposing additional burdens and sacrifices on younger generations, those who will be working and paying taxes, and in need of public services and benefits in the future. One finds generational inequities in the Social Security system, in government financed and subsidized health care, in public employee union pensions and other retiree benefits, in the wages and benefits of older and younger generations in the private sector, in the financing of maintenance of the public infrastructure, in energy and the status of the natural environment, and in the tax code. These are in addition to soaring on-the-books federal, state and local debts. In some cases a diminished future for younger generations has already arrived, and in some cases it is coming. And no one, not the Democrats, not the Republicans, not “liberals,” not “conservatives,” seems willing to point this out.
I wrote this post in August, 2008, but it is the distillation of many things I had written earlier and things I had been saying for years. The original post was on Room Eight here.
http://r8ny.com/2008/08/27/generational-equity-and-the-legacy-of-todays-politicians/
People don’t frame the generational equity issue correctly. Public policies that favor the old at the expense of the young are not necessarily unjust, since the young have other advantages. As long as these arrangements are sustainable. The question is, were those now older collectively willing to make the same sacrifices when they themselves were young? And will those now younger receive the same benefits when they are older themselves, without causing even more harm to those coming after? In the wake of Generation Greed, those born between 1930 and 1957 or so, the collective answer is “no.”
Whenever I bring this issue up, the response is usually rage. Generation Greed doesn’t like to be identified as Generation Greed. But all the inequities I discussed in this post, which I will now update at its end (in italics), have been discussed in the public realm for my entire adult life. Everybody who has been paying attention knows everything I write about, but somehow those on the receiving end demand not to hear about it, or to have it rationalized for them.
Let’s start with Social Security. As I first wrote here,
http://r8ny.com/2007/02/26/social-security-the-generational-betrayal/
twenty-five years ago those running the federal government made my generation and those after a promise: pay a vastly higher regressive payroll tax throughout your lives and accept a later retirement age, and Social Security will be there to keep you out of poverty in your later years. With all the extra payroll taxes since collected over and above those required to pay benefits (plus interest), the rest of the federal government owed Social Security nearly $1.9 trillion dollars as of FY 2006.
But in reality, however, all the additional money collected in the past was spent in the past, and substituted for personal income taxes that were cut in the past. To pay Social Security that $1.9 trillion back, the rest of the federal government will have to force younger generations to pay a second time — in higher taxes and/or lower spending on other things, or it will have to cut Social Security benefits. Not only that, but during the past 25 years the federal government borrowed even more money on top the funds that should have been set aside for retirement benefits but wasn’t, and we will have to pay that back too.
How about health care? As I first wrote here …
http://r8ny.com/2006/07/01/socialized-medicine-get-real-its-already-here/
although the majority of Americans finance their health care through private insurance plans, the federal state and local governments are in reality paying for three-quarters of all third party health care expenditures in the United States, either directly (Medicare, Medicaid, the VA system) or indirectly (private insurance paid for by taxpayers on behalf of public employees, and tax breaks such as the exclusion of employer-paid health insurance from taxable income). Total direct and indirect government spending on health care soars ever year, but benefits fewer and fewer people. In fact, the government cost of health care in the United States, as a share of GDP, is higher than the total cost of health care in other developed countries, countries where they government covers the basics for all, leaving people to pay for luxury-class and high-tech care on their own. Here the government provides or subsidizes luxury and high tech care for some, and provides nothing for others, others who nonetheless pay taxes that fund health care.
Each year additional spending and benefits, including the recently enacted Medicare prescription drug benefit, buys more health care at and higher and higher prices for beneficiaries inside the charmed circle, particularly public employees and today’s senior citizens. Those in younger generations, meanwhile, are increasingly uninsured, or forced to pay for health insurance on their own. And this isn’t just a choice to remain uninsured while they are young and healthy, as some claim, it is a generational shift in what people will receive throughout their lives. Just as earlier generations granted generous defined-benefit pensions for themselves, and offset the cost by giving my generation less-generous 401K plans (increasingly with no employer contribution at all), so younger generations are increasingly less likely to receive employer-financed health insurance, even when they get older and really need it. Many large businesses, for example, get around the requirement that in order to receive the income tax exemption all employees must receive employer-financed health insurance — by taking on younger workers as “freelancers” and “independent contractors” rather than employees. That is one reason self-employment is surging as a share of total employment in this country.
