Robert Samuelson December 8, 2013

We are locked in a generational war, which will get worse before it getsbetter. Indeed, it may not get better for a long time. No one wants toadmit this, because it’s ugly and unwelcome. Parents are supposed tocare for their children, and children are supposed to care for theiraging parents. For families, these collective obligations may work. Butwhat makes sense for families doesn’t always succeed for society as awhole. The clash of generations is intensifying.

Last week, a federal judge ruled that Detroit qualifies for municipal bankruptcy. This almost certainly means that pensions and health benefits for thecity’s retired workers will be trimmed. There’s a basic conflict between paying for all retirement benefits and supporting adequate currentservices (police, schools, parks, sanitation, roads). The number ofDetroit’s retired workers has swelled, benefits were not adequatelyfunded and the city’s economy isn’t strong enough to take care of bothwithout self-defeating tax increases.

The math is unforgiving. Detroit now has two retirees for every active worker, reports the Detroit Free Press; in 2012, that was 10,525 employees and21,113 retirees. Satisfying retirees inevitably shortchanges theirchildren and grandchildren. Though Detroit’s situation is extreme, it’snot unique. Pension benefits were once thought to be legally andpolitically impregnable. Pension cuts in Illinois (last week), Rhode Island and elsewhere have shattered this assumption. Chicago is considering reductions for its retirees.

What’s occurring at the state and local levels is an incomplete and imperfecteffort to balance the interests of young and old. Conflicts varydepending on benefits’ generosity and the strength — or weakness — oflocal economies. A study of 173 cities by the Center for Retirement Research at Boston College found pensioncosts averaged 7.9 percent of tax revenues, but those of many citieswere much higher: 17 percent in Chicago, 15 percent in Springfield,Mass., and 12.9 percent in New York. Health benefits add to costs.

At the federal level, even this sloppy generational reckoning is missing.The elderly’s interests are running roughshod over other nationalconcerns . Social Security, Medicare and Medicaid — programs heavily for the retired — dominate the budget, accounting for about 44 percent of spending, and have been largely excluded from deficit-reduction measures.

Almost all the adjustment falls on other programs: defense, courts, research,roads, education. Or higher taxes. The federal government isincreasingly a transfer agency: Taxes from the young and middle-aged are spent on the elderly.

The explanation for this is politics. For states and localities, benefitcuts affect government workers — a powerful but small group — while atthe federal level, it’s all the elderly, a huge group that includeseveryone’s parents and grandparents. As a result, the combat has beenlopsided. Political leaders of both parties have avoided distastefulchoices. Younger Americans have generally been clueless about howshifting demographics threaten their future government services andtaxes.

This may be changing. One reason is the Affordable Care Act. Among otherthings, Obamacare expands the young’s compulsory subsidization of olderAmericans (in this case, those not yet 65). Under the law, some of theyoung will pay artificially high insurance premiums to cover the medical expenses of older and sicker Americans. The young seem to be balking. A poll by Harvard University’s Institute of Politics finds that less than a third of uninsured 18- to 29-year-olds plan to enroll in the program. Here’s another generational skirmish.

The upgrading of old age also undermines the status quo. To be sure,millions of older Americans are frail, sickly or poor. But many morearen’t. Older Americans are generally healthier and wealthier than ever. Someone now 65 can, on average, expect to live another 19 years, up about two years since 1990. More years are spent in relatively good health, finds a study from the National Bureau of Economic Research, becausemajor disabilities are occurring later. Meanwhile, Americans age 65 andolder regularly rate their finances better than do those in other age groups according to surveys by NORC, an opinionresearch organization at the University of Chicago. In 2012, 41 percentof those 65 and older were “satisfied” with their finances and20 percent dissatisfied (the rest were in between). Among those ages 35to 49, only 25 percent were satisfied and 29 percent were dissatisfied.

Generational warfare upsets us because it pits parents against children. Theelderly’s well-being partly reflects Social Security and Medicare’ssuccess, but it also comes at the expense of younger Americans. Wepretend these discomforting conflicts don’t exist. But they do and arerooted in changing demographics, slower economic growth and competingconcepts of old age. They cannot be dissolved by pious invocations that“we’re all in this together.” To date, the contest has been one-sided;now the other side is beginning to stir.

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