They chewed up resources, ran up the debt and escaped responsibility.
Baby boomers pillaged our economy. They should help fix it. Baby boomers gobbled up the best economy in American history and left the bones for the rest of us, argues The Post’s Jim Tankersley, and it’s time they help to fix it. (Tom LeGro/The Washington Post)
One moment in the third Republican presidential debate encapsulates everything terrible about baby boomers and the way they’ve pillaged the U.S. economy. It came from Sen. Marco Rubio of Florida, a Generation Xer, who offered the standard line — you can hear it from the mouth of almost any American politician today — on how to keep Medicare and Social Security solvent. Rubio defended the idea that future workers will need to retire later or receive fewer benefits from those safety-net programs than current retirees. “Everyone up here tonight that’s talking about reforms,” he stipulated, was “talking about reforms for future generations. Nothing has to change for current beneficiaries.”
That’s smart politics: The biggest generational voting bloc by far in the upcoming election will be baby boomers, a group that is just starting to draw its first Medicare and Social Security benefits — and does not want anyone messing with those benefits, thank you very much.
It’s also bad economics.
Boomers soaked up a lot of economic opportunity without bothering to preserve much for the generations to come. They burned a lot of cheap fossil fuels, filled the atmosphere with heat-trapping gases, and will probably never pay the costs of averting catastrophic climate change or helping their grandchildren adapt to a warmer world. They took control of Washington at the turn of the millennium, and they used it to rack up a lot of federal debt, even before the Great Recession hit.
If anyone deserves to pay more to shore up the federal safety net, either through higher taxes or lower benefits, it’s boomers — the generation that was born into some of the strongest job growth in the history of America, gobbled up the best parts, and left its children and grandchildren with some bones to pick through and a big bill to pay. Politicians shouldn’t be talking about holding that generation harmless. They should be asking how future workers can claw back some of the spoils that the “Me Generation” hoarded for itself.
When you look at the numbers, the advantages boomers have enjoyed are breathtaking. Start with the economy. Boomers went to work in a job market that their children rightly romanticize. It delivered living-wage work for wide swaths of Americans, even those who didn’t go to college, which by the way cost a fraction of what higher education costs today, even after you adjust for inflation. A single earner could provide for a family. Employees could reasonably expect to advance in their companies and work their way into the middle class. Incomes grew across the board.
Earlier this year, in a paper for the Brookings Institution, economist Robert Shapiro tracked the lifetime earnings paths for Americans who entered the labor market in the 1970s, 1980s, 1990s and early 2000s. He found a sharp generational divide. The typical U.S. household headed by someone who was 25 to 29 years old in 1975 saw its real income increase by 60 percent until it peaked and began to slowly decline before retirement. For a similar household in 1982, lifetime income peaked 70 percent higher than its starting point. Those are both boomer cohorts.
The groups that came after fared worse. Workers who were 25 to 29 in 1991 saw median earnings peak 50 percent above where they started. For the 2001 group, the peak was just over 20 percent higher. (Though there’s still time, theoretically, for their earnings to rise again.) For both those groups, the high point came much earlier in their working lives than it did for the boomers.
My generation, Gen X, is in far worse financial shape than our parents were at the same age. Millennials are even worse off than we are. Soon after the Great Recession ended, the Pew Research Center reported that middle-class families were 5 percent less wealthy than their parents had been at their age, even though today’s families work a lot harder — the average family’s total working hours has risen by a quarter over the past 30 years — outside the home, and even though they’re much likelier to include two wage earners. The ensuing recovery has made things worse. Middle-class families owned fewer stocks, businesses and homes in 2013 than they did in 2010, according to calculations by New York University economist Edward Wolff.
Meanwhile, future generations will have to pay the costs of weaning the world from fossil fuels and/or adapting to warmer temperatures, rising seas and more extreme weather. (Estimates vary, but some projections suggest they could total trillions of dollars for America alone.) They will also have to shoulder the burden of keeping America’s retirement promises to the boomers. The Congressional Budget Office estimates that the rising costs of Social Security and government health care that will stem from an aging population will consume two more percentage points of America’s economic output by 2040. If policymakers don’t find the revenue to pay for it all, the CBO projects that the national debt will climb past 100 percent of annual gross domestic product — quadruple its post-World War II low.
