“It is characteristic of any Ponzi fraud that the people who get in on the ground floor do well. That makes the scheme popular; people clamor to get in. This is what has happened with Social Security and Medicare here in the U.S. Past and current beneficiaries are receiving benefits that are entirely disproportionate to what they paid in. This obviously cannot continue indefinitely. Every Ponzi fraud inevitably crashes when its exponential growth cannot be sustained because there is not enough new money–not enough suckers, to put it bluntly. In the context of entitlements, ‘new money’ means young people. That point is now approaching rather rapidly.”
Recent events in Illinois are quite instructive.
“After pension reform went down in flames last week, Illinois moved to Plan B: war on the young. Governor Pat Quinn’s administration claims that the upcoming budget will include major cutbacks on state services to make room for a $1 billion increase in pension spending. Most notably, education spending will decrease by $400 million, which would make 2013 the third straight year in which education spending has dropped.”
“Sticking it to either group, the young or the old, isn’t appealing, but the boomers are politically organized and better positioned to fight for their interests, particularly because powerful unions are on their side. The young, by contrast, are among the least politically active groups in the country, making them much easier for politicians to ignore. Illinois has obviously chosen the path of least resistance.”
AARP stuck to me like flypaper when I moved across the country. The baby boomer lobbyists are filling my mail box with fliers beseeching me to re-up my ten year AARP membership before it expires later this year. I have wisened so I won't be offering them the pleasure of a reply, but that makes me part of the one percent. The other 99 percent of the baby boomers has young people squarely in their fiscal crosshairs.