The Suburban Generations Destroy the Suburban States (and Nation)

In the 1950s and 1960s, a generation used New York City (and other central cities) as cash cows, and then decamped for the suburbs, spitting on the ground as they left. They voted themselves richer pensions but didn’t pay for them, with the best off public employees – police, fire, teachers – among the first to run for the exits. They ran up debts while failing to maintain the infrastructure. They benefitted from rent control even as their income increased, providing them with money needed to buy homes in the suburbs but not providing landlords with a sufficient incentive to reinvest in their buildings. Eventually, as things started to go downhill, the large corporations that the cities had nurtured followed the middle class out the door, to their own fortress like suburban campuses.

Now it is five decades later and what do we find? Like a plague of locusts, the generations that moved to the suburbs have turned the same trick there. New Jersey and Connecticut are small states that had a number of small, pre-suburban industrial cities. For the most part, however, these two states are suburban – the two most suburban states in the nation, and for most of the past four decades the two richest. Despite this they are now among the most bankrupt. And once again, the rats are fleeing the sinking ship.

Let’s start with Connecticut, where many financial companies fled from New York City right through the early 1990s crack epidemic. It was a place where diversity was limited, ground zero of the 1980s preppie revival. There were and are relatively few poor people in need of extensive, expensive public services. With regard to public finance, Connecticut promised employees hired after 1983 – the back and of the Baby Boom and those coming after – less lucrative pensions than those who had been hired earlier, and much less lucrative pensions than have been scored by New York City’s unions. And unlike in NYC there were no massive retroactive pension increases over the past two decades that I have been able to identify. Despite all this the state is broke.

It turns out the state never set aside a dime for the pensions of those hired before 1984. They just paid for them out of the state budget. Which was cheap when the state was growing rapidly, and all those additional taxpayers and businesses in the suburbs only had to pay for the smaller number of former public employees from the small older cities. But once the suburban generation of public employees started to retire, the cost exploded. Now current and future state residents and businesses are forced to pay twice. For the Generation Greed retirees – virtually all of those hired before 1984 are now being paid to not work. And for everyone working now, almost all of whom have been hired in 1984 or later. With 90 percent of the money going to the already-retired.

Comptroller Kevin Lembo on Thursday released a detailed plan for dealing with the ‘impending crisis’ the state employee pension system is facing. Because Connecticut for decades failed to adequately fund its obligations to retirees, the schedule for paying off unfunded liabilities in the state’s two largest pension funds has become unsustainable, Lembo said. ‘We need to bring stability and predictability into this discussion because right now, [we are] … on an uncertain path,’ Lembo said. If nothing is done, the state would face a $3.8 billion payment in 2032, he said. ‘That is not sustainable and we simply won’t be able to afford it.’”

It turns out that not funding pensions, running up debts and not reinvesting in the infrastructure is the real story behind the relatively low taxes and good public services, relative to NYC, that Connecticut had enjoyed for several decades. The businesses and residents that moved there from 1960 to 2000 benefitted from this theft from the future. They got a really good deal.

Today, however, Connecticut has been forced to drastically increase its once-low taxes. Its infrastructure is inadequate and in poor repair, another huge off-the-books debt that current and future residents are facing. Due to on-the-books state and local government debts, pension underfunding, and inadequate infrastructure investment, I ranked Connecticut as the state with the fourth most sold-out future in FY 2012, with a burden equal to 69.4% of all the personal income of everyone in the state that year shifted to the future.

But those who pillaged in the past are not planning on sticking around to meet their long-shirked responsibilities.

Concern over the state’s looming pension crisis reportedly played a role in General Electric’s decision to move its corporate headquarters from Connecticut to Boston. Company officials had expressed concern about the future costs of the underfunded state employees’ pension system.

They are moving back to a big city in a state that still has one, along with mass transit and lots of college-educated young people. How ironic. Other Connecticut residents are trying to head for Florida. If they can sell their houses.

Mirroring a proposal made by outside retirement experts last year, the comptroller’s plan would split the state’s pension liability into two categories — one system for state employees hired before 1984, which is unfunded, and the second covering those hired from 1984 through the present. The second category, which is 95 percent funded, reflects the scaling back of pension benefits that took place in 1984.

That proposal is to increase “generational equity,” in the words of the Center for Retirement Research at Boston College. Not by clawing anything back from Generation Greed. By reducing the burden during the period when many members of Generation Greed are still around, by shifting a large share of the cost to the far off future. Burdening any young people and new businesses stupid enough to remain in Connecticut – people and businesses that never got any of the past benefit of shirking future responsibilities – for their entire lives. By further hiding and deferring the cost, perhaps members of Generation Greed can sell their houses to the unwary for more money, cash in and head to Florida before the full bill comes due.

It is hard to feel sorry for Connecticut, given what Connecticut did to New York from the 1970s through the 1990s. It’s karma. Moreover, of all the states in the union Connecticut, home to the insurance industry with all its actuaries in Hartford and the finance industry with all its MBAs in Fairfield County, should have known what it was doing to its future. On the other hand, the people who were most culpable in the past aren’t going to be the ones forced to pay the price in the future. The guilty are going, going gone, replaced by others or by no one.