Based on the current trend, there is no reason for me to believe my teen-aged children will receive employer-financed health insurance once they complete their education. Soaring federal, state and local debts mean that today’s twenty-somethings are not only less likely to be insured today, but they will also be less likely to receive government support for their health care needs later, when they get older and health problems begin to accumulate. My own generation may not even benefit from government-funded or subsidized health care when we need it most. As the United States heads toward bankruptcy, I tell my generational peers all we’ll get is medical marijuana followed by legal assisted suicide. And that’s if the Democrats are in power. If the Republicans are in, we won’t even get that.
And those debts are soaring. When George W. Bush proposed his tax cuts in 2001, he promised surpluses as far as the eye could see. Now, with those tax cuts enacted, his administration admits there will be deficits as far as the eye can see, even when the economy has recovered. In fact, the federal deficit has been reported to be at record levels in dollars this year, and that’s with all those additional payroll taxes workers are forced to pay being spent today, rather than set aside for their Social Security. And government bailouts of the financial industry, to offset the debt-driven consumer spending boom of the past eight years, will add billions — perhaps trillions — more to that debt. If those who save, who are mostly outside the United States, become unwilling — for whatever reason — to keep lending more and more money, interest rates will soar and the economy will collapse.
Speaking of taxes, as a result of a long series of senior citizen tax breaks, many enacted in the past when senior citizens were worse off (on average) than working people and younger generations rather than better off, those over 65 pay vastly lower taxes than younger people even when they have exactly the same income. As shown in this analysis…
http://r8ny.com/2008/02/13/taxes-generational-equity-redux/
where I live a hypothetical young couple with a child, earning $100,000, with no savings or health insurance or pension, and living in a rented one-bedroom apartment, would have paid $22,214, or 22.2% of their income, in federal taxes in 2007, while a retired, senior-citizen couple who owned their home, had a pension, and benefited from Medicare, would have paid $11,791 on the same $100,000 income, or 11.8% of it. The young couple would have paid $10,926 in state and local income taxes and (indirectly as part of their rent) property taxes, or 10.9% of their income. The senior citizen couple would have paid just $2,378, or 2.4% of their identical income, in state and local income and property taxes, one quarter of what the younger couple would have paid. That is $33,140 in taxes for the young couple and $14,169 in taxes for the senior citizen couple on the very same cash income, even though the senior citizen couple in this example has far more wealth and non-cash benefits. Will today’s young people be similarly advantaged when they become senior citizens themselves? Almost certainly not.
In addition to the on-the-books federal, state and local debts, and the fact that the extra Social Security taxes have already been spent, there is another enormous debt that has been hidden — the rich pensions (after early retirement) and extensive retiree health benefits that today’s politicians have promised public employees — including themselves — but have not paid for. All of the cost of the retiree health care, and much of the cost of the pensions, has been deferred, allowing older generations to enjoy more spending (on themselves) and lower taxes (on themselves), with younger generations facing the reverse when the bill comes due.
As I explained here…
http://r8ny.com/2008/04/13/stock-prices-and-public-employee-pensions-a-history/
in older places (such as New York City) where the retirement crisis hit long ago, the result has been a cycle of richer pension and retiree benefits for public employees with seniority every time the financial markets boomed, described as “free” since investment returns would purportedly pay for it all. This has been followed, multiple times, by higher taxes, reduced public services, and lower pay and benefits for newly hired public employees every time the financial markets bust, due to “circumstances beyond our control.” The result has been a series of union contracts providing enriched pay and benefits for those cashing in and moving out, and lower and lower pay and benefits for the increasingly less motivated and qualified people providing degrading public services in the future. And those disadvantaged new hires are nonetheless forced to pay dues to the unions who sold them out, dues that in part help fund the political activities of the incumbent politicians.
