Focus Point - Generational WelfareCommentary by Pete du Pont
November 12, 2001
I'm Pete du Pont with the National Center for Policy Analysis. We've all heard of the generation gap... but generational warfare? Baby boomers will begin to retire soon and begin collecting Social Security and health care benefits rather than paying taxes into the system. If we don't do something now to reform Social Security...that could set off a conflict over resources that could result in generational warfare.
Doctor Laurence Kotlikoff, the chairman of the economics department at Boston University, recently completed a study for the N-C-P-A showing that by 20-30, the cost of elderly entitlement programs will double relative to national income. Kotlikoff points out, in fact, that an American born today can expect to pay nearly 32 percent of lifetime payroll in taxes to support retirement programs. That could go over 70% thirty years from now.
How to avoid these huge tax rates? Personal saving and investment accounts equal to 10 percent of payroll. These funds could be invested in interest-bearing accounts that can be sold in future years to fund retirement. And payroll tax rates won't go up.
Those are my ideas, and at the N-C-P-A we know ideas can change the world. I'm Pete du Pont. Next time, medical savings accounts.