Don’t let your grandparents steal your money.

In 1950, there were 16 workers paying payroll taxes for each retiree collecting Social Security benefits. Today, there are 3.3 workers supporting the Social Security and Medicare benefits of each retiree. In the future there will be only 2 workers paying taxes to support the benefits of each retiree.

Demographics is a bigger problem than health care costs

Stan Druckenmiller, one of the best- performing hedge fund managers of the past three decades, has a warning for the youth of America: Don’t let your grandparents steal your money.

Druckenmiller, 59, said the mushrooming costs of Social Security, Medicare and Medicaid, with unfunded liabilities as high as $211 trillion, will bankrupt the nation’s youth and pose a much greater danger than the country’s $16 trillion of debt currently being debated in Congress.

“While everybody is focusing on the here and now, there’s a much, much bigger storm that’s about to hit,” Druckenmiller said in an hour-long interview with Stephanie Ruhle on Bloomberg Television’s Market Makers. “I am not against seniors. What I am against is current seniors stealing from future seniors.”

Druckenmiller said unsustainable spending will eventually result in a crisis worse than the financial meltdown of 2008, when $29 trillion was erased from global equity markets. What’s particularly troubling, he said, is that government expenditures related to programs for the elderly rocketed in the past two decades, even before the first baby boomers, those born in 1946, started turning 65.

Druckenmiller suggested changing eligibility ages for Social Security and benefit structures for wealthy retirees, as well as removing disincentives for those who would rather work in their later years. Adding a federal consumption tax would help, he said, because seniors consume about the same amount as people in their 20s or 30s, yet pay less in income taxes.

Druckenmiller Sees Storm Worse Than ’08 as Seniors Steal

The storyline of the week is the terrible spending cuts about to be visited on our poor defenseless country by hapless politicians with no regard for the country’s economic welfare. The truth is much different and far darker.

The hue and cry about the fiscal cliff is, in fact, a side show for yet more fiscal child abuse. Like all budget “fights” over the last 40 years in which contemporaneous “adult” generations come up with excuses for far more spending and far less taxes than our children can afford, this battle, regardless of its outcome, will leave the American dream where it found it — down the tubes.
. . .
Take a look at the next retiree you see. That person is collecting Social Security, Medicare, and Medicaid benefits that will average, this year, over $30,000. That person and the 33 million retirees like him have been promised these benefits plus, in the case of Medicare and Medicaid, real increases for the rest of their lives. This is a massive debt that’s as real, indeed far more real, and far greater than the $11 trillion in Treasury bills and bonds held by the public.

Now look at the next baby boomer you see. There are 78 million of these folks. By the time they all demand their promised benefits, the average benefit level will be $40,000, in today’s dollars. Paying this obligation will cost $3 trillion per year — another colossal debt that Uncle Sam has kept off his books.

My question is where are the responsible adults? A responsible politician is clearly an oxymoron. But what of the economists working in Washington? Are their really none brave enough to tell the President and the Congressional leadership that we are bankrupting our children, that resolving our fiscal gap requires running a 5 percent of GDP surplus this year and coming up with tax hikes and spending cuts of $25 trillion in this decade alone, not one tenth this amount.

Where are the marchers, the protestors, the outraged parents who care for their kids, or the youth of America whose future is being decimated? Where is the official generational accounting being done by other countries that documents what today’s fiscal policy means for the next newborn you see? Where is the official fiscal gap accounting that should inform each and every fiscal decision.

There are no marchers, no protestors, no parents worth their titles, and no kids knowledgeable enough to say, “Enough.” Yet how we Americans are treating our children is the deepest moral issue and outrage of our times. Let there be no mistake. We are destroying their environment, physical and economic, on a daily and accelerating basis. We should be ashamed.

The Real Sequestration — Our Children’s Future

It’s been crystal clear for thirty years that the Boomers weren’t having enough kids or setting enough money aside to fund everything from Social Security and Medicare to local pensions for teachers and firefighters; nevertheless they kept blindly and blandly adding new benefits to overburdened systems. As they ran around in flapping their arms in hapless, ineffective panic about everything from Y2K to global warming, they somehow neglected to look at the sustainability of the pay as you go pension systems on which they were betting the farm.

The wolf will soon be at the door; pathetically, the Boomers are hoping it will eat their grandkids and leave them alone.

George Soros’ Top Investor Warns the Young that a Worse Crash is Coming

Standard government accounting methods hide that intergenerational transfer from the public and make it difficult to calculate how large the transfer is. Intergenerational resource transfers will grow larger as the composition of budget receipts and expenditures changes with relatively faster growth of age- and gender-related social insurance programs. Intergenerational redistributions through federal government operations could substantially affect different generations’ economic expectations and choices and exert powerful long-term effects on economic outcomes.

Spending Beyond Our Means: How We Are Bankrupting Future Generations

Baby Boom and Baby Bust


Mockery, truculence, and minimalist living are best, then enjoy the decline. We also need a Revolving Door Tax (RDT) and to prosecute politicians and staff and their “family and friends” who profit from insider trading.

Tags: , , , , , , , , , , , , , , ,