Suburban and Sunbelt communities haven’t yet faced the public employee retirement crisis New York and other older cities have, and thus have lower taxes and in some cases better public services. The reason is that newly-developing places have relatively few public employee retirees (reflecting their past as rural areas with few people) and lots of new taxpayers, keeping the cost of retirement benefits low relative to the growing tax base. Once a community is fully developed, however, the tax base and population stop rising rapidly and the number of retired government workers soars. That’s when newer and younger residents of those communities find out that the pensions and health care benefits of the newly retired weren’t paid for in the past, when they were working. The cost was deferred, and will require huge tax increases and public service reductions to pay. Much of suburban and Sunbelt America faces the kind of fiscal crisis New York and other older cities faced in the 1970s, unless a new national health care system picks up the cost of the retirees. Whether the cost is federal or state and local, however, tomorrow’s taxpayers will be forced to pay for public services provided by public employees yesterday, a hidden debt over and above the financial ones.
The decline of our infrastructure is another hidden debt. The suburban and Sunbelt infrastructure that was put in place in the 1950s and 1960s has suffered from inadequate maintenance, and now requires rehabilitation or replacement — just as the urban infrastructure did when it fell apart in the 1970s. One might argue that our oil dependent transportation system is functionally obsolete and requires at least partial replacement with something else. With federal, state, and local governments already deep in debt, however, there is no money for this.
Even in places where the infrastructure fell apart sooner and has been repaired, the generations now in charge have been unwilling to pay to repair it, and have borrowed the money instead. New York City’s public transportation system, despite the highest ridership in 50 years, is facing a financial disaster, physical deterioration on a massive scale, and the postponement (actually cancellation) of long-promised improvements, as I showed in detail here
http://r8ny.com/2008/03/03/the-2008-13-mta-capital-plan-our-sold-out-future-is-here/
The reason is that within a few years half its revenues will be going to the past — to debt service, pension contributions, and retiree health care — not to transportation. The transit systems of Boston and Chicago are even more bankrupt, in the former case because of money borrowed to maintain the system as revenues were diverted to the “big dig,” in the latter case because of lucrative but un-funded pensions. The New Jersey transportation trust fund will use nearly all of its future revenues to pay past debts. The next President will inherit a bankrupt highway trust fund.
This, however, is not the greatest failure of the past 35 years. Following the 1973 Arab Oil boycott and subsequent energy crisis and economic meltdown, it was clear to the generations now in charge that energy was the greatest challenge they faced, as former President Carter explained in 1977 in the speech described in this essay
https://larrylittlefield.wordpress.com/2014/10/08/update-oil-sugar-and-35-now-41-wasted-years/
The environmental concerns related to global warming are merely an addition to the existing economic and national security imperatives. For 35 years, however, these generations have been unwilling to make any sacrifices for the sake of our economic, security and environmental future. Beginning in the mid-1980s, as the price of fossil fuels fell, they took the easy way out and stopped conserving and investing in alternatives. They had their cheap energy party, and left us with the situation we are in today. We are an increasingly impoverished nation of global energy beggars, at risk of being cut off at any moment, either for political reasons or because the Chinese, Arabs and Russians realize we’ll never be able to pay off all the money we are borrowing to buy imported oil, and stop lending us more.
There are some who argue that government policies that enrich older generations are fair, because over time people become richer. By transferring wealth from younger generations to older, by running up debts, deferring costs, and not investing in the infrastructure, they argue, such policies are therefore “equitable” transfers from rich to poor.
