In the words of Kenneth Langone (Home Depot founder),
“You’re being ripped off…and you’re only letting it happen because you’re doing nothing about it”
I recently watched this YouTube video, and it was revelatory in the sense that I knew there was a problem but didn’t know the extent of it. Naturally, I wanted to share my notes with y’all.
The video is Generational Theft: How Entitlement Spending is Stealing Opportunity from America’s Youth, a panel discussion held at NYU. The panelists were Langone, Geoffrey Canada of Harlem Children’s Zone, and hedge fund manager Stanley Druckenmiller. The moderator was Bloomberg’s Stephanie Ruhle.
It’s long (1h24m), but the presentation itself is only 30 minutes, with a long followup Q&A.
I use initials to indicate who said what (eg, KL = Kenneth Langone).
- America is financing its current generations by borrowing heavily, which will hurt our generation and our children’s
- “Only certain way (to fix the problem) is through the political process” – KL
- GC – not as worried about NYU-caliber students, but about those with less opportunity and support
- SD – during the Vietnam War, young people brought down a President and changed the path of a war; you are in clear and present danger today. About 40 years ago, the federal government started transferring wealth from your generation to my generation, economic implications and inequity are enough on their own but put them together, it’s astounding
- Stats from the slides (primarily SD)
- Significant increase in federal budget transfers to entitlement payments
- Increasing percentage of spend on SocSec, Medicare, and Medicaid (excluding child payments)
- All this while wealth is increasingly concentrated among the elderly! 30 year olds were worth more 27 years ago than they are today (21% less)
- Significant reduction in elderly in poverty while children in poverty has remained constant (!)
- In next 10 years, of the $1 trillion increase in spending, $875mm will be towards entitlements, and only $6B to children
- Demographic trends are not helping – there’s about to be a LOT more elderly, from now until 2033, 11K new 65 yo’s per day, working age population to elderly population ratio will fall dramatically
- There’s a massive gap in value of debt (national debt plus entitlement payments promised to seniors) and actual projected revenues (national debt is $12-16T, total promised debt is $200T)
- Each elderly has basically gotten a transfer/”stolen $700K from the unborn”
- Why does this happen? “Old people vote, and you don’t” – SD
- The young don’t know about it, and don’t care: “I’ve got a 22 and 23 year-old daughter, their issues are gay rights and the environment” – SD
- “The AARP gives to them, and you guys don’t” – SD (talking about politicians)
- During the budget debate, no one will touch entitlements, because they would be voted out of office
- SD – Most elderly don’t know these numbers, and if they did, they wouldn’t tolerate ripping their children or grandchildren off
- SD – why aren’t young people asking more of Obama? More voted than we ever saw before…
- The panelists (GC, SD, KL) are going to 12, 18 colleges to see if they can stir something up
- If you wanted to eliminate the $200T fiscal gap, here’s how you would do it:
- #1. raise every tax 55% – payroll, income, cap gains, dividends
- #2. cut all federal spending 36.2%
- Both are clearly impossible but needs to be some combo of both
- The longer we wait – because the debt is accumulating – the greater the tax raises/spending cuts needed
- SD – “really grates me” that we’re increasing payments to individuals (the elderly) but spending far less on investments and R&D (government investments led to the national highway system, GPS system, the internet, the original semiconductor)
For more content, check out my linkblog to see what I’m reading and highlighting.