The U.S. Economy Is Stuck in the Past

Meanwhile, our younger citizens have not been so lucky. Poverty rates for children are currently nearing modern-age records. While some 15% of Americans lived in poverty last year, almost 22% of children were poor, or 16 million. Poor kids now make up 5% of America’s population. Meanwhile, fewer than 4 million of retired Americans are poor, or 9%. Since the early 1960s, the elderly have seen their poverty rate decline steadily from almost 30% to record lows today.

While about 15 million retirees are saved from poverty by their Social Security incomes, programs that benefit children have been slashed, some substantially. For example, when in 1996 federal Aid to Families with Dependent Children was replaced by Temporary Assistance to Needy Families, it provided $20.6 billion in benefits. By 2011, this figure had been cut by more than half—even though there are now many more needy families—and only about a third of the money is distributed as cash.

Budget cuts that kicked in earlier this year sequestered 5% of the $8 billion budget for Head Start, dropping 57,000 kids from this educational program. As budgetary battles are waged in Washington, further cuts loom. They seem to fall disproportionately on the shoulders of our youngest citizens.

Opposition to the Affordable Care Act is Exhibit One of our backward-looking society. Some 7 million children currently have no health insurance, but that is only a small aspect of the generational confrontation. Of the 47 million uninsured Americans there are no citizens over 65, since they are covered by Medicare, regardless of their income levels.

Bankrupting the State

Consider runaway inflation in the cost of health care and education, which far outstrips the pace of price increases in the economy. Retirees are major consumers of health care, while young people under 30 are the most likely to be enrolled in schools. However, while the retirees are largely shielded from cost increases in health care—it is the government that bears their brunt—the more than tenfold increase in tuition costs over the past 30 years is saddling generation after generation of young people with massive debt at the start of their productive lives.

Some analysts fear that the student debt crisis will be the next debacle on the scale of the subprime mortgage crisis of 2008. Two-thirds of graduates of U.S. universities leave school with debts averaging some $26,000 per head. Total student loans measure $1.2 trillion.

The need to pay back debt shapes professional, personal and economic choices of recent graduates. Few of the best and brightest can afford to go into lower-paying public service. Crucial decisions such as getting married and starting a family may have to be delayed, with profound implications for the economy. Economists have suggested that student loans will affect the lives of the millennials (born early 1980s to 2000s) even into their own retirement.

While today’s kids and young people are already at a disadvantage, shouldering a disproportionate burden of budget cuts, high cost of education, underemployment, poor quality jobs, no medical coverage, etc., they are also being saddled with government debt, all $17 trillion of which they will be responsible for.

We have managed to create a remarkably wasteful system that looks into the past, putting an excessive emphasis on making the retirement of its older citizens comfortable. It is no doubt a good and highly moral thing to do, but if done at the expense of future generations of productive citizens and to the detriment of future economic growth, it becomes suicidal. Giving parents the right to vote on behalf of their kids may not be a panacea, but it would certainly be a major step to remedy the imbalance of generational power in the political arena.