It is true that in their personal lives many of today’s young people expect to live a lifestyle immediately that it took older generations decades to achieve. But it is no longer true that younger generations are and will be better off that older generations were at the same age. The data shows that those in the second half of the baby boom, who came of age in the 1970s stagflation era rather than in the 1960s, were worse off in their 20s than earlier generations had been at that age, and worse off in their 30s than earlier generations had been at that age, etc. Those coming after have been worse off still. Much of the difference will not be apparent until the “stagflation” generation and those after reach old age — without pensions, retiree health care, or perhaps even Medicare. Rather that cut the cash pay young workers could see, businesses first cut the future pay they didn’t know enough to appreciate. As a result the poverty rate for senior citizens, which has been lower than for working people in recent decades following the expansion of senior benefits in the 1960s and 1970s, is set to soar.
People in their 20s today, moreover, are also paid less in cash (adjusted for inflation) than those who came before, as a demographic analyst showed in this analysis
http://www.gothamgazette.com/article/demographics/20070619/5/2208.
In inflation adjusted dollars, average annual earnings for U.S. workers in their 20s fell from $32,192 in 1970 to $28,250 in 1990 (when I was 29) to $26,995 in 2005. Even for twenty-somethings who are college graduates, the averages were $42,834 in 1970, $39,040 in 1990, and $35,653 in 2005. So what can be expected for my own children, who are in their mid-teens?
In recent decades, in fact, only two kinds of people have been getting richer – top executives and today’s senior citizens, particularly retired public employees. Everyone else is getting poorer. And it isn’t because of international trade or technology or other factors economists talk about, it is because of power. The executives sit on each other’s boards and vote each other higher pay, even when the corporations they oversee lose money. State and local officials enrich pensions for public employee union members with seniority in exchange for political support, and then cut the pay and benefits of new hires when money is tight, and those new hires are forced to pay union dues even so. Social Security is adjusted upward for inflation, but the minimum wage is not.
Times sure have changed. In the 1950s and 1960s, everything was for the children and the young, as their parents left their grandparents behind in declining urban and rural communities and moved to the suburbs and the Sunbelt. The old, who had worked and sacrificed, were neglected and forgotten. Today things are just as inequitable, but in the opposite direction. And many of those who were on the lucky side as children and young parents are on the winning side yet again. Everything is still for themselves.
At every point in their lives the generations born between 1930 and 1957 or so – the so-called “Silent Generation” and the first half of the baby boom – have been better off economically than their predecessors, while those born later, who came of age in the mid-1970s and after, have been worse off. No wonder the estate tax has become such a hot issue. The “Greatest Generation,” those who are now dying off, worked, fought and sacrificed to build a better world for its children. Now, some members of the “Richest Generations” are desperate to provide a future for their children, and only their own children, in a diminished world. A world they are diminishing at this very moment through the actions of their elected representatives, almost all of who are of the same generation as themselves.
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Update: Social Security Needless to say, faced with the prospect of imposing sacrifices on themselves and their generation to preserve Social Security for those coming after, Generation Greed politicians have chosen to do nothing. Since 2008 the situation has deteriorated, with benefit payments exceeding payroll tax revenues years earlier than had previously been expected. To pay Generation Greed everything that it has promised itself but was unwilling to pay for, the federal government is now converting the theoretical debt it owed to the Social Security Trust fund into a real debt owned to foreign creditors.
http://www.cbsnews.com/news/social-securitys-new-report-has-a-clear-message/
Even at that, the disability trust fund will be empty by 2016, and the old age trust fund will be gone by 2033, when I will be 72 years old and might be looking to retire.
“If these trust funds are depleted, according to current law, Social Security benefits must be reduced to the level that’s supported by the amount of FICA taxes being collected from workers at that time. The trustee report estimates that tax income will be sufficient to cover about three-quarters of all scheduled benefits at that time.”
That sounds like they’ve already got their solution. No one has to vote to screw future generations: all they have to do is nothing. Although I wouldn’t put it past them to decide to provide full benefits for those born before 1958 even after 2033, and just half benefits or less for those born later, because they have “time to adjust.”
