The Boomers' Last Swindle

New at Reason: Kerry Howley gets sick just thinking about the new Medicare prescription drug benefit.

Comments

[Anonymous]

good piece kerry

[Abe Simpson]

Don't you people relize that I'm old, and that the world owes me a living?

[Tommy_Grand]

good article. that is disgusting

[Anonymous]

http://economist.com/World/na/displayStory.cfm?story_id=1893625

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Every year Mr Bush has either produced or endorsed some vast new government scheme: first education reform, then the farm bill, now the prescription-drug benefit. And every year he has missed his chance to cut federal pork or veto bloated bills.

As Veronique de Rugy of the Cato Institute points out, federal spending has increased at a hellish 13.5% in the first three years of the Bush administration ("he is governing like a Frenchman"). Federal spending has risen from 18.4% of national income in 2000 to 19.9% today. Combine this profligacy with huge tax cuts, and you have a recipe for deficits as far ahead as the eye can see.

Why has the self-proclaimed party of small government turned itself into the party of unlimited spending? Republicans invariably bring up two excuses?the war on terrorism and the need to prime the pump during a recession; and then they talk vaguely about Ronald Reagan (who sacrificed budget discipline in order to build up America's defences).

None of this makes much sense. The war on terrorism accounts for only around half the increase in spending. The prescription-drug entitlement will continue to drain the budget long after the current recession has faded. As for Mr Reagan, closer inspection only makes the comparison less favourable for Mr Bush. The Gipper cut non-defence spending sharply in his first two years in office, and he vetoed 22 spending bills in his first three years in office. Mr Bush has yet to veto one.

The real reasons for the profligacy are more depressing. Mr Bush seems to have no real problem with big government; it is just big Democratic government he can't take. One-party rule, which was supposed to make structural reform easier, also looks ever less savoury. Without a Congress that will check their excesses, the Republicans, even under the saintly Dr Frist, have reverted to type: rewarding their business clients, doling out tax cuts and ignoring the fiscal consequences.

This opportunism may win Mr Bush re-election next year, but sooner or later it will catch up with his party at the polls. The Republicans are in danger of destroying their reputation for managing the economy?something that matters enormously to the "Daddy Party" (which sells itself as being strong on defence and money matters). The Democrats can point out that Bill Clinton was not only better at balancing the budget than Mr Bush. He was better at keeping spending under control, increasing total government spending by a mere 3.5% in his first three years in office and reducing discretionary spending by 8.8%.

The Republican Party's conservative wing stands to lose the most from this. Some conservatives credit Mr Bush with an ingenious plan to starve the government beast: huge tax cuts will eventually force huge spending cuts. But this is rather like praising an alcoholic for his ingenious scheme to quit the bottle by drinking himself into bankruptcy. There is no better way to stymie the right's long-term agenda than building up the bureaucracy (government being a knife that only cuts leftwards). And there is no better way to discredit tax cuts that to associate them with ballooning deficits. For the moment Mr Bush is still the conservatives' darling. Will they still love him a decade from now?

[Anonymous]

bush: bad on economics, good at national defense

dems: bad on economics, bad at national defense

also: tax cuts are the only way to slay the beast. the only way the goverment can spend is to eventually collect taxes. if they borrow now and don't collect (because of tax cuts) we are only bankrupting our goverment and dropping their credit rating - not the nations. which libertarian is going to complain about that?

[Anonymous]

I'll never bitch about a tax cut. But giving me $300 now for a reduction in promised benefits later is not a tax cut.

[Brad S]

To anonymous at 4:31 PM: a bankrupt government is not a good thing. Why do the dollars that you and I carry around in our billfolds have value at the end of the day? Because they are "backed by the full faith and credit of the U.S. government." If the U.S. government's "full faith and credit" isn't worth anything, then ultimately, our money isn't worth anything either.

[Anonymous]

brad: buy gold and euros.

if they are so stupid to keep spending money they don't have then those who hold federal reserve notes deserve what they get (they shouldn't have loaned the money, which is what you do when you deposite it into a bank).

