Just So You Can’t Feign Surprise Later

The Treasury Department said government borrowing this year will more than double from 2017 to $1.34 trillion. Thank God we have fiscally responsible Republicans in charge.

And a special thanks to all the Millennials and Generation Zers who will be paying the interest charges on all these bonds. And thanks in advance for not voting next week. The Boomers and their parents aren’t done raiding the cupboard.

What Will America Look Like As This Transformation Unfolds?

This phenomenon — the aging of the Baby Boomers — will transform America in a myriad of ways: economically, financially, socially, religiously, politically, and culturally. It’s going to be interesting to watch.

Perhaps the most pressing concern is the financial one. The underfunding of pensions is huge. And the increasing demands on Social Security and Medicare will be mammoth. I’m not sure how we’re going to deal with these problems. It could get ugly.

The chart also reminds me of my own situation. I’m average — average age for a Boomer, that is. I’m not at the leading edge, and I won’t be bringing up the rear. So I have a pretty good vantage point, although I’ll be more vulnerable than the point and less vulnerable than the rear to potential fiscal hazards.

Mortality also comes to mind. Statistically, it’s a long ways off, yet I know that, in real life, very few of us are the mean or median. Anything could happen at any time.

Death has a way of surprising us. I volunteer at a nursing home. Last evening I arrived and, at a place always occupied by one of the ladies I know, there was a small bouquet of flowers. My heart sank. I feared the worse. As it turned out, she had choked to death from a sandwich the previous night. I never got to say goodbye. Or to tell her how much better she made my life. That’s the way death operates.

Her parting gift to me was a simple reminder: always say goodbye and tell the person how much they mean to you.

The Graying of America

As the above chart shows, America is graying. Fast.

My generation (the Baby Boomers) (I’m one of the purple ones the graph) is the contributing factor. There are a lot of us. And now we’re rounding the final corner of life, which will have major implications for society.

  • The labor force is being restructured as Boomers retire in droves;
  • Demand for certain goods and services will decline precipitously (Amazon isn’t the only one impacting retail!);
  • Demand for certain other services (e.g., healthcare) will rise as a greater number of Boomers approach their mid-70s, when the deterioration in human bodies really begins to accelerate;
  • Demand on our safety nets, such as Social Security and Medicare, will drive government borrowing through the roof, dramatically increasing expenditures (including high interest charges), perhaps resulting in stiff tax increases, and possibly resulting in an erosion of the value of the U.S. dollar with all the unfortunate consequences thereof; and
  • In time, there will be a massive transfer of wealth from the Boomer generation to their children’s generation (but that will take time as most Boomers still have a quite a few years to live).

We saw this coming, of course. Big demographic shifts like this don’t sneak up on anyone. Some people prepared for it; many others did not. As a group (government), we haven’t prepared, which should make things interesting as related government expenditures balloon over the next decade.

This demographic transformation of America will be interesting to watch. It will have political ramifications. Economic ones, too. Social scientists should have a field day with this.

The Boomers’ Last Hurrah

About 10,000 Baby Boomers (those born between 1945 and 1964) retire each and every day in the United States. And now a large number are reaching age 70 each and every day. Our last hurrah is about to unfold.

The aging of my generation will produce a couple of indisputable consequences. First, outside of health care, the massive wave of retirements will depress consumption — that is, spending — in a very significant way, which will limit growth and exert deflationary pressures.

Second, this retirement wave will exacerbate our pension mess by increasing pension and Social Security costs dramatically. This comes against a backdrop of underfunded plans.

Despite what the right-wing propaganda machine persistently spews forth, Social Security is a relatively easy fix. But the state and private pension fix isn’t.

State and corporate pension plans are grossly underfunded. Some have already failed. More failures are to come. In short, some will renege on their obligations and retirees will not be receiving the monthly checks they’re expecting. (The only “bright”spot for the pension plans is that Americans are now dying earlier, thereby reducing the plans’ payouts.)

Saving some of the public systems will require tax increases, which will further suppress consumption.

Third, equity prices and, therefore, investment portfolios, will take a hit. Take General Electric for example. GE’s underfunded pension hole is $31 billion. Yet the market has yet to fully price into the stock this huge deficit.

Many other companies have large unfunded pension commitments. This will not be good for asset values and, by extension, individuals’ and endowments’ portfolios. Less spending. Deflationary pressures.

There are 72 million Boomers in the U.S. My generation had a major impact on our economy and society as we moved through adulthood. Don’t expect the impact to be any less as we move through retirement. It’s just that the impact will be very, very different.

“You get old and you realize there are no answers, just stories.”

Garrison Keillor wrote the words in the title of this post. If you’re young, you may not get it. If you’ve been around a while, I suspect you will.

The danger, at least from my perspective, is that you get carried away with stories when you get older. You know what I mean: telling the same stories, over and over, each time stretching them out just a little longer. I suspect most of us over the age of 60 have done it.

I’ve caught myself doing it. I always regret it (assuming I realized it). I wish the bored but polite listener would have stopped me.

So what’s the antidote? Continue reading

Is America Great?

_dsc0061Some people think America is going to hell in a hand basket. Some people think America isn’t great anymore. Phooey, I say!

I think America is already great. It’s far from perfect, of course. And some things are pretty bad, such as our dysfunctional national politics. And the way we’ve allowed people of wealth to dominate politics and our economic policies.

We have work to do, and it’s gravely disappointing we’re not going about the business of getting things done. But that doesn’t mean America isn’t great. Continue reading

Hopeful Signs

I think we are up to our waders in you-know-what. I’m not going to recite any of the you-know-whats here. I’ve mentioned some (but not all) of them in prior posts. Suffice it to say I think the situation is serious — perhaps, from a financial and political standpoint, even dire.

That said, I remain incredibly hopeful. I prefer hopeful to optimistic because what we call optimism is too often untethered from reality — mere wishful thinking if you will. Too often it takes the form of a naive, childish outlook — a don’t worry, be happy persona.

Sometimes one should be worried (or perhaps concerned is a better word, as your great-grandmother prefers, Vera). Sometimes we need to acknowledge the clouds and gathering storms and work our butts off to prepare and avoid some of the disastrous consequences that might otherwise ensue.

Pure optimists aren’t very good at that. They’re generally the ones who get blindsided and take the full brunt of the blows.

So the whole optimist-pessimist dichotomy doesn’t appeal to me. Nonetheless, if I had to claim one or the other, I suppose I’d claim both, in the model of Antonio Gramsci: “Pessimism of the intellect, optimism of the will.”

Hope, on the other hand, is a concept more to my liking. At least for me, it doesn’t deny reality. Hope isn’t afraid to talk about the clouds and to confront risks and danger. But it does so with full awareness of what shines behind the clouds. Hope, you see, allows you to see the sun through the clouds.

I see the sun. Here are some of the reasons why: Continue reading