Wednesday, January 23, 2008

My Big Pink Elephant for Hump Day: Money, Social Programs and The Generation Gap

We are all operating under some informational delusions, and they are affecting how we vote. We're letting the very people who have a personal agenda tell us what to think; that's called a conflict of interest and unreliable resource in my book. So let me clear up a few things and express my largest cultural concerns along the way:

* we're in an economic crisis and a stimulus package isn't going to fix it. Stimulus packages are for the short term, and we have a long-term problem ahead of us because the cost of living and big business interests are dangerously outpacing earnings. (Not to mention big business practices---such as those evil Adjustable Rate Mortgages---which benefit business at the expense of the people, economy and country at large. Banks, mortgage lenders, speculators and so forth who perpetuate this shouldn't just be ashamed, they should be fined and jailed. And politicians who enabled and supported it---including our President---should be ousted from office, and face similar penalties. Yes, I have NO MERCY for people who cost their citizens their HOMES.)

* cutting social programs doesn't lead to more money in your pocket. In fact, it worsens the economy on multiple levels, not to mention robs from the future. This is also why stimulus packages only work short-term. If you're wealthy with plenty of money in reserve, you are the minority. So close your mouth and open your ears for a minute. We can send out tax rebates but without appropriate social programs, that money won't go back into the economy (aka Business). People will use it for health care, utilities, groceries, etc. Essentials. Stimulus packages count on nonessential spending.

* the above two things keep happening because of a large voting block: the conservative Baby Boomers. They aren't as cool or rebellious as they (and we) think. They also don't outnumber us as much as we think. So let's take back the vote, folks, and prepare for tomorrow, instead of focusing so selfishly on ourselves today.

At the end of the day, all of my major issues boil down to one thing: money, and the distribution thereof.

At the end of my day, I figure absolutely none of it will come to me.

And that royally chaps my hide.

But it doesn't chap my hide half as much as watching my children robbed of a high-quality comprehensive education, seeing too many citizens struggling for the basics in increasing numbers, and knowing people lack the basic human right of proper health care.

This is the result of a conservative trend in American politics that began in the 1990s, courtesy of our big generation, the Baby Boom:
[America became] a somber land obsessed with values, back-to-basics movements, ethical rectitude, political correctness, harsh punishments, and a yearning for the simple life.

With a huge fear---and media and politician inspired panic---about the burden the Baby Boomers will put on our social program infrastructure, people have begun voting even more conservatively to cut back even more of these programs, erroneously thinking we can't possibly support or afford them and rationalizing this action by falling back on the out-of-date "if you want it, you have to earn it yourself" philosophy of government.

Invariably this leads to voting patterns that are individually focused instead of culturally focused. We end up cutting essential, nation-building programs such as SCHIP.

Furthermore, it puts the focus on Baby Boomers and misses the subsequent generations and their needs. There was a Baby Boom. Hordes of people. They ruled the nation and consumed the majority of resources through sheer volume. However, that day has hit its end.

My generation isn't as small as you might think.

Depending upon who you listen to and whether you believe my generation begins in 1960 or 1965, we number somewhere between 50 and 80 million (equivalent to the Baby Boom).
The early-sixties birth cohorts are among the biggest in U.S. history -- and, at 80 million, this generation has numerically outgrown the Boom. By the late 1990s it will even outvote the Boom.
---Source: The Atlantic, "The New Generation Gap," by Neil Howe and William Strauss

I know: SURPRISE!

Consider these US Department of Health and Human Services projections that breakdown population by age groups. Imagine a person was born in 1970. Look at the disparity in 1998, and notice how the gap narrows in 2009:

Figure 4.1. U.S. Population by Age


Figure 4.2. Percent Change in U.S. Population by Age, 1998-2009


At some point we became a nation so obsessed with the here and now that we have forgotten the future. if a few people raise their hands and start asking about the future and down the road, they are smilingly assured by leaders that there is no future problem; they either allege the problem isn't real (global warming) or assert that short-term fixes are all that is needed (recession). This whitewash applies to almost every issue you can think of.

We need to consider that cutting education will long-term prevent our ability to adequately and competitively contribute to the global market. We need to consider that social programs enable better growth and development because the citizens are housed, fed, healthy and better able to contribute to the country. We need to consider that losing the last Boomer won't enable us to sigh in social relief; Generations X and Y are also large and have similar needs long-term, and have even less access to retirement programs and employment benefits because so much of business has moved away from benefits and long-term employment and has shifted to term, contract and freelance work to avoid paying out benefits or providing retirement programs.

It's not going away folks.