[Brad S]

Back to the original topic - it's now painfully clear to me that my generation (Gen-X) is doomed to have to fund not only our own retirements and old age, we're also going to have to fund the same for the friggin' Baby Boomers. If my grandparents' generation was "The Greatest Generation", as Tom Brokaw proclaims, then surely the Baby Boomers are "The Most Worthless Generation".

[pugilist]

To anon 4:31:

Bush is good at national defense?

Yeah, real good. The first attack on our soil since Pearl Harbour happens on his watch.

If I block a punch with my face, I suppose you would credit my defense as well...

[pugilist]

To anon 4:31:

Bush is good at national defense?

Yeah, real good. The first attack on our soil since Pearl Harbour happens on his watch.

If I block a punch with my face, I suppose you would credit my defense as well...

[Anonymous]

pugilist: oh please, it would've happend under Pres. Gore as well. get over florida.

[Anonymous]

so FDR was bad on FP?

[Todd Fletcher]

I don't there's ever going to be a real cut in governmment spending in my lifetime. The best case is that the economy will manage to keep just a bit ahead of the government money vacuum in the long run.

[pug]

To Anon 5:16

I really couldn't care less about Florida or Gore's pansy commie ass. All I'm saying is that a president of a country unable to stop a bunch of yahoos with boxcutters from pulling a 9-11 is anything BUT "good at defense."

Offense, if that's what gets your rocks off, not so bad. But defense is not Bush's (nor Clinton's, nor FDR's, nor ____) game.

To tie in Florida, Roy Jones Jr. is good at defense.

[fyodor]

I agree with the entire article except for this tiresome and bigoted boomer bashing. The prescription drug benefit is just the logical extension of what Medicaid is all about, and Medicaid was started when the Greatest Generation was in power.

[Russ]

The folks at AARP must be wetting themselves right now.... lower taxes, higher subsidies and benefits, and a huge budget deficit.... what's not to like?

It's like eating your dinner at a restaurant and leaving the bill for the next person who sits at the table.

I'd like to see a law that prohibits the Secretary of the Treasury from issuing debt that matures after the end of his term in office. No more passing the buck.

[Croesus]

What's funny about the Frenchmen insult, is that France is cutting the rate of government growth (not as much as Raffarin, Chirac, etc. want mind you) right now. Chirac is far more interested in reigning in the size of government than W is.

[Brad S]

fyodor - actually, my interpretation of the new Medicare benefit is basically a large group (Baby Boomers) that right now holds the reins of government and, being the largest current generation, holds all the political trump cards is acting in its own best interests by preparing to feed at the public trough for decades to come at the expense of future generations. Tell me where I'm wrong here.

[fyodor]

Brad S,

By focusing in a bigoted manner on Boomers. As I pointed out in my previous post, boomers did not invent Medicare, and the new benefits are just a logical extension of the old ones. Tell me where I'm wrong there? Also, is there any evidence that Boomer is the whole reason for benefits? Remember, boomers are actually still wage earners now. If Boomers support the benefits at any higher a rate than any other age group, is this more so than older Americans have supported retirement benefits in previous generations? I think little of any of this is supported by any evidence. Boomer bashing is merely "in." They're being skapegoated on these pages for problems that run throughout our political system. No group that large is any better nor worse than any other group, and to think otherwise is bigotry. Now maybe I'm being a spoilsport to say so. I could laugh at boomer bashing if it weren't so old tiresome and if people didn't actually take it seriously and not realize at how plain bigoted it is.

Having said that, older Americans have always voted more than younger ones, and so sadly it is not surprising that we get these ever more expensive old age entitlements. And sure, the boomers' numbers only makes it worse. THAT part, I agree with.

[David 2]

And to throw my own $1.39 in....
(formerly $.02 - adjusted for inflation)

http://davidm2.home.mindspring.com/bh0.htm

[fyodor]

Damn, I shoulda proofread that last post, must be getting senile! Well hope it makes sense....

[Anonymous]

http://businessweek.com/magazine/content/03_28/b3841077_mz014.htm

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Left-wing labor defenders of the status quo have suffered serious setbacks recently in France and Italy, two other European countries where excess regulation smothers growth. In the past few weeks, France's center-right government faced down once-powerful unions to win the overhaul of the publicly financed pension system. And in Italy, voters rebuffed a union-backed effort to increase job protections. These suggest that voters in core Europe may finally be willing to accept rollbacks in the cherished welfare state to get the region's stagnant economy rolling again.

