The contract simply states that we look after you until you grow up and then when you start working, you look after those who helped you. Sounds decent. Except that this social contract, when managed by politicians, translates into conflict for the obvious reason that administrators and politicians are addicted to spending money.
Back to the social intergenerational contract.
If the social generational contract was working why do we have such negative outcomes for children and older adults? In 2010 the 112th Congress Senate introduced bill 294 highlighting that Congress finds the following:
(1) The United States ranks 17th in reading, 31st in mathematics, 23rd in science, and 18th in overall secondary education out of 36 developed nations, according to the Organization for Economic Co-operation and Development (OECD).
(2) According to data compiled by the OECD, in 2008 the United States had a child poverty rate of 20.6 percent, which is the 4th highest child poverty rate of the 30 OECD countries that are ranked in this category...
In 2011 we now have a child poverty rate of over 22% with single parents with children having the third highest rate among all OECD countries.We are losing ground.
This is not a successful intergenerational contract. But the litany of woes continues.
Once our children mature and start going to college, there are other pitfalls that do not exist for children in other developed countries. Of the 20 million students that attend college every year in the US, close to 12 million borrow to help cover costs. The August 2013 Federal Reserve Statistics student loans amounted to $1,178 Trillion. Student loans are hovering around $100 Billion a year in new loans per year. Students in the US owe more than the total GDP of over 180 countries and territories (out of 194).
It surprises Europeans to learn that this cost is in addition to state funds that contribute more than $1,060 per student per 3-unit class. An enviable sum for any Country offering free education. All this cost ensures that from infants, to children, to adolescents to adulthood young Americans are enslaved in an economic stranglehold.
From the very young to young adults, between 25%-50% of Americans are destined to remaining in poverty, becoming debt ridden or electing to be uneducated and join the daily cycle of minimum work at $8:50 an hour.
So the social intergenerational contract is not working so well for our children. But at least, for older adults in the USA, there is some benefit to the social intergenerational contract.
Back to the social intergenerational contract.
We need to examine the federal figures more closely for this one.
The most successful social programs in the US has been the introduction of Social Security in 1935. Social Security has been instrumental in lowering poverty levels among older adults. But if we look at the metrics—without denying the comparative improvement of welfare of millions of older adults—the improvement does not translate to economic security in older age.
The 2010 Current Population Survey reported 43.6 million people living in poverty—the largest number in the 51 years for which poverty estimates have been published. Surprisingly, the same report shows that between 2008 and 2009, poverty increased for children under age 18 (from 19.0 to 20.7 percent) and people aged 18 to 64 (from 11.7 to 12.9 percent), but decreased for older adults (from 9.7 to 8.9 percent).
The federal poverty level was defined by Mollie Orshansky between 1963-1964 while she was working for the Social Security Administration. Ms Orshansky used the U.S. Department of Agriculture’s economy food plan for families of three or more persons and multiplied the costs by a factor of three. A sensible enough metrics in 1960s.
Fast forward to 2013. The US is very different from the US of 1960s. The poverty metrics does not take into account housing costs, differences in living expenses across the country, child care, health care costs, medications and transportation. National Academy of Science developed a new formula to account for these changes. And in January 2011, the federal government officially but reticently acknowledged the need to improve the outdated federal poverty level by releasing a ‘Supplemental Poverty Measure.’
The new index, now known as the Elder Index, was calculated by the UCLA Center for Health Policy Research on behalf of the Insight Center for Community Economic Development, and Wider Opportunities for Women. The Elder Index shows that the cost of living for most US older adults far outpaces the Federal Poverty Level. The Elder Index estimates that 18.6 percent of Americans over 65 live below the poverty line, which translates to 6.8 million older adults. This index is more accurate than either the antiquated Federal Poverty Level or the Supplemental Poverty Measure because it takes into account the costs of child care, health care and transportation.
Unlike other countries in the world, the United States is alone in that the surplus is spent, every cent, every year. There is even a law to stop Congress from doing this. The Budget Enforcement Act—Section 13301—made it illegal for Congress to use Social Security funds by excluding Social Security from all budgets including the congressional budget. However the intent of the law is ignored.
The 2013 Social Security Trustees Report states that "Redemption of trust fund bonds, interest paid on those bonds, and transfers from the General Fund provide no new net income to the Treasury, which must finance these payments through some combination of increased taxation, reductions in other government spending, or additional borrowing from the public." This means that these are no bonds that could be sold. In order to pay this money back the government will have to raise, borrow, or print additional monies to honor them.
The "special issue Treasury Bonds" are not bonds, because they cannot be bought, sold or bartered, but simply IOUs that Congress is NOT obligated to pay back. There are Supreme Court decisions, especially the 1960 Flemming v. Nestor. where the Court denied Nestor's benefits even though he had contributed to the program for 19 years and was already receiving benefits. The decision states that there is no obligation for the federal government to honor its commitment to provide social security regardless of your contribution. It is an entitlement as long as we say it is.
Back to the social intergenerational contract.
On the younger generational side there is Infant mortality, child poverty, educational debt encumbered, while on the older adult side we have an increasing number experiencing poverty--despite Social Security--and a Congress that has expropriate--illegally under Section 13301--all of our Social Security Trust Funds. Older adults insurance no longer exists.
Lets look at the social intergenerational contract again.
Intergenerational "conflict" is a product of abuse of funds. It is a creation of politicians and administrators who abuse the implicit agreement we have across generations. When we allow for this to happen--for administrators to expropriate our investment--then we allow for our society, our community, to fend for itself. There are no safety nets. How did we get to this place and what are some of the solutions?
We got to this place because we keep being distracted by peripheral issues that have no significance to our well being. Whenever there is an issue that hits at the core of our being, our civic society, we are distracted by jingoism and national pride or petty politics. The solution is education. Not a radical idea, but one that sounds simpler than it is. Education, not in a formal sense of going to college (which we should if we can afford it or have that inclination) but in terms of being open to discussing everything. To fight for an truly open society. To invest time to understand the issues and not to settle for sound bites. This is hard. Attend a council meeting. Participate. You do not have to say anything, just listen and be aware.
© USA Copyrighted 2013 Mario D. Garrett
We got to this place because we keep being distracted by peripheral issues that have no significance to our well being. Whenever there is an issue that hits at the core of our being, our civic society, we are distracted by jingoism and national pride or petty politics. The solution is education. Not a radical idea, but one that sounds simpler than it is. Education, not in a formal sense of going to college (which we should if we can afford it or have that inclination) but in terms of being open to discussing everything. To fight for an truly open society. To invest time to understand the issues and not to settle for sound bites. This is hard. Attend a council meeting. Participate. You do not have to say anything, just listen and be aware.
© USA Copyrighted 2013 Mario D. Garrett
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