While the retirement income of my generation and those after, those who also had pensions taken away from them in the private sector, will be slashed, our children will still have to pay off the huge debt run up to pay full benefits to older generations for the next 20 years. Because Generation Greed already spent all the extra Social Security money on itself in the past 30 years, leaving behind IOUs. By the time I reach age 70, the federal debt is expected to exceed 100 percent of GDP. Which means that at a five percent interest rate, five percent of our economy would just go to interest on the debt. Total federal tax revenues have typically been less than twenty percent of GDP.
The situation of the Social Security trust fund is like this. Imagine you have a 401K plan, to which you dutifully contribute year-after year. People are, however, allowed to borrow from their 401K plan. So each year you borrow all the money you have contributed to the 401K, and spend it on yourself. As retirement approaches you have a balance of $500,000 in the 401K plan, but you also owe that plan $500,000 due to past borrowing, which means that (net) you have nothing. And in addition, you owe $200,000 more on credit cards. Then you tell your kids that since you worked hard all your life, and obviously can’t pay that money back, they’ll have to pay back the loans while you collect on the $500,000. And then in 2033, the $500,000 they have paid will be gone too.
Update: Government Health Insurance In this case something has changed: the Affordable Care Act (aka Obamacare). The overall law is a mess, because rather than impose root-and-branch reform on a financially and morally bankrupt accidental health care finance system, it simply tried to impose fixes while keeping all the existing arrangements and interests in place. It is like the head of a unicorn grafted onto the body of a turkey.
That said, Obamacare did slow the exploding direct and indirect government cost of health insurance for those already in on the deal.
http://online.wsj.com/articles/cbo-sees-growth-in-medicare-costs-continuing-to-slow-1405434582
“The slowdown in Medicare cost growth has both economic and political consequences. ‘Excess cost growth,’ a measure that looks at how much faster health-care costs will rise than gross domestic product, will be 1.7% in 10 years, the CBO said. Last year, the CBO estimated it in 10 years would be 2.6%. As a result, the Medicare trust fund’s balance would increase from $206 billion in 2013 to $261 billion in 2024, before starting to slide. The trust fund is financed through payroll taxes and premiums paid by beneficiaries.”
Note: like the Social Security trust fund the Medicare trust fund isn’t real. It consists of IOUs, permission from our parents to tax our children into poverty while providing them with nothing in return.
“Another reason that Medicare’s hospital fund is improving financially is because of the 2010 Affordable Care Act, which cut more than $700 billion in Medicare spending to offset increases in spending to expand health-insurance coverage to lower-earning Americans.”
Younger Americans, who are poorer than those who came before, now benefit from a Medicaid program further expanded to the working poor (in some states) and subsidies for the purchase of private health insurance in an improved marketplace. So despite its flaws, the Affordable Care Act has at least provided Americans who are not yet age 65 with something.
Some opponents have spun Obamacare as a burden on younger Americans, who previously could have simply remained uninsured and then went on medical welfare (ie. Medicaid) if they got sick, taking the risk of free riding on the taxpayer. Now face a fine if they do not purchase health insurance. Since young people tend to be healthier, it is argued, they’ll end up cross-subsidizing the middle aged.
Under the affordable care act, however, states can allow insurance companies to charge middle-aged people up to 3.0 times the cost of young policyholders. In 2011, for the 46 states that have property reported their data, Medicaid spending per beneficiary age 45 to 64 was just 3.5 times spending per beneficiary for those age 19 and 20 and 2.2 times the spending on those age 21 to 44. So the argument that Obamacare rips off the young is false. Exempt in New York, were there is government of, by, and for the seniors and the producers of public services. Where the young are forced to pay the same for health insurance as middle-aged people, in a non-decision no one talked about.
Elsewhere, to understand the reality consider that Obamacare is responsible for the rise of the Tea Party, a bunch of aging “fiscal conservatives” who demand more public health care spending on themselves (get the government out of Medicare!) and tax cuts for themselves, along with Medicare and Social Security cuts for younger generations. And a proposal by “fiscal conservative” Paul Ryan to do just that.
http://www.politico.com/blogs/bensmith/0411/Generation_Greed.html
I don’t see any reason why anyone under 55 should vote for any Republican at the national level. If someone happens to be an actual “fiscal conservative,” they’ll have to come up with some other political party.
