Young Voters, Get Mad

By Robert J. SamuelsonWednesday, October 22, 2008

To: Voters Under 35
Subject: Your Future
Recommendation: Get Angry

You're being played for chumps. Barack Obama and John McCain want your votes, but they're ignoring your interests. You face a heavily mortgaged future. You'll pay Social Security and Medicare for aging baby boomers. The needed federal tax increase might total 50 percent over the next 25 years. Pension and health costs for state and local workers have doubtlessly been underestimated. There's the expense of decaying infrastructure -- roads, bridges, water pipes. All this will squeeze other crucial government services: education, defense, police.

You're not hearing much of this in the campaign. One reason, frankly, is that you don't seem to care. Obama's your favorite candidate (by 64 percent to 33 percent among 18- to 29-year-olds, according to the latest Post-ABC News poll). But he's outsourced his position on these issues to AARP, the 40 million-member group for Americans 50 and over.

Don't believe me? Go to the Web site, http://www.aarp.org/. On Sept. 6, both Obama and McCain addressed an AARP convention celebrating the group's 50th birthday.

Click on the Obama video. You'll see some world-class pandering. There are three basic ways of reducing the costs of Social Security and Medicare: increase eligibility ages; trim benefits; and require recipients to pay more for their Medicare benefits (higher premiums, co-payments or deductibles). In his talk, Obama effectively rejected all three.

Or look at the September-October issue of AARP the Magazine, which has a "voters' guide." In it, Obama and McCain receive the opportunity to check boxes agreeing or disagreeing with AARP's positions on 11 issues. Obama checked agreement on 10. He's not an agent of change but a staunch defender of the status quo. Indeed, he would expand subsidies to the elderly by exempting from federal income taxes anyone 65 and over with $50,000 income or less.
McCain pandered, too. In his video, he praised AARP effusively. He didn't mention benefit cuts. But he hedged. He said today's system is "broken" and shouldn't be inflicted on future generations. In the voters' guide, he didn't check "agree" or "disagree" but merely described his positions. The hint is that, as president, he might try to curb retirement spending. There's a precedent; McCain voted against the Medicare drug benefit.

I am 62. Most of my friends are in their 50s, 60s and 70s. I wish everyone a pleasurable retirement. But we need to overhaul our government retirement programs for the common good and not just the good of the elderly. We have already waited so long that there's no way to do this without being unfair to someone -- overburdening the young or withdrawing promised benefits from older Americans. The present financial crisis, by reducing retirement savings, has made a hard job even harder. Still, these federal programs began as safety nets for the needy; now they've become subsidies for living long, regardless of need.

What the debate has lacked so far is a moral dimension. Obama says it's okay to raise taxes on those with incomes exceeding $250,000. Well, why should Social Security and Medicare beneficiaries with incomes of $250,000 get subsidies from the young making less? How about $200,000 or $100,000? What are acceptable eligibility ages? People live longer; they can work longer. Baby boomers cannot be excluded, because they are the problem.
There can be no "rewriting of the social contract" without benefit cuts, because paying today's benefits inevitably involves much higher taxes, massive deficits or draconian cuts in other government programs. Even with sensible benefit cuts, taxes will have to rise and there will be pressure on other programs.

What should you -- the young -- do? First, get angry -- at the media and think tanks for discussing this problem in misleading euphemisms (for instance, the problem is not an "entitlements crisis"; it's excessive benefits for the old); at the candidates for exploiting your innocence; and at yourself for your gullibility.

Next, start picketing AARP. It's the citadel of seniors' political power and the country's most powerful "special interest." It wields a virtual veto over roughly two-fifths of the federal budget. Your activist groups ought to be there every day with placards reading "Give Us Generational Justice" or "Get Off Our Backs." Ask direct questions of federal candidates about what benefits they'd cut, which they'd keep and why.

You need to appeal to the shame and guilt of older Americans by reminding them that their present self-absorption is not a victimless exercise. Only if older Americans act on their rhetorical pledges of worrying about their children will the political climate change. If you -- the young -- don't stand up for yourselves, believe me, your elders and your politicians won't.

If the world could vote.

http://www.economist.com/Vote2008/
This is an interesting look at who the world would like to see as our president. You might think that they prefer Obama because he may appear weaker than McCain but I wonder why third world countries would prefer a U.S. president that would reverse free trade?

It is an interactive map, spend some time cruising your curser over it.

