Boomers, Gen-Xers headed for showdown

SEATTLE POST-INTELLIGENCER
http://seattlepi.nwsource.com/virgin/142163_virgin02.html

Boomers, Gen-Xers headed for showdown

Thursday, October 2, 2003

By BILL VIRGIN
SEATTLE POST-INTELLIGENCER COLUMNIST

As with many American businesses, we here at the P-I are on a youth kick. The 18- to 34-year-old target demographic rules all, eclipsing those in less-favored age brackets whose palm crystals have long since turned from green to red (sorry, kiddies, that's an old movie reference; ask your elders).

In the interest of establishing bridges of communication with these younger readers, allow me to offer this message:

What the hell you doing wasting time reading this? Get back to work, you slackers. Get out there and earn some money, dammit!

Because, if you're not earning money, then you're not paying taxes, and if you're not paying taxes then there won't be any money to pay my Social Security, and I'll be writing this column well into my hundreds and then won't we both be sorry.

Sound harsh? Not half as harsh as the message being delivered from young to old in Germany, as recounted in a recent Business Week story whose headline tells the tale: "Revolt of the Young: Germans balk at the heavy cost of supporting retirees."

The story quotes the 24-year-old chairman of the Christian Democrat party as saying medical bills for the elderly are creating an intolerable burden for the young. He told a Berlin newspaper that they ought to pay for their own false teeth and hip replacements. "In the old days, people got around on crutches," he said.

We're not to the point of such language in this country yet. To the extent there is an intergenerational battle, it's a one-sided contest. The younger set doesn't know what it is in for or up against, and doesn't vote anyway.

And if the young'uns are not going to raise a squawk about it, the political set certainly isn't about to clue them in -- why stomp on the toes of those who do vote? Thus the race between both parties to offer seniors a Medicare prescription-drug benefit, never mind how much it's going to cost or who is going to pay for it.

But don't count on the younger set staying silent forever. At some point, the evidence of what's going on is going to show up in the one place even they won't be able to ignore -- the paycheck stub.

And when it does, that will trigger what is now one of the great looming tussles of the political landscape -- the battle of the generations.

You see occasional signs of tension in wrangling over school financing between parents and the kidless.

But the really big fight can be put off as long as the baby boomers -- the demographic pig in the python -- are still of working age and are paying enough into the system to cover current benefits and leave some for the federal government to skim off besides.

This happy state of affairs will last until the day -- or days -- when the baby boomers move in substantial numbers from being contributors to the Social Security "trust fund" -- which, in fact, is not a fund at all, but a pile of government securities -- to withdrawing from it.

When that happens, someone is going to have to pay to redeem those securities in order to provide benefits.

That, Gen-Xers and -Yers, means you.

And because there are a whole bunch of them and a lot fewer of you, there aren't many ways out of the snarl -- raise the minimum age at which Social Security benefits can be drawn to about 87 or raise both income and Social Security taxes.

Remember that these are also the generations whose members have been told they are not getting a pension in the conventional sense, their retirement income being dependent on what happened to their investment portfolios.

And when they add that all up, and figure out they are paying for benefits for the geezers that aren't going to be available when they themselves achieve geezerhood, they are going to be highly torqued.

Who can blame them? About their only hope is for a generation coming up behind them with enough workers to contribute mightily to the system (or else provide a convenient group of players for the next round of "pass the debt").

This won't be an issue confined to the political realm. Already we're seeing the competitive imbalance created by older companies with older work forces (a telling BusinessWeek statistic: The health and retirement cost per vehicle is $1,360 for General Motors, $107 for Honda's U.S. plants). If those companies with huge "legacy" costs of pension liabilities can't cope, they will wind up tossing the burden back on the public sector.

Meanwhile, Safeco announced this week that it is cutting out retiree health benefits for new hires and younger workers, a hardly isolated occurrence. That is going to make for some interesting conversations around the shop, and the trend is going to create even more conflict across business.

By the way, the movie reference in the opening paragraph was from "Logan's Run," in which the future looks remarkably like a cheesy 1970s-era multilevel indoor shopping mall in the Midwest (only without the Spencer Gifts signs). The society of that movie dealt with the problem of pension liabilities and medical bills for the elderly in a straightforward manner: Anyone over 30 was essentially "disappeared."

The battle between the generations won't devolve to that extreme -- probably. But if the financial projections turn out as badly as expected, younger generations are going to start asking pointed questions about what they are paying to their elders.

Then it will be up to older generations to rally to the barricades and speak up in defense of their retirement and health programs -- provided, of course, they can make enough noise with their false teeth, and get to those barricades with their replacement hips and canes, self-financed or not.

P-I reporter Bill Virgin can be reached at 206-448-8319 or billvirgin@seattlepi.com. His column appears Tuesdays and Thursdays.