The Crime of the Century
Or how one generation found a way to maintain its lifestyle and pass the bill on to the next
I have just participated in the greatest embezzlement in history. In my 60 years, I have never seen such a perfect crime.
Like most other master criminals, I am heady with success and feel a need to brag. I kid you not - never before has one group appropriated as much money that belonged to another group in the history of crime. The victims, while they are increasingly suspicious, still do not know they have been had. It was literally and figuratively as easy as taking candy out of the mouths of babies.
Here is how we did it. The first rule of embezzlement is to find some naive patsy. We sensed 30 years ago that the younger generation was not paying enough attention to public policy, so we quietly found ways to maintain our lifestyle and charge it to the next generation. While those of you under 45 were preoccupied with other things, my generation dumped the largest load of debt on you that history has ever seen - and found ways to maintain our lifestyles on your credit cards.
A good scam needs a compassionate come-on. In our case, we developed a new word: "poorelderly." To this day, most Americans do not understand this is actually two words, and that "poor" no longer describes the elderly as a class. There are, of course, poor elderly; but as a class the elderly have the most discretionary income of any group in America (except those in my age bracket of 55 to 65).
Next, we devised a number of systems that allowed us to charge our retirement to the next generation of Americans, who will wake up to find they are on the losing side of a Ponzi scheme. Like all good con artists, we relied on "trust." We told them there was a "trust" fund for both Social Security and Medicare. Of course, this was a lie. There is no "trust" fund, in the normal sense of the word, because we take this month's Social Security taxes from today's workers and pay them to today's elderly.
Then, we tell today's workers not to worry - the money is being held "in trust." In actual fact - as Sen. Ernest Hollings (D) of South Carolina has observed - they would be better off if the fund was invested in Confederate war bonds. The trust fund is a sham because it contains only IOUs that tomorrow's generation of workers will have to (mostly) pay off themselves. They will have to pay for both our retirement and their own. Not bad. We succeeded in taking money from poor workers in St. Paul and sending it to wealthy retirees in St. Petersburg and no one was the wiser. But I have hardly begun.
The perfect embezzlement maximizes its take. We soon found there was money left over after paying the Social Security funds to today's elderly, and we did not want to stop halfway. What self-respecting crook would leave money lying in the bank vault after a robbery? No, we completed the job by something called the "consolidated budget." This allowed us to quietly take the Social Security funds left over to reduce our taxes by spending the money on current government services. Under the "consolidated budget," we could legally "borrow" the money in the "trust fund" left over every year and spend it on current government services, thereby reducing our yearly taxes.
Virtually every year for the last 35 years we thus understated the yearly deficit and understated the total federal debt. Even though the official federal debt is $4.9 trillion, the amount actually passed on to the next generation is closer to $14 trillion to $17 trillion. No dummies in my generation. The entire scheme was done with clever accounting gimmicks that allowed us to minimize our taxes and maximize our spending while we passed the bill on to the next generation. As often happens with such scams, by the time they figure it out I will be long gone.
We are well along in totally spending the Social Security Trust Fund and have left nothing, absolutely nothing but higher and higher payroll taxes for today's and tomorrow's workers. They will have to either raise their taxes substantially, or dramatically reduce their benefits under the system. They have no other practical alternatives. They may, of course, try to do the same thing we did and try to perpetuate the Ponzi scheme, but I doubt it will work. Young people catch on at some point. The perfect crime works only once.
The next generation will wake up to the magnitude of the fraud. They will recognize they are working long hours (or two jobs) and make less working than I make in retirement.
Yet every month they transfer money to me to pay for my health benefits. I have plans for that also. When they start to blow the whistle, I will say with shock and horror, "You can't start an intergenerational war."
I will tell them about how hard I fought for this country (six months in active service - most of it at the officer's club). I will shame them by accusing them of breaking the "generational contract," neatly covering the fact that it was really my generation who "broke" the contract by leaving them an unsustainable and insolvent system. Like any successful crook, I cover all my bases.
When health-care costs became a larger factor in our budgets, we found a system to subsidize the costs at the expense of following generations. We called it Medicare. The average senior who turns 65 in 1996 will get back $4 from today's workers for every $1 that he or she paid in. Today's retiree receives on average a $100,000 subsidy toward his or her health-care costs - from a system that is slated to go broke early next century.
I am looking forward to playing golf and living high and sending much of the bill to today's workers. Apres moi le deluge.
The story does not end there. My generation screwed up the savings and loan industry. What did we do to get out of it? We issued 30-year bonds. Why should I pay for my mistakes when there is a gullible generation right behind me? Will I be here in 30 years? No. Will you? Almost inevitably.
My wife and I bought our first house for $11,900. Our first house payments were $49 a month because we had a Veterans Administration loan subsidized by the federal government. Everyone in my generation could buy their own homes. It is estimated that 30 percent of current workers below age 30 will never be able to own their own houses.
It does not end there. I, to this day, get more money in housing allowance every year from the federal government than the poorest American. It is simple. I get to deduct my mortgage interest and real estate taxes, which to someone in my income bracket is worth more than the cash equivalent that any poor person in this state receives for housing. Ditto for health benefits. By not being taxed on health insurance my employer pays for, I also receive more health benefits from the federal government than most people on welfare.
Do I feel guilty? Well, occasionally. The other night I was standing in line for the movies, getting a senior-citizen discount. A struggling young couple in front of me were wondering how they were going to pay the baby sitter. My wife and I had driven to the theater in our fancy foreign car from our debt-free house - but we got a $6 discount from the price the young couple paid.
I try not to spend too much time thinking about it. I keep busy. Right now, I have to go down to the state legislature to lobby for free fishing licenses for seniors. Why not? We already get free state park admission.
See you around.
*Richard D. Lamm, a former governor of Colorado, is director of the Center for Public Policy & Contemporary Issues at the University of Denver.