Social Security for the Next Generation? If You're Under 40, You Should Be in the Streets
I will start drawing Social Security next month. I think I've earned it. On the other hand, I have to admit that society has been good to my generation.
I was able to graduate from a good private college with no debt. Four years at Oberlin cost $10,000 -- tuition, room, board, books, fees. Not $10,000 a year -- but for four years.
My wife and I were able to buy our first home when housing was relatively cheap, and we accumulated net worth without lifting a finger, as housing values appreciated.
My employers all provided good health insurance. Though I've had a somewhat unorthodox career, I did not hold multiple jobs because economic circumstances forced me to but because I enjoyed being at the cusp of journalism and academia. Yeah, I've worked hard, but the truth is, I've had a nice generational tailwind.
Why am I telling you this? Not because I expect to retire any time soon. But because, if you are under 40, your generation is getting utterly screwed compared to mine, and you should be in the streets.
The fact that student debt just approached a trillion dollars, that kids without rich parents must begin economic life saddled with college debt, that public universities are no longer free -- none of this has anything to do with changes in the structure of the economy. It all reflects lousy policy.
The bad policy includes Pell grants not keeping up with tuition costs, state legislatures paying for tax cuts by cutting funding for state universities and shifting costs to tuition, private universities marketing themselves like soap and shifting need-based aid to "merit aid" in order to raise their rankings. It stinks.
Sure, housing prices were destined to stop increasing faster than inflation. In that respect, my generation benefited from fortunate timing and dumb luck. But the housing collapse didn't have to happen. That was also the result of bad policy -- in this case the regulators allowing the sub-prime sharks to go nuts at public expense.
The fact that employers have stopped providing good health insurance or good retirement benefits also has nothing to with technology or globalization or any of the other alibis. In a reasonable society, health insurance and decent retirement would be tax-supported and part of the basic package for everyone.
Bad policy reflects bad politics. The great hidden injustice in our society is the set of lead weights being placed on the feet of young adults. Your generation should be in the streets.
The other day, the Urban Institute released a report showing just how far people born after 1952 are falling behind where their parents were at a comparable stage of their lives. According to the report, all of these trends were happening well before the financial collapse of 2008, and the trends were only worsened by the prolonged slump, which has depressed wages and career prospects.
The report was especially satisfying to me because its lead author was Gene Steuerle. Back in 2009, I had the pleasure of debating Steuerle, who at the time was vice president of the Peter G. Peterson Foundation. Steurle, a respected economist, had left the Urban Institute to take the job with Peterson.
Then as now, the Peterson Institute's party line on generational justice is that our children and grandchildren will suffer lower living standards because of the size of the public debt and the projected deficit in the Social Security trust funds in a decade or two. This is total nonsense. If we use austerity to cut the public debt, that strategy will only slow the rate of economic growth, and future generations will be that much worse off.
The deficit cuts undertaken so far in 2013 -- the more than $100 billion payroll tax increases that were part of the January budget deal, the relatively modest tax increases on the rich, plus the $85 billion in "sequester" spending cuts, will cut economic growth in half this year.
When I debated Gene Steuerle, who is a good economist and an honest man, he seemed distinctly uncomfortable with the Peterson line. The report he just released makes clear that generational injustices have been going on for decades, long before the financial collapse sent deficits skyward.
The worsening economic prospects for the young have everything to do with bad public policies that began three decades ago, and nothing to do with the projected health of Social Security in 2033. If we follow the advice of Peterson and company, there will be even slower growth in the future and even less in the way of public resources to spend on opportunity ladders.
Steuerle must have been uncomfortable with the Peterson line, because he soon left the Peterson Foundation and returned to the Urban Institute where he continues to do important work. But the Big Lie about the federal deficit harming future generations continues to resonate, and Peterson continues to shovel money to an array of front groups of the young, calling for budget austerity in the name of generational justice.
There are plenty of injustices in this country, but they have little to do with old versus young and everything to do with the one percent versus everyone else. You don't have to cut my Social Security benefits to give your generation a decent break.
The secret sauce of my generation was that when I was young, prosperity was widely shared, ladders were plentiful, and tax rates were progressive. If gazillionaires pay their fair share, and we invest adequately in the young, there's no reason why Generations Y and Z can't enjoy the same economic tailwind that my generation did.
That, however, will not just happen. It requires a politics -- and not the politics of young versus old, much less the politics of austerity.
Robert Kuttner is co-founder and co-editor of The American Prospect magazine, as well as a Distinguished Senior Fellow of the think tank Demos. He was a longtime columnist for Business Week, and continues to write columns in the Boston Globe and Huffington Post. He is the author of A Presidency in Peril: The Inside Story of Obama's Promise, Wall Street's Power, and the Struggle to Control our Economic Future, Obama's Challenge, and other books.