One finds the same financial mess over in New Jersey, which has the fifth most sold-out future among states. I once wrote that George Pataki, who as New York’s Governor robbed the state’s future just about anyway he could in pursuit of short term popularity, was the epitome of Generation Greed. But New Jersey Governor Chris Christie is the epitome of the generation to follow, my generation, Generation Apathy. Christie inherited a fiscal and infrastructure disaster in New Jersey similar to what Governor Malloy inherited in Connecticut. And like so many in my generation, Christie has decided that since he’s screwed anyway, he might as well just look to his own self-interest and let future generations deal with the common disaster.

The fight in New Jersey over funding government workers’ pensions is coming to a head — and no one disputes that it’ll be costly to taxpayers. With the retirement system facing an $83 billion shortfall, Democrats who control the legislature are pushing for a ballot measure that would require the state to pay what it owes each year to end a bipartisan tradition of shortchanging pensions. Governor Chris Chris Christie, a Republican presidential candidate, has called it a ‘road to ruin.’”

Nice of Christie to comment, taking a break from the pursuit of another job which would allow him to move his family out of the state before it is too late. Like many other New Jersey residents and quite a few businesses. The bloom is off the suburban rose there, and I can tell you that people I know personally, who don’t follow state and local government and have no idea why things are ending up the way they are, can’t wait to move away. As they moved away from New York to New Jersey in the past. Some have already left the Garden State for a better deal elsewhere.

“‘The failure to address this problem would only continue the bad budget practices of the past,’ said Richard McGrath, spokesman for Sweeney. ‘Projections show that revenue growth is sufficient to ramp up to full funding by 2022, which will put the state on the road to fiscal stability.’”

At the expense of gutting New Jersey’s public services. As in NYC in the 1970s, public service recipients and the needy will always be sacrificed first at the state and local level. Because the services senior citizens get are provided or mandated by the federal government.

Ratings companies have cut the state’s grade nine times since Christie took office, a record for one of the state’s governors. Moody’s Investors Service ranks it A2, five steps above junk. In November, the New York-based company warned that the grade ‘will continue to fall’ if it doesn’t get a handle on mounting liabilities, including pensions.”

New Jersey has ‘one of the worst records in the country’ for funding its retirement obligations, said Marcy Block, a senior director at Fitch Ratings. In fiscal 2014, the state contributed 18.6 percent of what New Jersey’s pension fund needed, the least of any state, according to Moody’s. It hasn’t made a full payment since 1996, according to figures from the pension commission’s study.”

New Jersey is so far behind, though, that mandated payments in the short term ‘would significantly reduce the state’s budget flexibility and potentially strain their liquidity,’ said Moody’s analyst Baye Larsen. The state would probably cut services and raise taxes to make the obligation.”

Taxes that were once low, but are now high.

Unlike Connecticut, New Jersey did have a massive pension increase for current and already retired public employees during the 1990s stock market bubble, in addition to pension underfunding. So the unions share some of the blame – but not all of it, unlike NYC. Besides, Governor Christie’s pension “solution” required the public employees to give back some of the 1999 pension increases in exchange for (someday) fully funding their pensions. But Christie reneged on his end of the deal.

Did I mention that New Jersey has been one of the two richest states in the country for decades? A place that people moved to while leaving the poor, and their burdens, behind in New York City and Philadelphia – located in entirely different states? Back before I knew how much Generation Greed New Jerseyans had robbed the state’s future, I assumed zoning the poor out of the suburbs explained that state’s much lower taxes (relative to NY) and extensive services. But now I know that was only part of it.

And as in Connecticut, those that benefitted in the past aren’t sticking around to pay the bill. They are running for the exits. And as in Connecticut, large corporations have caught on. Only those with special deals to not pay taxes are choosing to move or remain there, with New Jersey having one of the worst job creation records in the country in the wake of the Great Recession.

Are they fleeing far enough? Because Generation Greed has done to our big common 401k, Social Security, and Medicare exactly what it has done to public employee pensions. Even though Social Security and Medicare will be the only old age benefits that most of those who came of age after Generation Greed will get, if they get anything at all.

At the federal level, despite the need to assure the retirement of the large Baby Boom generation, it’s been tax cut, tax cut, tax cut for more than 30 years. Meanwhile, senior benefits have been increased, with health care spending going through the roof. And now? According to one “recovering Republican” who has been involved in federal budgeting as an expert…

I have concluded that this ritual denunciation of deficits and out-of-control spending is a fraud. Not only does the party not care about the deficit, but its practice since 1981 has been to worsen it.”

All of the Republican candidates for President are proposing a third set of massive tax decreases that primarily benefit the wealthy, differing only in the extent to which they want federal revenue reduced. But on the spending side, they all take pains to say that those generations in or near retirement – the richest generations in history and those that benefitted from the prior tax cuts in their prime working years – would never, ever be asked to give anything back.