Update: Debts It isn’t just public debts that had soared in the era of Generation Greed. Private debts had soared as well, covering the widening gap between what businesses were paying ordinary Americans and how much it was selling to them. That consumer debt-driven economy, and related inequality, came crashing down in 2008. Or would have, if the federal government had not stepped in to borrow for Americans who could no longer borrow themselves, now that everyone knew those loans would never be paid off. As I showed here…
total federal debt held by the public soared from 35.4% of GDP in 2007 to 73.5% of GDP in 2013. And immediately talk has resumed about how much federal old age benefits will have to be cut, for younger generations only, to pay for the national parties during the Reagan and Bush II administrations, and their aftermath. Despite those soaring debts, federal spending on items with long-term benefits – such as infrastructure – continues to fall. And the young soldiers sent to fight and become crippled in Afghanistan and Iraq are not being property cared for. I have openly wondered if younger generations would have been better off with another Great Depression in the short run, than with a future diminished by the debts run up to keep our unsustainable economy going a few more years.
Update: Taxes Here in New York seniors just can’t stop demanding lower taxes for themselves, so they won’t have to pay for the debts they ran up and the old age benefits they promised themselves but refused to pay for. The geriatric, future destroying New York State legislature proposes more and more exemptions of private pension income from state and local income taxes (public employee pension income is already exempt from taxes) and other breaks. As I wrote here…
the latest gambit is a union push to pretend public employee pension income doesn’t exist when determining whether or not a retiree qualifies as a “poor senior.” A poor senior who is entitled to special “enhanced” property tax breaks under the STAR program. If a senior (but not a worker) actually is poor, they are already entitled to those breaks. But as a matter of “fairness” and being “progressive,” it seems the state legislature believes that since better off seniors already don’t pay state and local income taxes, they should pay less in property taxes (than those who are worse off ) too. With young people not paying attention and not willing to organize to throw these sleazebags out, it is only a matter of time before a deal is cut and something like this passes. What is worse the mainstream press, with its dwindling geriatric readership, is unwilling to call out those who propose such deals for their injustices. Thereby earning the fact that no one under age 40 spends a dime on them anymore.
Update: Public Employee Pensions: As predicted, in New York City following the retroactive pension increases of 1991, 1995, 2000, and (for New York City teachers) 2008, pension costs have soared, taxes have been increased and services have been cut. A new pension tier has been created, forcing future public employees to pay more for less in retirement benefits than Generation Greed had been promised to begin with.
Soaring pension costs are responsible for the ongoing demands for more and more spending on public schools, even though New York state already spends more on average than anywhere else in the country. Having taken much of that money off the top in retroactive pension increases, “advocacy groups” financed by the teacher’s union and other unions demand even more funding to spare the classroom – and provide raises for those still working. To be paid for by whom, and how? The demanded a “millionaire’s tax,” got it, but find they have taken so much it still isn’t enough.
Meanwhile, suburban and Sunbelt America is facing a pension disaster for the first time. Not only are the City of Chicago pension funds broke, but also the State of Illinois pension funds that cover public employees in the rest of the state are broke. The Sunbelt state of California and the suburban State of New Jersey stopped being rapid growth areas 25 years ago, and both now face pension crises. In bankrupt Detroit and a few other places, existing retirees have been forced to make sacrifices. In general, however, the debate is about allocating those sacrifices among younger and future public employees, service recipients, and taxpayers –while the older generations that caused the problem by retroactively enhancing or underfunding pensions – are spared.
This rant by the Chicago Tribune, when they suddenly woke up and realized the implications of what had been done for decades, captures what is going on around the country.
