Intergenerational Warfare? (Re: Davos does school taxes

Nathan Newman nathan.newman at
Wed Feb 3 08:07:38 PST 1999

-----Original Message----- From: pms <laflame at> To: lbo-talk at <lbo-talk at>

>Lester sounds like he's making the same arguements made by that org. Lead
>or Leave, I think it was, that started all those greedy geezer articles.
>Turned out Lead or Leave was two guys with a lot of funding and
>news coverage, basically.

Two issues here, one structural and one substantive:

Structurally, the federal government overwhelming transfers income support to the elderly (in the form of Social Security, Medicare and a large chunk of Medicaid) with very little going to children and youth (a bit of welfare for children, some Medicaid, only a little for education). Most spending on children in the form of K-12 education happens at the state level. So there is a skew in spending, where children and youth get relatively little from the federal government, while the elderly get less from state and local government.

However, substantively, the fact is that in the last forty years, the elderly have seen their average income increase significantly, largely due to government spending and income transfers. At the same time, childhood poverty has increased dramatically and the wages of youth have plummeted. Tax limitation laws like Prop 13 have locked in low taxes or various tax exemptions for the elderly, even as younger workers have seen payroll taxes skyrocket. The result is that increasingly poor youth are paying increasing taxes to support increasingly well-off elderly folks. And it is worth noting that school taxes for children are mostly funded by sales taxes - a regressive tax to which the poor pay a much higher precentage of income than the wealthy.

Lead or Leave, Third Millenium, etc. justifiably analyze the problem of generational equity. It somewhat pisses me off that so much of the Left wishes this problem away, since it ignores the reason why so many Gen X folks feel very little loyalty to government, as they pay the burden of high payroll taxes as they struggle to pay off massive loans to pay for college - while being lectured by baby boomers who usually enjoyed free or nearly free education at a time when, as Thurow notes, a summer job paid decent money.

What is needed, though, is not generational warfare but intergenerational class war. But that requires serious analysis of priorities that would ease the economic burden on youth. Some places to start:

** eliminate the payroll tax on the first $10,000 of income, cut the FICA rate by applying it to all wages and even unearned income ** massively expand grant aid for higher education; for any remaining loans, link repayment to income after graduation - EPI had a wonderful plan on this linking higher ed loans to Social Security trust funds ** push for federal spending on education, since that is paid for with progressive income tax rather than regressive state sales taxes

Beyond that are the broader structural fight of unionization of younger workers (who have unionization rates of about 7% for those under age 30) to raise wages.

Now, as I said I don't like the Lead or Leave it types, but they do raise real issues about how youth are being screwed by the system. And when we add the fact that the elderly are overwhelmingly white in this country and children and youth are increasingly people of color (a majority in places like California), there is a strong racial inequality in federal spending and taxing policies tied to that intergenerational inequity.

This is the classic making of a "wedge" issue and either the Left addresses it and creates a "class wedge" approach to deal with it, or some enterprising libertarian republican will combine a nice race and youth based program attacking Social Security and Medicare. The rumblings are already there in the whole privatization debate and the defend the status quo approach of most of the Left could make it a lot worse.

--Nathan Newman

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