[little john]

Good point, Jonathan. The Sheriff of Nothingham (excuse me) the gubmint is gonna get at your labor, your energy, your time (your money) in some form or another. Still, stealing is stealing, no matter how many layers of paperwork you cover it up with.

[Sphynx]

RE: European fisticuffs ...

When there's cooking going on in the kitchen, the kitchen usually gets very hot. But, in Europe's case, that doesn't mean the roast won't get burned.

Dinner might just be a big flop.

[Anonymous]

http://www.wired.com/wired/archive/11.08/view.html?pg=4

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In April, while the US was loudly conquering Iraq, the world's weirdest empire quietly swallowed 10 countries. In the ancient shadow of the Acropolis, the European Union expanded from 15 nations to 25, opening its gates to the Czech Republic, Hungary, Poland, Slovakia, Slovenia, the three Baltic states of Estonia, Latvia, and Lithuania, the island of Malta, and the schizoid mess that is Cyprus. Someday, "Europe" might extend all the way to Japan.

What's the EU's secret for transcending nationalism? Infrastructure. April's 4,900-page Treaty of Accession is all about railroads, smokestacks, trademarks, livestock, fertilizer, cosmetics, glassware, footwear - everything it will take to level the playing field across a consumer population of 450 million people. Life is bound to improve for the new members, from Polish newspaper editors who once feared for their lives to black-lunged Czechoslovakian miners. Celebration is in order, and mankind should rejoice.

No silver lining comes without a cloud, though, and Europe faces severe challenges.

• First and foremost, it lacks a real government. Managing Europe by remote control through 15 national authorities was unwieldy, but 25 looks downright impossible.
• Second, European countries that haven't yet been absorbed are in steep decline. The outlines of the Schengen open-border confederation constitute a 21st-century Berlin Wall, separating the New Europe from what now can be justly called Deepest, Darkest Europe.
• Third, Europe is lightly armed. Although Europeans in general scorn the American cowboy tradition of blowing the living daylights out of bandits, the EU's fringe hosts its share of vigilante bloodletting - thanks to church-burning Balkan bandits, tin-pot dictators in Belarus, Albanian heroin gangsters, and cold-eyed al Qaeda theology students.
• Finally, today's children are the citizens of the future, and Europe has very few of them. While Asia's population spills out of its own borders to colonize the West, Europe's is aging and shrinking.

But as long as the infrastructure is there, does it really matter who inhabits it? Becoming a mix-and-match composite of the planet's ethnicities never slowed down the US. Whatever "Europe" is - union, superstate, confederacy, club, bloc, or community - it's a brand-new form of political organization whose best days are likely ahead of it. And it doesn't have to stay put on any particular continent, either. A 21st-century Europe without any Europeans in it - that's such an attractive prospect that even Republicans might join up.

[Anonymous]

"The folks at AARP must be wetting themselves right now.... lower taxes, higher subsidies and benefits, and a huge budget deficit.... what's not to like?

"It's like eating your dinner at a restaurant and leaving the bill for the next person who sits at the table."

But when that happens, the waiter (or a cop) usually runs after the freeloader and grabs him by the collar.

And that's YOUR job, Russ.

[Douglas Fletcher]

There's always poison.

[Phil]

Medicare benefits are nothing but a logical extention of prescription drug laws, not of medicaid. The first rule of politics is to deprive people of libety in the name of safety, or general welfare, ensuring that people will not be able to provide for themselves. And the second rule is to overcome the side effects of the first rule by throwing them a few scraps that they should be thankful for.

[jacob dreyer]

LOL at saying "bush is good on nat'l defense, democrats suck at it"
and then responding but what about FDR?"

yeah engaging in painful wars and imprisoning civlians withou due process and killing tons of people and invading countries'

yay for national defense!