And yet almost no one suggests that boomers should share the pain of shoring up those programs. Folks my father’s age like to say they’ve paid for those benefits, so they should get them in full. But they haven’t. The Urban Institute has estimated that a typical couple retiring in 2011, at the leading edge of the boomer wave, will end up drawing about $200,000 more from Medicare and Social Security than they paid in taxes to support those programs. Because Social Security benefits increase faster than inflation, boomers will enjoy bigger checks from the program, in real terms, than their parents did.
The sin here isn’t exactly intentional: It’s not boomers’ fault that there are so many more of them than their predecessors (their ranks peaked near 80 million, some 30 million more than the Silent Generation before them) or that they’re living longer (retirees today can expect to live three or four years longer than their grandparents). The sin is that boomers have done nothing to ameliorate their easily foreseen threat to the U.S. Treasury. They have had every opportunity: Congress has been controlled by a baby boom majority since the beginning of the George W. Bush administration.
Did that majority sock away money for future safety-net costs? No. Pols talked about putting budget surpluses in a “lockbox,” but not for long. Instead they cut their own taxes, the deficit-financed two wars, they approved a new Medicare prescription drug benefit that their generation will be the first to enjoy in full. Partly as a result of those policies, the federal budget deficit has averaged 4 percent of GDP in the Bush/Obama era, more than double the average rate of the 50 years before that. Boomers let federal debt, as a share of the economy, double from where it was in 1970.
Meanwhile, they stood by while the economic bargain that lifted them as young workers began to unravel for their children. They opened global trade and watched millions of U.S. manufacturing jobs vanish; research by MIT economist Daron Acemoglu and colleagues suggests that normalized trade with China, the biggest driver of those losses, has by itself cost America at least 2 million jobs.
Then, boomers didn’t invest enough in new training programs for young workers, particularly men, who once could count on factory jobs to bring them a middle-class lifestyle. They allowed college costs to more than double from 1982 to 2012. Though, point in their favor: Many of them took out loans to send their children to school.
Boomers let public investments in research and development — a critical driver of future prosperity — fall steadily as a share of the economy; they’re down from 1.2 percent of GDP in 1976 to 0.8 percent today, a decline of one-third. In the 15 years boomers have been running Congress, economic growth has slid well below the average of a generation ago — to 1.9 percent a year, down from 3.2 percent for the preceding 25 years. Some of the brightest minds of their generation built fortunes working at Wall Street investment banks, then helped drive the economy into its worst recession since the Great Depression.
It’s increasingly clear that Generation X, and possibly millennials, haven’t learned from the boomers’ mistakes. My son will rightly criticize me someday for my generation’s love of SUVs. He’ll probably wonder why he has to pay higher taxes or work several more years just to get a retirement that’s worse than my dad’s or maybe even mine.
Every generation wants to leave a better world for the ones to follow. I truly believe that boomers had no idea, for a long time, that the sum of their choices — of their quest to make life as good as it could be for themselves — might be a worse world for their children. But it’s apparent now.
It’s too late to ask boomers, as a generation, to repent of their economic sins and undertake future struggles now that the damage has been done. It is fair, though, to ask for a dose of responsibility from the boomers now running for president. They have all cast themselves as truth-tellers, problem-solvers and makers of hard choices.
Political incentives argue against that — by census counts, there are as many boomer voters today as there are 25- to-44-year-olds and senior citizens combined. And nobody likes to be told he is a parasite. After I first outlined this argument to my father in 2012, he gifted me an actual lump of coal for Christmas.
But it’s not enough to talk soberly about saving the economy and the safety net for future generations, if future generations are making all the sacrifices. The boomer candidates — actually, all the candidates — need to be honest with boomers about how good they’ve had it in America and how it’s time to give back: They should take steps, right now, to reduce carbon emissions and head off a debt crisis. They should pay higher taxes or accept slimmer retirement benefits, and they should tell lawmakers to make cleaner energy a top priority. My generation should join them. The boomers running for president should lead with a call to change the country for the better. Wasn’t that always supposed to be their thing?
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