One moment in the third Republican presidential debate encapsulates everything terrible about baby boomers and the way they’ve pillaged the U.S. economy. It came from Sen. Marco Rubio of Florida, a Generation Xer, who offered the standard line — you can hear it from the mouth of almost any American politician today — on how to keep Medicare and Social Security solvent. Rubio defended the idea that future workers will need to retire later or receive fewer benefits from those safety-net programs than current retirees. ‘Everyone up here tonight that’s talking about reforms,’ he stipulated, was ‘talking about reforms for future generations. Nothing has to change for current beneficiaries.’”

Those that enjoyed the best years of the U.S. economy and are leaving those coming after with massive debts.

Did that majority sock away money for future safety-net costs? No. Pols talked about putting budget surpluses in a ‘lockbox,’ but not for long. Instead they cut their own taxes, they deficit-financed two wars, they approved a new Medicare prescription drug benefit that their generation will be the first to enjoy in full. Partly as a result of those policies, the federal budget deficit has averaged 4 percent of GDP in the Bush/Obama era, more than double the average rate of the 50 years before that. Boomers let federal debt, as a share of the economy, double from where it was in 1970. Meanwhile, they stood by while the economic bargain that lifted them as young workers began to unravel for their children.”

Those who came of age in the 1950s, 1960s and early 1970s were some of the hardest working, most creative people this planet has every seen. But somehow they decided they were entitled to so much – in personal spending and in years in retirement — that they far outspent what even they could produce. And shifted the surplus bill to the poorer generations to follow them. And here we stand.

It’s not enough to talk soberly about saving the economy and the safety net for future generations, if future generations are making all the sacrifices. The boomer candidates — actually, all the candidates — need to be honest with boomers about how good they’ve had it in America and how it’s time to give back…The boomers running for president should lead with a call to change the country for the better. Wasn’t that always supposed to be their thing?”


In Rhode Island, the state with the most sold out future in the U.S., they are adding even more special deals for today’s seniors even as taxes increase and public services are slashed for the generations to follow.,108713

Rep. Joseph M. McNamara (D-Dist. 19, Warwick, Cranston) has introduced legislation that would exempt state, federal and military pensions from state income tax with income limitations for the filer.”

Last year, we removed tax on Social Security income,” said Representative McNamara, chairman of the House Health, Education and Welfare Committee. “I have heard from several constituents who have pointed out the fact that there are certain pensioners – namely those with a state, federal or military pension – who don’t get Social Security or who receive a seriously reduced version. This bill would put the retirement income of these people in the same category as Social Security.”

What about all those people in younger generations who are actually working, have incomes just as low, will not get a pension, and the way things are going won’t get Social Security either? How come no one seems the slightest bit concerned about them? Even Bernie Sanders, allegedly the Presidential candidate of the young, speaks of jacking up federal benefits for existing retirees, leaving someone else to come up with the money to pay for this some time later. We’ll take more now, and they’ll “have to” find a way to give you something later somehow so we don’t have to think about that now, seems to be the attitude.

What is the anthem of Generation Greed? “All You Need is Love” or “Money Can’t Buy You Love” by the Beatles? There are those who thought that way then, many of whom still think that way now. But they were never the majority. Just the people who made the most noise back in the early and mid-1960s.

This former college radio DJ was able to summon up from the back recesses of his mind the real anthem of the majority. A long-forgotten song from a long-forgotten band that sums up what has gone in Congress, statehouses, corporate boardrooms, on Wall Street, in the public employee union halls, and even in many non-profit organizations for most of the past 35 years. Don’t say we weren’t warned.

We all knew what we wanted to take

Only just a piece of the cake

We got involved and couldn’t get out

Now we know what greed is about.

Don’t stand in line you’ll get abused

Take the money, you’ll get it loose

Keep on looking for a better way

Don’t you listen to what they say.


Put your hands in the till

Keep it coming keep it coming yeah

Put your hands in the till

Got to have an iron will.


I’ll take mine and you take yours

Good advice and that’s for the sure

I work all day and half the night

Always is an uphill fight.


Put your hands in the till

Keep it coming keep it coming yeah

Put your hands in the till

Gimme gimme gimme the money.


Money! Get the money!


Now you know what you’re going to do

The days of waiting they’re all through

There’s really nothing left to say

Because in the end you’ve got to pay.


Put your hands in the till

Keep it coming keep it coming yeah

Put your hands in the till

Got to have an iron will.


Rape or kill! Gimme gimme the money.

1 thought on “The Suburban Generations Destroy the Suburban States (and Nation)

  1. larrylittlefield Post author

    Lot’s of people seem to be reading this. But it is a small part of the big picture. Younger generations have been left worse off across the board. In public policy.

    In the economy

    Even in the family

    To the point where life expectancy is going to fall.

    When you steal part of the future from younger generations, and keep doing it, eventually that turns out to be almost everyone. The first people on the wrong end of the deal are starting to approach age 60, although it is worse for those coming after. Most of whom are thought of by the limited people grabbing with both hands as a bunch of serfs.

    And few dare to even talk about it. And are shouted down when they do.

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