The shutdown crisis has ended, and eventually the two parties will make another stab at a deal on taxes, investments and entitlements. There’s one outcome from such negotiations that I can absolutely guarantee: Seniors, Wall Street and unions will all have their say and their interests protected. So the most likely result will be more tinkering around the edges, as our politicians run for the hills the minute someone accuses them of “fixing the deficit on the backs of the elderly” or creating “death panels” to sensibly allocate end-of-life health care.
Could this time be different? Short of an economic meltdown, there is only one thing that might produce meaningful change: a mass movement for tax, spending and entitlement reform led by the cohort that is the least organized but will be the most affected if we don’t think long term: today’s young people.
Whether they realize it or not, they’re the ones who will really get hit by all the cans we’re kicking down the road. After we baby boomers get done retiring — at a rate of 7,000 to 11,000 a day — if current taxes and entitlement promises are not reformed, the cupboard will be largely bare for today’s Facebook generation. But what are the chances of them getting out of Facebook and into their parents’ faces — and demanding not only that the wealthy do their part, but that the next generation as a whole leaves something for this one? Too bad young people aren’t paying attention. Or are they?
Wait! Who is that speaking to crowds of students at Berkeley, Stanford, Brown, USC, Bowdoin, Notre Dame and NYU — urging these “future seniors” to start a movement to protect their interests? That’s Stan Druckenmiller, the legendary investor who made a fortune predicting the subprime bust, often accompanied by Geoffrey Canada, the president of the Harlem Children’s Zone, of which Druckenmiller is the biggest funder.
What are they doing on a Mick Jagger-like college tour where they don’t sing, don’t dance, and just go through a set of charts showing young people how badly they’ll be hammered if our current taxes, growth rates, defense spending and entitlements stay where they are?
“My generation — we brought down the president in the ‘60s because we didn’t want to go into the war against Vietnam,” Druckenmiller told an overflow crowd at Notre Dame last week. “People say young people don’t vote; young people don’t care. I’m hoping after tonight, you will care.”
Whenever Druckenmiller (a friend) is challenged by seniors, who also come to his talks, that he is trying to start an intergenerational war, he has a standard reply: “No, that war already happened, and the kids lost. We’re just trying to recover some scraps for them.”
Druckenmiller is not looking to get his taxes cut. He considers Social Security and Medicare great achievements for how they've reduced poverty among the elderly. He and Canada are simply convinced that only a Vietnam-war-scale movement by the young can break through the web of special interests to force politicians to put in place the reforms that would actually secure both today's seniors and future seniors, today's middle class and the wanna-be middle class. (Watch their NYU presentation: http://bit.ly/16NjOLK).
Druckenmiller urges young people to design their own solutions, but, when asked, he recommends: raising taxes on capital gains, dividends and carried interest — now hugely weighted to the wealthy and elderly — to make them equal to earned income taxes; making all consumers more price sensitive when obtaining health care; means-testing Social Security and Medicare so they go to those most in need; phasing in higher age qualifications for entitlements, and cutting corporate taxes to zero, so the people who actually create jobs will have more resources to do so.
At the Harlem Children’s Zone, explains Canada, “we have made a promise to all of our children: You play by the rules, do well in school, avoid drugs, gangs, crime and teenage pregnancy, and we will get you into college and on your way down the path of the middle class” and toward a future of financial security.
But, he adds, “the current spending on my generation — I’m 61 — if it continues unabated, will erase any chance my children will have the safety net of social, education and health services they will need. It seems deeply offensive to me that we will be asking these poor children from Harlem to subsidize a generation that is, by and large, more well-off than they are, and then leave them deeply indebted in an America that had eaten the seed corn of the next generation.”