“Pension math is relentless, tyrannical: Chicago pols and union officials knew they were committing tomorrow’s taxpayers to pension costs that could grow astronomically over time. But since their pension hikes likely couldn’t crush City Hall (or taxpayers) for a few decades, they were protected by the needn’t-be-spoken blood oath of IBD, YBD: If pension costs explode, so what? I’ll be dead, you’ll be dead.”
“The sorry legacy: Today almost every property tax dollar goes not to services, but to runaway pension and debt costs. Yes, downtown Chicago does look beautiful — as beautiful as your home, too, could look if you expanded your mortgage debt indefinitely and consequence-free.”
“The net result over time, as City Hall deepens its liabilities yet delays retiring them, has been a massive theft of wealth in dollars by the billions: government leaders robbing their children and grandchildren, the putative taxpayers of tomorrow. If, that is, those young people stay in Chicago.”
“This serial larceny — our priorities are so worthwhile today that you, the yet unborn, must be made to pay for them — ought to embarrass politicians who boast that City Hall serves the needs of children. The debts we are bequeathing to future Chicagoans expose those platitudes as cruel lies.”
“Since Chicago’s incorporation in 1837, no generation of public officials and enabling voters has so hamstrung the next generation with such an abysmal inheritance. Those future Chicagoans, and whatever employers remain to hire them, risk inheriting exorbitant debt burdens, and probably exorbitant taxation, for which they will have received … no services whatsoever.”
I’ve written about public employee pensions extensively in the last few months. To review that information, start with this post…
And use the tabs at the bottom to follow along to the rest.
Update: Infrastructure: The consequences of the unwillingness of Generation Greed to pay for infrastructure, instead preferring to spend both its own money and that of its children on immediate gratification, is beginning to lead to tragicomic public policies. Essentially Generation Greed is desperately engaged in ever more extreme measures to defer the consequences of its actions until it is safely in the grave, world champions in the “whoever dies with the most toys wins” game, or (in the case of New York and New Jersey) in Florida or the Carolinas. It is like a $trillion dollar game of Jenga…
http://en.wikipedia.org/wiki/Jenga
with those playing the game hoping to have already departed having been declared winners when the infrastructure collapses.
At the federal level, to prevent the transportation trust fund from going broke for a few more months, the Congress decided to allow those private employers that still provide defined benefit pensions to intentionally underfund them, and use the resulting taxes on the temporarily higher profits to postpone the reckoning.
As I noted here
In New Jersey, Governor Christie cancelled the ARC tunnel to New Jersey to come up with money to remain the deteriorating Pulaski Skyway. With all the dedicated “transportation trust fund money” going to past debts, New Jersey has no way to maintain and operate its transportation system. Except to borrow even more money and raid the Port Authority of New York and New Jersey, which is also going broke.
Nearly half of the cash income in New York’s transportation trust fund is also going to past debts. To pay for a replacement for the deteriorating Tappan Zee Bridge, New York Governor Cuomo has decided to raid money borrowed for water and sewer infrastructure. There is no money to replace the bridges despite all the tolls over the past 60 years since it opened.
And as for New York’s Metropolitan Transportation Authority, after 20 years of raids by all concerned it is $32 billion in debt, with most of that borrowed not for long-promised improvements but rather for ongoing normal replacement of components of the transportation system as they wear out (ie. maintenance). The last MTA capital plan, based on such borrowing, is set to expire at the end of this year. The state legislature will quietly decide, after the election and without telling anyone, if it is safe for their generation to start allowing the system to fall apart. Or if more will be borrowed to put this off until their crowd can carry its booty to Florida or the grave.
Update: Energy: This is allegedly the source of some good news. In the wake of the Great Recession, and with younger generations substantially poorer and less likely to own houses and cars, energy demand has fallen. Renewable energy has been expanding exponentially, albeit from a low base. And advanced fracking techniques have expanded the amount of oil and natural gas that can be produced in the United States, albeit at a higher cost than required to produce oil and gas in the Persian Gulf.