Mind Blowing

I ask again. Where is the conservative candidate?

Do you have a caption for this cartoon?

Measure the gap between rich and poor based on consumption not income.

Enlarge This Image

This is long but I think it presents an interesting way to view the gap between the wealthy and the less wealthy. Spend a little time reading the two charts. - McKay

By W. Michael Cox

WITH markets swinging widely, the Federal Reserve slashing interest rates and the word “recession” on everybody’s lips, renewed attention is being given to the gap between the haves and have-nots in America. Most of this debate, however, is focused on the wrong measurement of financial well-being.
It’s true that the share of national income going to the richest 20 percent of households rose from 43.6 percent in 1975 to 49.6 percent in 2006, the most recent year for which the Bureau of Labor Statistics has complete data. Meanwhile, families in the lowest fifth saw their piece of the pie fall from 4.3 percent to 3.3 percent.
Income statistics, however, don’t tell the whole story of Americans’ living standards. Looking at a far more direct measure of American families’ economic status — household consumption — indicates that the gap between rich and poor is far less than most assume, and that the abstract, income-based way in which we measure the so-called poverty rate no longer applies to our society.
The top fifth of American households earned an average of $149,963 a year in 2006. As shown in the first accompanying chart, they spent $69,863 on food, clothing, shelter, utilities, transportation, health care and other categories of consumption. The rest of their income went largely to taxes and savings.
The bottom fifth earned just $9,974, but spent nearly twice that — an average of $18,153 a year. How is that possible? A look at the far right-hand column of the consumption chart, labeled “financial flows,” shows why: those lower-income families have access to various sources of spending money that doesn’t fall under taxable income. These sources include portions of sales of property like homes and cars and securities that are not subject to capital gains taxes, insurance policies redeemed, or the drawing down of bank accounts. While some of these families are mired in poverty, many (the exact proportion is unclear) are headed by retirees and those temporarily between jobs, and thus their low income total doesn’t accurately reflect their long-term financial status.
So, bearing this in mind, if we compare the incomes of the top and bottom fifths, we see a ratio of 15 to 1. If we turn to consumption, the gap declines to around 4 to 1. A similar narrowing takes place throughout all levels of income distribution. The middle 20 percent of families had incomes more than four times the bottom fifth. Yet their edge in consumption fell to about 2 to 1.
Let’s take the adjustments one step further. Richer households are larger — an average of 3.1 people in the top fifth, compared with 2.5 people in the middle fifth and 1.7 in the bottom fifth. If we look at consumption per person, the difference between the richest and poorest households falls to just 2.1 to 1. The average person in the middle fifth consumes just 29 percent more than someone living in a bottom-fifth household.
To understand why consumption is a better guideline of economic prosperity than income, it helps to consider how our lives have changed. Nearly all American families now have refrigerators, stoves, color TVs, telephones and radios. Air-conditioners, cars, VCRs or DVD players, microwave ovens, washing machines, clothes dryers and cellphones have reached more than 80 percent of households.
As the second chart, on the spread of consumption, shows, this wasn’t always so. The conveniences we take for granted today usually began as niche products only a few wealthy families could afford. In time, ownership spread through the levels of income distribution as rising wages and falling prices made them affordable in the currency that matters most — the amount of time one had to put in at work to gain the necessary purchasing power.
At the average wage, a VCR fell from 365 hours in 1972 to a mere two hours today. A cellphone dropped from 456 hours in 1984 to four hours. A personal computer, jazzed up with thousands of times the computing power of the 1984 I.B.M., declined from 435 hours to 25 hours. Even cars are taking a smaller toll on our bank accounts: in the past decade, the work-time price of a mid-size Ford sedan declined by 6 percent.
There are several reasons that the costs of goods have dropped so drastically, but perhaps the biggest is increased international trade. Imports lower prices directly. Cheaper inputs cut domestic companies’ costs. International competition forces producers everywhere to become more efficient and hold down prices. Nations do what they do best and trade for the rest.
Thus there is a certain perversity to suggestions that the proper reaction to a potential recession is to enact protectionist measures. While foreign competition may have eroded some American workers’ incomes, looking at consumption broadens our perspective. Simply put, the poor are less poor. Globalization extends and deepens a capitalist system that has for generations been lifting American living standards — for high-income households, of course, but for low-income ones as well.
W. Michael Cox is the senior vice president and chief economist and Richard Alm is the senior economics writer at the Federal Reserve Bank of Dallas.