Column: Rewriting the intergenerational contract

In a new column for National Journal, I discuss an article by Isabel Sawhill and Emily Monea of the Brookings Institution, which calls for America's "intergenerational contract" to be rewritten:

The current contract, Sawhill and Monea say, was written in the 1930s when Social Security was born, revised in the 1960s with the addition of Medicare and Medicaid (which pays nursing home benefits), and then revised again in the current decade with passage of the prescription drug benefit.

The authors point out that this contract takes several things for granted: that workers will continue to retire at 65; that most seniors are too poor to support themselves in retirement or to pay for their own health care; and that younger Americans are, on average, better off than elderly Americans. Those assumptions, they argue, need to be challenged.

The poverty rate among the elderly (partly thanks to Social Security, of course) fell from 35 percent in 1959 to 9 percent in 2006. The poverty rate among working-age households is much higher, at 13 percent.

Some 80 percent of the elderly own their own homes, and three-quarters of those have paid off their mortgages. Social Security and Medicare have succeeded almost too well. The fiscal cost of that success keeps rising, and it is falling on working-age Americans who feel beleaguered--and who in many ways are worse off than the contract's beneficiaries.

A new deal needs to be struck, they say. But what should be the terms of this revised compact? And what are its chances, politically? You can read the column here (the link expires in a fortnight).