Because it’s not possible for the government to meet its entitlement obligations to the Baby Boomers, in part because previous generations pursued a strategy that increased the expenses of raising children to the point to which the government had to pursue mass immigration to fill the gaps in population growth, the baby boomers counting on government checks to handle their medical expenses and pensions are certain to be disappointed.
No one will tell them this, because to do so outside of a crisis situation would be to provoke an enormous political backlash for all the people involved. It will not be possible to pass a ‘responsible’ budget, because a responsible budget stiffs a large portion of the country out of what they’re owed.
The left-wing solution, which would be to seize the assets of corporations and high net worth individuals, would only provoke a capital flight of such stunning swiftness that it would be truly shocking. Unlike previous eras, in which most wealth was tied up in physical goods and inventory, now most wealth is expressed in terms of ownership rights, in terms of access to information and talent, and other intangible goods that can be transferred across borders within hours or days.
Tearing the fabric of the entitlement state would destroy the keystone of the nation-state, namely the social security and medical care programs that have been affirmed repeatedly as the only method by which an abstract governmental entity can ensure that everyone has some skin in the game with the federalizing institutions.
It’s not something that can be simply cut to balance a budget without provoking a political crisis in the way that burning buildings and lynched government officers constitute a political crisis. While it may be possible to make it balance on the spreadsheet, it’s not possible to make that balance with the capricious mob which is both emotionally and legally entitled to money which is not there.
The only ‘responsible’ move, which would be to raise taxes and lower entitlement spending, is not feasible, because lowering entitlement spending is what would provoke crises. Introducing means testing to these entitlement programs would have similar negative effects — the entire program is less important because of the actual money involved, but because it gives everyone in the society a stake in the survival of the federal institutions. If you remove that stake, you remove some important symbols of egalitarian citizenship, along with the incentive structure that makes it all work.
The honest, responsible solution would be to devolve the Federal state into a collection of smaller, regional states with governments more appropriate to the differing characters of the residents. The responsible way to handle it is to address the insolvency of the state before crisis forces a resolution.
Henry Dampier 
This solution is sound, but I can’t see it happening for the reason you state – those who have a stake in it will push for any measure to keep it solvent for a few more years, even if doing so precipitates disaster.
I also wrote about the Baby Boomers here: http://wp.me/p4n7vv-a
I agree with your assessment of the problem. However, when this does come to pass, won’t baby boomers be too elderly to effectively riot or otherwise cause trouble?
You don’t need to riot to cause problems.
So the decision point is where obligations >>> assets available. At that point, we either get the death panels or choose who to eject.
“The responsible way to handle it is to address the insolvency of the state before crisis forces a resolution.”
Thus we will not address it until crisis forces a resolution.
Whenever people have tried to address it responsibly, they get shunned and attacked by the press, even when their left-wing credentials are impeccable.
Or, Death Panels.
Reblogged this on Philosophies of a Disenchanted Scholar and commented:
When Gen Y are in power, we could well rule their legal changes to take all the money illegal, because they involved future persons without democratic say at the time. Now we do, we could call for a referendum or some such. Possible.
Paul Krugman says our national debt doesn’t matter because it’s just money we owe ourselves. As both debtor and creditor, we can forgive this debt whenever we please.
When we retire, it’ll be like Homer Simpson opening his hollowed-out Emergency Procedures Manual and finding a note, “Dear Homer, I. O. U. one emergency donut, signed, Homer.”
P-Krug would just print the money, to cover it, and has said as much.
It’s also using a tricky definition of ‘ourselves.’ The problem is the obligations to citizens more than the debt owed to creditors. That’s the eye-popping $100T+ unfunded liability.
Someone has to be screwed in this: the bond holders, the citizens owed money, and/or the people who use the currency.
Not sure it is realistic to think you’re going to be able to work things in such a way to screw over an older generation to save money for the younger. If this is a realistic option, it will have been tried elsewhere before. Can you think of any examples?
The collapse of the Soviet Union screwed their pensioners royally, but it screwed everyone.
Old folks are people too, and vulnerable ones at that. They are the beloved parents and grandparents of younger folks. Do you think that if the cheese began to bind, the younger folks would like a solution that left the costs of their elderly parents and grandparents entirely on the shoulders of the young?
The most likely solution is to continue the social security/medicare checks as always, but to devalue the currency, impoverishing everyone and not just the elderly.
In frmr. USSR, life expectancy plummeted as the elder people were unable to adapt and survive.
>Do you think that if the cheese began to bind, the younger folks would like a solution that left the costs of their elderly parents and grandparents entirely on the shoulders of the young?
Polls will show that people support SS/Medicare, but don’t want to pay the taxes to fund them, acting as self-contained arguments against democracy.
>The most likely solution is to continue the social security/medicare checks as always, but to devalue the currency, impoverishing everyone and not just the elderly.
Yes — but people on fixed income would suffer the most. Generational tension is a common theme during long-running economic downturns.
soylent green is baby boomer!