The war against the young

This article was published by The Globe and Mail  on February 2nd 2012.  To see this article and other related articles on the The Globe and Mail website, please click here.

How mean is Stephen Harper? Mean enough to kick a helpless granny in the chops. Just ask Susan Eng at CARP, the aptly named association for retired people. CARP is always carping about something. This time, it’s outraged that the government might start gutting people’s Old Age Security cheques. “There is no reason why we have to cut the social safety net for the people who need it the most,” said Ms. Eng. Opposition politicians warn that, thanks to Mr. Harper, our seniors may soon be relying on soup kitchens and cat food.

These histrionics ignore the fact that any changes to OAS wouldn’t come for years and wouldn’t affect a single person who’s currently a senior, or anything close to it. OAS is a relatively small amount of money ($540.12 a month) that gets taxed back as your income goes up. And despite what Ms. Eng says, nobody pays for it in advance. It comes from current general tax revenue.

In fact, seniors have a sturdier social safety net than any other segment of society. The poverty rate among the elderly in Canada is 5.9 per cent, much lower than it is for children or those of working age. The reduction in the elderly poverty rate over the past few decades has been called the major success story of Canadian social policy in the 20th century.

Now, our biggest social problem is not how to redistribute more money to the needy old. It’s how to protect everyone else from the tsunami of geezers that’s about to crash on our shores and suck the wealth of future generations out to sea. The war against seniors’ pension reforms is a war against the young.

The biggest, most powerful and most dangerous lobby in the United States today isn’t the banking lobby or Big Pharma. It’s CARP’s big brother, AARP. No politician dares tangle with the seniors’ lobby. No one dares to question social security and Medicare (health care for seniors), even though these are the entitlements that threaten to keep the U.S. in hock to China forever. As economics writer Robert Samuelson has noted, there’s no path to a balanced budget without restraining retiree spending. And yet it’s strictly off-limits.

With the geezer population set to double, their entitlements will double, too – pensions, health care and all the rest. But it’s worse still because, thanks to modern medicine, people live forever. When the federal government introduced OAS in 1952, the qualifying age was 70 and many people didn’t live long enough to collect it. Today, it’s 65, and a Canadian of that age can expect to collect OAS for nearly 20 years.

Meantime, the pool of workers to pay for all these benefits is shrinking. Not long ago, we had five workers for every retiree. Now we’re heading toward a ratio of 2 to 1. The seniors’ lobby argues that they paid for their entitlements in advance, but that’s only partly true. The C.D. Howe Institute’s William Robson figures that the gap between Canada’s projected revenues and the cost of what we’ve promised to current and future seniors amounts to $2.8-trillion. No wonder every country in the Western world is trying to roll back its retirement age.

I’m not suggesting we cast the elderly out to sea on ice floes. But we need to think about how we allocate our money. Are we really sure we want to transfer so much wealth from struggling young families to relatively well-off geezers? How smart is it to suck our grandchildren dry? How many schools won’t get built because we’re buying Lipitor for people who can already afford to pay for it?

Not all seniors are well off, of course. But plenty of them are. Personally, I think it’s ludicrous that my affluent pals and I will be entitled to two or three decades worth of free doctoring, free drugs, free hip implants, discount transit tickets and other goodies. (I do like the seniors’ movie rate, though.)

I am constantly astonished at the opposition parties’ stout defence of entitlements for people who demonstrably don’t need them. And I think anyone with a social conscience and a CARP membership should tear it up.

© The Globe and Mail