Will Americans celebrate another ‘Greatest Generation?’

In 1998 for­mer NBC news anchor Tom Brokaw released his book, The Great­est Gen­er­a­tion, which cel­e­brated the lives and accom­plish­ments of the peo­ple who matured dur­ing two of America’s most dif­fi­cult times: the Great Depres­sion and World War II. Dur­ing these try­ing times through much of the 1930s and 1940s, peo­ple labored for their fam­i­lies and their coun­try on a large scale basis, with vir­tu­ally every Amer­i­can required — par­tic­u­larly dur­ing the war years — to set aside per­sonal ambi­tions for the greater good. Only in this way was the rise of fas­cism that was sweep­ing through the world defeated. On this week that con­tains Memo­r­ial Day, it is fit­ting that Amer­i­cans rec­og­nize the sac­ri­fices of this great­est gen­er­a­tion which led to the free­dom and pros­per­ity that typ­i­fies the years since the end of WWII.

Today, there are still peo­ple who sac­ri­fice for our nation, that is, set­ting aside their own per­sonal com­fort and safety by join­ing America’s armed forces and fight­ing for our nation’s free­dom and com­mon val­ues. Such peo­ple, how­ever, are a self-selected few, with most of us required to engage in lit­tle or no per­sonal sac­ri­fice for the bet­ter­ment of our nation.

The envi­able atmos­phere of free­dom and pros­per­ity our coun­try has expe­ri­enced since the mid-1940s is at risk, how­ever, and sac­ri­fice will once again be needed to allow future gen­er­a­tions to have their oppor­tu­nity to live “the Amer­i­can Dream.” The ques­tion fac­ing Amer­ica is whether another gen­er­a­tion will step for­ward and will­ingly suf­fer per­sonal set­backs for the greater good.

And what is this new mon­u­men­tal issue that requires such sac­ri­fice and may endan­ger the very fab­ric of America’s national tapes­try if it is not quickly and ade­quately addressed? Enti­tle­ment reform.

No doubt many are think­ing that I have quite pos­si­bly lost my mind as I try to com­pare the hard­ships of WWII with the need to reform pro­grams such as Social Secu­rity, Medicare and Med­ic­aid. But for future Amer­i­cans — some already born and most not — this may well rep­re­sent the defin­ing issue of this decade.

Within the past cou­ple of months, I wrote about the need to reform Social Secu­rity, given the huge bur­dens that will be placed on future tax­pay­ers should they be required to ful­fill the polit­i­cally expe­di­ent promises made by mem­bers of Con­gress to senior cit­i­zens. With­out sig­nif­i­cant changes in the pro­gram over time to avoid sink­ing into the red, rev­enues will need to be increased sig­nif­i­cantly. So, with­out present or future seniors sac­ri­fic­ing for the greater good, future Amer­i­can fam­i­lies will see their stan­dards of liv­ing reduced, deficits/debt explode, and/or taxes raised sig­nif­i­cantly. In total, the unfunded lia­bil­i­ties of the Social Secu­rity pro­gram amount to some $7 tril­lion over the next 75 years, with many ana­lysts plac­ing the fig­ure well above that deplorable figure.

Even more crit­i­cal than Social Secu­rity is the Medicare pro­gram (with Medicaid’s bud­getary prob­lems even more ter­ri­fy­ing than these two social insur­ance pro­grams … but that will be an issue for another day). Accord­ing to many fore­cast­ers the unfunded Medicare lia­bil­i­ties over the next 75 year time hori­zon are some­where around $38 tril­lion, bet­ter than five times the size of the Social Secu­rity short­fall. And many ana­lysts place the poten­tial red ink for this pro­gram at tens of tril­lions of dol­lars above this fig­ure given the rapid rise in health care costs, the aging of the Amer­i­can pop­u­la­tion, and increased life expectancies.

Par­tic­u­larly alarm­ing is that most Amer­i­cans seem to feel that our nation’s deficit/debt prob­lems can be addressed with­out sub­stan­tive changes to the Medicare pro­gram. A recent sur­vey of Ohioans found that more than three-quarters of adults feel Medicare can be excluded from bud­get nego­ti­a­tions as our annual deficits of bet­ter than one tril­lion dol­lars per year are added to our present debt of nearly $14.3 tril­lion. National survey-based research finds sim­i­lar results, with Amer­i­cans over­whelm­ingly against changes to Medicare’s promise of health care to senior citizens.

To be sure, such empa­thy for many of our country’s most vul­ner­a­ble cit­i­zens is admirable. Vir­tu­ally nobody wants to deny health care to any­body, much less senior cit­i­zens who may be in declin­ing health, or who need access to health care to keep from falling into poor health due to the lack of pre­ven­ta­tive care.

But with­out major changes to the pro­gram, Medicare oblig­a­tions will over­whelm the abil­ity of the future work­ing pop­u­la­tion to fund such inter-generational promises with­out enor­mous finan­cial sac­ri­fices. Which begs the ques­tion: will Amer­i­cans cel­e­brate another great­est gen­er­a­tion? More about that ques­tion and how to address the issue next week.

Dr. James New­ton serves as chief eco­nomic advi­sor to Com­merce National Bank and is an aux­il­iary fac­ulty mem­ber in eco­nom­ics and sta­tis­tics at Ohio State University-Marion.

Posted by Jim Newton on May 31 2011. You can follow any responses to this entry through the RSS Feed. Comments can be made below.