Coming age of austerity
“Are the good times really over for good?” asked Merle Haggard in his 1982 lament.
The good times weren't over. In fact, they were coming back, with the Reagan recovery, the renewal of the American spirit and the end of a Cold War that had consumed so much of our lives.
No matter the winner of the presidential race, it is hard to be sanguine about the future. Demographic and economic realities do not permit it.
Consider: Between 1946 and 1964, 79 million babies were born — the largest, best-educated and most successful generation in our history.
The problem: Assume that 75 million of these 79 million boomers survive to age 66. This means that from this year through 2030, an average of nearly 4 million boomers will be retiring every year. This translates into some 11,000 boomers becoming eligible for Medicare and Social Security every single day for the next 18 years.
Add in immigrants and the fact that baby boomers live longer than the Greatest Generation or Silent Generation seniors, and you have an immense and unavoidable increase coming in expenditures for our largest entitlement programs.
Benefits will have to be curbed or cut and payroll taxes will have to rise to make good on our promises to seniors.
As for the rest of our federal budget of nearly $4 trillion, we have run four consecutive deficits of over $1 trillion. To bring that budget to balance, freezes would have to be imposed and cuts made in spending for defense and other social programs.
Europe has arrived at where we are headed. In the south of the old continent — Spain, Italy and Greece — the new austerity has begun to imperil the social order. In the north, the disposition to be taxed to pay for other nations' social safety nets is disappearing.
With government in the U.S. at all levels consuming 40 percent of gross domestic product, and taxes 30 percent, taxes will have to rise and government spending be controlled or cut. The alternative is to destroy the debt by depreciating the dollars in which it is denominated — i.e., by Fed-induced inflation. But you can rob your creditors only once. After that, they never trust you again.
There is another social development rarely discussed. Workers who are replacing retiring baby boomers in the labor force are increasingly minorities. Blacks and Hispanics account now for 30 percent of the population — and rising rapidly.
Yet these two minorities have high school dropout rates of up to 50 percent in many cities, and many who do graduate have math, reading and science scores at seventh-, eighth- and ninth-grade levels.
Can their contributions to an advanced economy be as great as were those of baby boomers of the '60s and '70s, whose SAT scores were among the highest we ever recorded?
Moreover, while boomers were almost all born into families where mother and father were married and living together, Hispanics have a 53 percent illegitimacy rate, blacks a 73 percent rate. Among the white poor and working class, the illegitimacy rate is now 40 percent.
And between the illegitimacy rate and the drug-use rate, dropout rate, crime rate and incarceration rate, the correlation is absolute.
Some of us are accused of always “crying wolf.” But it is worth noting that one day the wolf came.
Pat Buchanan is the author of “Suicide of a Superpower: Will America Survive to 2025?”