Don't let the conservative Boomers lead the way. Break free.

Vote for the future. This includes Green business and practices---including a more constructive and positive approach such as incentives rather than punitive fines for noncompliers (which clearly is a failure); sustainable development and investment (support for mom and pop business instead of such breaks for large chains); long-term economic planning; a focus on citizenry and their needs rather than big business and their wants; and a reprioritization of education and social welfare programs.

This is an extremely political issue, and it is why I have recently decided to back John Edwards. This was a hard come by decision; the other two Democrats offer much but also lack much.

However, more importantly, it is our issue, yours, mine and our children's. Let's vote in a way that creates a better country not just for us---here, now, today---but leaves behind us a place and time better than when we arrived.

Some interesting reading...

Daily Kos: Some Baby Boomers - The Worst Generation by davefromqueens

Attention Baby Boomers, Hollywood Execs and DC Insiders… by Future Majority Editors and Contributors

PBS: The Generation Gap (essays and polls of information)

CNNMoney.com: The generation gap at work---What's wrong with these kids today? Nothing. You have more in common with younger workers than you think. (I SERIOUSLY disagree that Gen X has not had to fight hard for work and has never known job scarcity. I don't know if the author was snoozing through the major recession of the early 90s but the economy and job market tanked then and my generation was hosed. The difference is we probably in general didn't have as many financial obligations, such as kids and mortgages, yet.)

Economics Journalist Robert Kuttner on the “Most Serious Financial Crisis Since the Great Depression”: “This is the Result of Rightwing Ideology and the Political Power of Wall Street”

Copyright 2007 Julie Pippert
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26 comments:

Gwen said...

You forgot to add, in your description of this nation's future financial problems, the way the emerging, highly powered economies of China and India are going to be challenging for the U.S.

It's hard to sacrifice for the future when you already feel like you don't have enough for the present, even if part of what makes you feel you don't have enough is the grossly consumeristic culture you are hoping will change.

wheelsonthebus said...

I feel so cheated and f-cked by the previous generation, sometimes. They just do not seem to care what we are inheriting from them. That is why I am so obsessive about the environment; I don't want my kids to feel this way and I want them to be able to breathe.

Awesome post.

Emily

Space Mom said...

You don't leave me much to comment on...You've said it all

Gina Pintar said...

I also feel like the boomers are all about "What is in it for me" and are not interested in the future behind them.

I am glad you pointed out that our generation CAN BE just as strong a force as the boomers. Thanks for that.

I don't always agree with you on political issues. I am in the more conservative spending camp but I see the WASTE that goes on in my state and BS that happens and I just want to shut it down already.

But I AM an Edwards fan. I could see myself voting for him. He has a decent autism plan.

Julie Pippert said...

Gina, I think fiscally conservative, responsible spending, AND social welfare can marry happily for the long-haul.

In fact, it's imperative that they do.

I just don't think we've had people who are good enough to manage that in the places we need them.

If you think you are fiscally conservative talk to Jon. he has been persuaded by me, a little. ;)

Edwards is the ONLY candidate who remembers the other 98% of the nation. The ONLY ONE.

I hate waste too. it makes people hate spending. It makes them against programs that need funding. I hate that. It needs to be better managed.

I find myself furious at school bonds because WHERE IS THE MONEY?!?!?!

Not in the classroom, not on the students in the way I expect.

And yet...I know the need.

Thanks for commenting. :)

le35 said...

Hey Julie,

Although I respectfully disagree with your thoughts, I respect your post. I can see where you're coming from. We have a whole new generation of people who are going to get to retirement age, and there will be no social security. I don't feel like the way to solve this is to create more social programs. a capitalist system cannot work as a communist or socialist system. However, I can see where you're coming from. Good post. I feel like less government, in the longrun, is more.

Catherine said...

I was just accepting this week that I'm not an economics person (though I know your post is much for than economics), but there are many other things about our current situation I'd like to see changed.

Thanks for fixing my link, btw. Good to know you can do that! I've been a poor blog cooperator this busy, busy month, but today's was a topic I wasn't about to miss - with or without a reminder! Thanks, as always.

Anonymous said...

Extending social programs will actually do more to destroy our children's future than it will to help it. Giving the government more control over individual dollars is a bad idea. They do not spend it wisely. Giving more tax breaks to businesses that help employees get private insurance, giving more incentives to build or buy as a business (and thereby create jobs), cutting taxes to all taxpayers - those are the things that will have a long-term positive effect on the economy. Reducing welfare programs - though I prefer converting those for the poor into education/training programs instead - and giving the younger generation the right to opt out of social security are the best chance for the younger generation to save themselves. If a person, for instance, were to get back their social security withholdings each month and allowed to invest that themselves, think how much better off everyone would be now.