There are, however, two shadows over this happy story. First all three trends – conservation, alternative energy, and domestic fossil fuel supply – are made economically feasible by the fact that energy prices are higher than in the past. If those temporarily fall, as in the past, expect Generation Greed to go back to its old ways and this positive trend to reverse. And cheap energy, regardless of the cost, is what Generation Greed wants.
Second, all the progress of the past few years have still left us cranking out greenhouse emissions and desperately dependent on oil imported from countries where terrorists are spawned. All the happy talk about U.S. energy independence is about the future – IF current trends continue. Today, however, 40 percent of our oil and petroleum products still come from other countries.
http://www.eia.gov/energy_in_brief/article/foreign_oil_dependence.cfm
And while import dependence has decreased since peaking in 2005, at the height of the gas guzzling SUV and McMansion era, the U.S. still imports more foreign oil than it had in any year before 1997. And more Persian Gulf oil than it had in any year before 1998. During almost the entire time before 9/11, the U.S imported fewer barrels of oil from that part of the world than it did in 2013, the most recent year for which data is available. And since we are paying more for than ever for each barrel of oil we import, the amount we are sending into an area increasingly dominated by exterminationist Islam may be at a record. In fact the massacre and rape of Iraqi civilians – Christians and followers of other types of Islam – by ISIS, a group the U.S. is now bombing, is now being paid for by oil revenues.
Update: Private Wages and Salaries: Perhaps members of the New York State legislature and other Generation Greed politicians feel it makes sense to retroactively enrich the pensions of their generation of public employees, and then cut the pay and benefits of future government workers, because more for themselves and less for those coming after has also been the trend in society as a whole. On average, at every pointint their lifecycle, the generations born after 1957 or so have been paid less, in wages and benefits, than earlier generations. If you’ve been reading the mainstream media you’ve heard plenty about “wage stagnation” over the last few years. In reality, “stagnation” is better than the deal younger generations have in fact received. What you have had is mass downward mobility.
No one comes right on and says it, however, because Generation Greed – still advancing revenues from the future and deferring costs to it – does not want to hear it. You still only read about this in scholarly publications few other people read. Such as this publication by the Federal Reserve Bank of St. Louis.
Click to access Emmons-Noeth-Economic-and-Financial-Status-of-Older-Americans-4-Sept-2013.pdf
One can see the reality of what has happened in the charts on page 73 and 74. The best off generations, according this analysis, were those born 1930 to 1950. Prior generations of Americans had always been better off than those who preceded them, but those bone since then have been worse off.
This is a complicated multiple regression analysis that adjusts for everything, including education levels. While those born from 1950 to 1957 might have been worse off, on average, than those who preceded them with same education level, they were also better educated on average than those who came before. So unadjusted for education, it is those born after 1957 or so who have been worse off.
Education paid off for a while. Those members of the 1960s generation who got sent to Vietnam rather than going to college ended up worse off after the severe recessions of the mid-1970s and early 1980s. At first mass downward mobility was thought of as a blue-collar thing related to deindustrialization. The 1980s were the heyday of the hippies turned yuppies. But for those born after 1957 downward mobility moved up to the college educated as well.
I’ve been reading about the progressively lower pay and benefits of younger generations ever since the early 1980s, but rarely in the popular media. No one wants to hear it. But it is the truth. The Federal Reserve analysis was concerned with the financial status of older Americans. It is when the younger, poorer generations reach old age themselves, with fewer assets and facing higher taxes and diminished public benefits as a result of Generation Greed’s institutional pillage, that they will really suffer the consequences.
“What’s done is done,” one might say, and “creative solutions” are required. “Why stir up conflict and controversy?” Because unless Generation Greed’s sense of entitlement is challenged they are going to keep right on taking and rationalizing, just as they have for the past six years.
And unless younger generations are made to understand how much worse off they are, on average not just individually and over the course of their whole lives not just temporarily as a result of recession, they will not make the needed adjustments required to keep things from being even worse than Generation Greed has already arranged.
Saying the Unsaid in New York 