I'm not going to argue that America doesn't love its butter; it does.
In JFK's America, the payroll tax was not 15.4% of earnings. As recently as 1949, it was 2%. By Eisenhour's last yeat, it had more than doubled to 5%. The next year, in JFK's America, it was 6%. And still, the elderly in JFKs era did not get the benefits that todays elderly treceive. Today's elderly are no doubt much better off, and are happy to be subsidized at a much higher rate by young working Americans that in earlier generations. We might even be able to keep this puppy flying, if we keep doubling the payroll tax every so often.
But realize; the increase from JFK's 6% to todays 15.4% occurred during the period of the Boomers earnings and tax paying years; they were -already- going to be paying a massive generational surplus into this 'pay as you go' system. So, what is the fiscal state of the program after those many years of generational surplus? Is our government rolling in assets to account for this long term period of surplus subsidy, or, instead, did it spend all that generational surplus immediately and replace all that with spending long gone, borrowed from this future?
On its face, is that increased transfer of wealth from the young today to yesterday's young increasing circulation in our economies relative to JFK's era? It doesn't seem to have done so. As well, the opportunities and fortunes faced by the class of 1962 look much different than the same for the class of 2012. And yet, this still begs the question: how did the class of 1962 end up building -this- world? Kind of moot, with so many of the class of 2012 advocating for even nmore of the same.
How is this going to work? Any ideas? We are leaving a long term period of what should have been inter-generational subsidy with a busted treasury and busted credit card and economies flat on their backs. We are currently spending $2.3T/yr more than JFK. We are in the midst of a current political struggle in which half of America at least is screaming for yet more federal crack above and beyond that $2.3T/yr in additional stimulus. Krugman claiming 'not enough.'
When you do finally crash onto the beach of old age, if you are very lucky, under what conditions do you hit the beach in a reasonable condition? One in which you labored your entire career under a 6% payroll tax plus income tax, or one in whcih you labored under a 15.3% payroll tax plus income tax? It seems to me that, in the latter case, you have almost 10% less of your earnings available to plan for your own retirement needs. Well, OK, so the government has stepped in, to take over that responsibility. So...how is the program's fiscal health? Where are those assets, needed now to fund the liabilities? Were there investments made in future economies, which are now bearing their fruit on any kind of sound accounting basis? Or...was all that just spent, to buy votes and political payoffs, decades ago, for politicians long gone? Will the next generation be impressed with the massive piles of IOUs we show to them-- "They said you and your economies would be good for these, that is how they planned for our easily predicable mass crashing on the beach."
The Boomers, already paying a generational surplus, were surcharge taxes up to 15.3% of earnings for their rntire working lives. So where is it, now that they are going to need it?
Who do we thank for this ... foresight and brilliant execution?
Don't blame me; I read Clark's book in 1979, and voted for him in '80, not Reagan. I sleep like a baby, I didn't vote for this tribal C.F.
Moynihan, on the floor of the Senate back around then: "God help us, when they realize what we have done to them." Well, apparently, no need to worry; they've barely figured it out, even today.