One last point to make: the people who took out loans on homes they could not afford are responsible for "losing their homes" not the banks that loaned them the money. The banks should not have loaned it, but the people should not have overextended themselves. ARM loans are not "evil" and do not have some automatic benefit to businesses. We've used our ARM loan to reduce our principal faster by paying what we would have to a fixed rate mortgage, and now if our percentage rises it will be on a lower amount. They could max out the allowed rate and we'd still be better off than if we'd just gotten a fixed rate mortgage. The main problem is people do not bother to educate themselves and then later expect the government to bail them out.

I came to your blog from someone else's and just couldn't leave without commenting. I prefer to post anonymously here, though.

ewe are here said...

This is a great post...
and I particularly agreed with the sentiment of this sentence:

But it doesn't chap my hide half as much as watching my children robbed of a high-quality comprehensive education, seeing too many citizens struggling for the basics in increasing numbers, and knowing people lack the basic human right of proper health care.

Because it's so very true. Sad, but true.

Jennifer said...

THANK YOU. Thank you. The whole stimulus package has been so bothersome to me and you pinpointed exactly why. I find it odd that I (and you and many others) can see this so clearly while those in Washington (on both sides) cannot. Too much tunnel vision and short-term tunnel vision, at that.

jeanie said...

There are many reasons that I feel so lucky to be born in Australia - unfortunately watching some parts of the US and the economics is one of them.

I am saddened, however, that we seem set to follow your lead.

Wonderfully written post, putting economics on common people terms.

Julie Pippert said...

Jennifer, I was troubled by this plan as well and after a little research stumbled across several pieces of information that, when tied together, helped explain to me why the plan wouldn't work. IMHO ---> DC politicians are trying to balance an egg on a fence. They are trying to please those who got them into office (rich and business) while some generally try to do what's good for the citizenry. Unfortunately, it ends up being a wash.

Ewe, I know, I know.

Anonymous, I'm glad you took the open anonymous option to state your opinion. That's why I have it. I'd rather people weigh in than not.

May I pick your brain a bit, with sincere questions? I'd like to hear more.

In your idea, will all people have jobs that must provide benefits such as health care, as in MA?

What will happen for those who freelance, are SAHPs, or do not have jobs that provide health care?

I actually don't disagree with you about SS. It's a legitimate plan to consider.

I will respectfully disagree with you about ARM loans. People were given loans who shouldn't have been. Those who applied were between a rock and a hard place, IMO. So many regions have pricing for homes that are well-beyond the 1/3 of income rule...in fact I'd say most. Almost everyone is pretty close to over-extended. I think those who are overextended aren't being whiners demanding a bail-out per se.

Catherine, I don't have an economics degree but I've done budgets long enough to have a fair idea of how money works. Big dollars don't seem to work any differently than little dollars. ;)
I'd be curious what context you are coming from. But I understand privacy. :)

le35, my husband (and friend Gina) agrees with you. :) And I see that point, too. I admit I have an understandable skepticism of the government's ability to manage things well. Who doesn't? LOL However, the conservatives and Republicans don't offer less government, they seem to offer more. And if it's going to be more, I'd rather it be for the people than other.

Space Mom, thanks.

Emily, yeah, a crux of my argument is more about how this generation ahead of us en masse (understanding there are individuals and exceptions and so forth) is sort of locusting the fields. At least how it appears. And then calls our generation slackers. Sure big spender. ;)

Gwen, true, true...I did try to allude to that with my global market comments. It's kind of it's own long discussion, eh. And our second point, TOO TRUE.

Thanks everyone for great comments...on BOTH sides.

jen said...

Brava, girl. I've had my head up my ass lately or i would have been all over this one.

realitytesting said...

Oh, Julie. Every time I begin flirting with the notion of taking on your Hump Day Hmmm challenges, I end up reading your post each week, and I realize that all I really want to do is write "what SHE said" in my post, and simply link right back to you. Who on earth could say this better than you just have?

Anonymous said...

Same anon here.

To answer your questions:

I am self-employed and have to provide my own health care and insurance. I pay about $14,000 a year to receive that health care out of a salary of about $72,000. If government would give insurance companies an incentive to offer the employees of small businesses the chance to belong to group coverage, that would be vastly superior to government run insurance programs. Stay at home parents, free-lancers, etc. could belong to such programs. By creating group coverages for people in a certain sector, certain area, etc., the insurance companies could spread their risk while the insured individuals could reduce their rates for coverage.