[Anonymous]

"killing tons of people and invading countries'"

better for hitler to have won

[Anonymous]

http://economist.com/World/europe/displayStory.cfm?story_id=1893369

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JUST two weeks have passed since The Economist recommended that the draft constitution for the European Union should be chucked in the bin, and still the delighted tributes roll in. Dorothea Negroponte of Greece muses, "Maybe we Europeans should throw Britain in the dustbin"; Sergio Zangaglia of Brussels urges Britain to have the "intellectual honesty" to leave the EU; Vincenzo Russo accuses The Economist of "preposterous arrogance"; a Parisian reader scolds us for "incredible rudeness".

Why all this shock and horror? It seems that the robustly abusive nature of British political debate does not travel well across the English Channel. Just contrast the scathing criticism that Tony Blair has to put up with during an average prime minister's question time in the House of Commons with the normally decorous, somnolent calm of debate in the European Parliament. When somebody breaks the calm?as Silvio Berlusconi, the Italian prime minister did this week, with his crassly insulting comparison (unacceptable even in Westminster) of a German MEP to a concentration-camp commandant?the result is uproar.

There is a reason for the difference in tone. More than three centuries have passed since debates in the House of Commons got so heated that they led to the English civil war. But the second world war left most of Europe's politicians with the feeling that shouting across national lines in a supranational parliament is not just impolite but also potentially dangerous. A German journalist remarked kindly to your correspondent that he agreed with much of The Economist's analysis of the constitution and then added, "But what's your alternative to a compromise?that we go back to killing each other?"

It is still a reassuringly long journey from the rejection of a consititutional draft by The Economist to the blood-soaked trenches of Verdun. But the broader argument remains. It is possible that serious division over the proposed constitution could end up splitting the European Union. That frightens those who believe that it is the EU that has crated peace in Europe and who fear that if the Union were to fracture or disappear, Europe could indeed slide back into conflict. As that kindly German journalist puts it, "Just think back to the break-up of Yugoslavia ten years ago. Germany instinctively sided with Croatia; France backed Serbia. Both countries' national presses fell instantly into line. It was quite terrifying."

[Anonymous]

http://online.wsj.com/article_email/0,,SB10577902054571700,00.html

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In the early part of the 20th century most social needs, such as care for children and the elderly, were handled by the family across Europe. After World War II, much of the responsibility shifted to the state, and the social-welfare system began to grow exponentially. Driving the expansion were European growth rates of 5% or more, spurred by the rebuilding after the destruction of the war. Jobs were so plentiful that countries had to import workers from Turkey and elsewhere. Birth rates soared, which meant that there were plenty of young workers to finance the retirement needs of the relatively few elderly.

Europe could afford to be generous. In the 1960s and '70s, the social role of governments grew well beyond caring for the needy to providing health care, higher-level education, child and old-age care -- for all citizens. "The instruments of redistribution got hijacked by the middle class," says Dennis Snower, a professor of international economics at Birkbeck College, at the University of London. That meant that reversing direction became increasingly difficult, since an ever-larger number of citizens -- and voters -- benefited from the system.

While at the beginning of the 1960s social spending in Europe was only slightly higher than in the U.S., by the end of the 1990s, it was twice as much. "Americans are not as obsessed with social insurance because they think if they work hard they will get rich," says Robert MacCulloch, a professor of economics at Princeton University. And they think that once they get rich, they won't want to be burdened with high taxes to cover welfare costs. In Europe, many feel their chances of improving their lot are lower, increasing their appetite for assistance from the state, he says. Europeans also favor income equality more than Americans, surveys show.

[Ira Weatheral]

Let's feed to boomers to the homeless!

"McDonalds is PEOPLE!"

[Anonymous]

http://economist.com/World/europe/displayStory.cfm?story_id=1899146

"There's a clear sense that France and Germany are moving side by side on economic co-ordination," says a French official. If so, no need to worry too much about penalties for breaching the stability pact. "Since last week, a clear Franco-German strategy has emerged: to pursue structural reforms and cut deficits only after, when growth resumes," says Jacques Delpla of Barclays Capital in Paris. "This entails each voting no to fines against the other."

[Jonathan Wilde]

tax cuts are the only way to slay the beast. the only way the goverment can spend is to eventually collect taxes.

Not true. The government can also inflate the money supply.

[Levy Rachel]

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You do a good work, keep it going

[Hale Scott]

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[Becker Michelle]

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