Glad you agree about SS. The program has had a negative investment return, when you examine it, because the dollars that went in have depreciated in value while never being invested in anything that draws interest to recover that depreciation. Therefore it has been a very foolish idea for the government.

ARM loans are not evil. I restate that because I have one. My brother-in-law had one on his first home that actually went down several times after he hit the adjustable period and never actually went up. All these loans do is adjust to the market rate. A person who got one knew that going in, and bailing them out now is unfair to those of us who have done our best to stay current. I've managed some pretty tight cash flow over the past several years, all the while managing to reduce my principal in my loan by $21,000 over the course of four years. If I'd only paid minimum payments, then I might be in danger when my loan interest goes up (assuming it does, which I don't guarantee since the Fed keeps dropping the prime interest rate). Instead, even if they increase the rate by the maximum allowed 2%, my total interest remaining is less than if I'd had my original fixed rate mortgage all along and made the same payments. So, in the end, I'm annoyed/insulted/disgusted - whatever you want to call it - that someone who did not plan ahead, who overbought on their home, who failed to do the right thing in a contractual situation is going to get bailed out for being foolish. I deal with people all the time in my business who back out of promises, and it simply disgusts me. I want to know where I can file for my refund of their failed payments. Last year alone my business lost $75,000 in bad debts. Can I get some of that back if I get the right media man to write about it? No, I don't expect the government to bail me out. I would have liked it if I could have insured against those losses, but since I could not, my business simply had to pay them. All we teach people in this country when we continue to give them handouts, bail them out of bad contracts, and give them a "good feeling" instead of a reality check is teach them not to be personally responsible. Giving the goverment more money is never an answer for me because they clearly are not responsible with it. You write a blog about being a good parent and teaching your children values. One way you teach them, I hope, is by showing them there are consequences to their actions. Letting people suffer through these loan foreclosures will teach them to be wiser with funds next time.

One last tidbit for you to consider: during the savings & loan crisis in the 80's. the government bailed out the businesses that made bad loans and dramatically increased the losses. Had they simply let those savings and loans fail, they would not have continued to make bad loans knowing those loans would never come back. Research has shown they did just that and basically gave their friends a lot of free money at taxpayer expense. I do not want this home loan situation to do the same thing.

You asked, I answered. Sorry for the long post, but not sorry to inform you of how I think.

Suz said...

Oh, the hope that springs into my heart when I look at your diagrams and realize that we can be rid of the baby boomers. We can! Yet, I want to comment on a few other things:

1) I will not be backing Edwards; I think that what you say is true, but his position on education, as I understand it, rubs me the wrong way for reasons that reveal a little too much about myself to go into on the internet.

2) I don't mind paying taxes. In fact, I think I should. I don't deserve a break but neither do those in tax brackets above me nor do big corporations. I'm happy to pay taxes as long as they go to the things that I believe will improve lives and welfares - infrastructure, the environment, education, and a helping hand for those that need it whereever those people may be.

3) A friend of mine sold some of those mortgages and I believe that she knew exactly what she was doing. She knew the people she sold them to couldn't afford the homes in the long run and she did it anyway to earn a buck for herself and the company. Granted, she needed those dollars, but not by selling others out. Is this the culture that we've created in America? The culture of desperation? The culture of the selfish?

melissa said...

You're right; our posts do compliment.

Did you read Generations by Strauss and Howe? It's about 15 years old by this point, but it is a fascinating read. Short version: each generation falls into one of four cycling types. Gen X is the same type as the generation the lead, not fought, WWII. That's right, the one who get screwed and has to fix the mess that other people started.

Julie Pippert said...

Melissa, I did read Strauss and Howe, and Coupland too, way back when. :) I don't think the import of what they said fully hit me...well it's a sustained release message. I got a good portion of the point back then and marveled, but with time, my mind keeps going back to it, and marveling more.

Suz, you know I am eaten up with curiosity. And your 2 and 3? Yes.

Anon, thanks for coming back. I will stand technically corrected: the ARM loans are not in and of themselves evil; however the business practices around them were exceedingly unethical and just awful. People manipulated rates, the market, loaned to people who couldn't afford it...well, as Suz said in point 3 of her comment. I've read a lot about the background behind the loans that are failing, and there IS legal action to take against many of the people and institutions...action that is being taken, and should IMO.

As for health benefits...it's so variable by state. We had FABULOUS coverage in MA. Not here. In fact, when we moved, and I left my job it was cheaper and better for me to pay COBRA for a year. There are co-ops for health insurance. Costly, though, and in this state, coverage is bad. They can be better elsewhere.

We'll have to agree to disagree about "handouts." We simply view that very differently.

Anonymous said...

Same anon,

In our case, we had to actually ask for an ARM loan. Our ARM has yet to reach the adjustable period. The salesman/loan officer at the time said it had been so long since anyone had even asked about an ARM, he had to remember what paperwork to get out. Now, if we're just reaching that period, it seems somewhat odd that other people who got the same type of loan as we did back then were "manipulated" into it. Certainly people got loans they should not have, but that's at least partly their own fault. Bailing them out could do serious damage to the housing market, property rights, and the lending industry.

I understand there are co-ops, but if government gave insurance companies a greater incentive to sponsor those (rather than try to get into the business themselves) then the cost of being in one would go down.

I have to disagree with the idea in Suz's #2 on principle. Taxes do not go to the programs that are best in many cases. The bulk of tax dollars goes to good programs, but the large amount of dollars continually funnelled into welfare programs that encouraged people to stay on them (and actually made it hard to leave) was and is huge waste. If those same dollars had provided parents with job training and child care at an initially higher cost but a long-term cost that is much lower, then I would be all for it. I much prefer to give people a hand up than a hand out.

And yes, we can respectfully agree to disagree.

slouching mom said...

The interchange between you and anon showcases the best of the internet, doesn't it? Reasoned arguments, RESPECTFULLY argued differences of opinion, courtesy, and thoughtfulness. I'm impressed, really impressed.

And Julie? I've decided to support Edwards, though I'm not sure he can come from behind at this point.

Anonymous said...

Edwards is running for VP at this point. That's why he's holding back a full attack on either of the frontrunners at this point and trying to talk about the issues in debates. If he keeps it up, he'll be the man most likely to be a running mate in 2012, too.

WrapAroundSam said...

My only question and/or comment would be, when will someone wake up and realize that 90% of the problem is caused by fuel prices? Congress etc is so darn busy worrying about whether the high priced athletes are taking steroids or not, why not be concerned about the grotesque profits being made by Big OIL companies...It sure stumps me...

Anonymous said...

Same anon,

I have an answer on the oil question. The reason the government is happy with high priced oil is because many of their gas taxes are based on the price at the pump, so their revenues have more than doubled with the hike. Meanwhile, no evidence from any independent study has ever shown the oil companies are gouging. It's the government sticking it to us in three ways: one with the increasing tax and two with the stockpiling of oil which makes a naturally available product scarce, and three by forbidding the drilling of available oil here in the United States (which also makes a naturally available product scarce). The idea that oil will run out soon is actually a myth, easily disspelled when the available amount of it is examined and compared with usage. Just something to consider.

Anonymous said...

Oh, and you are right, by the way: the cost of fuel (and of food being foolishly diverted to fuel that does not actually replace oil since it takes aboutt a gallon of gas to produce a gallon of ethanol) is definitely driving inflation right now. Until we release some of the reserves and drill our own supplies, we're placing ourselves at risk as a nation of damaging our own quality of life.

SciFi Dad said...

Julie, while I agree that the current economics have to change, I cannot agree with you about ARMs. I am going to assume that these are similar to what is called a "variable rate mortgage" up here in Canada, where the interest rate fluctuates based on the bank's prime interest rate, which is in turn (generally) influenced by the Bank of Canada.

Based on research and statistics, people actually pay LESS interest over the life of a mortgage if they go variable as opposed to fixed; rates never stay high or low for long, and going with a standardized mortgage duration of 20-25 years means you'll see several cycles and overall benefit from the down periods.

I also must agree with anonymous: the blame lies not only with banks who give these loans but the people who fail to prepare a budget before they buy. It's not rocket science or high-order mathematics to figure out what your paycheque less mortgage payments, car payments, etc leaves you with... people need to plan.

Now, with all that being said, the fact remains that the current situation is unacceptable; the cost of living is outrageous, and unless both partners are working it is nearly impossible to own one's home. The ratio of housing costs to average salary is out of whack, and needs to be adjusted. However, with the valuation of property so high in developed countries I cannot see that correction coming soon.

Anonymous said...

Same anon,

Thanks for the agreement. I actually wrote a blog post recently supporting ARMs that basically agreed with what your research just said, and I just figured that out doing my own study with an Excel amortization. I also agree, the inflation of the cost of living has gotten out of hand and the devaluation of currency is out of hand. Continuing to pile up a national debt by giving more and more money to programs that we simply do not need and definitely cannot afford is like pouring gasoline on an open fire. Something has got to give.