Old people's power.

WASHINGTON, D.C.-I love old people and you love old people, but let's face it, they're killing us.

In the season of political piety just past, a sea change in American politics was recognized and affirmed: the old are the most powerful political constituency in the country, indeed the only constituency whose claims on the commonwealth have been placed beyond democratic debate. Politicians of both parties and of all ages now believe, at the operational margin, that it is safer to play with inflation, safer to cut back on housing programs and food assistance, safer even to cut the budget for the nation's defense, than it is to restrain the transfer of wealth to the old. From the evidence of election day 1988, one concludes that the process of intimidation is complete.

How did it happen, this political coup? One of the answers is organizational. Along Washington's power alley, the K Street lawyer/lobby zone, old people built the biggest and best organizational machine. The American Association of Retired Persons has signed up thirty million members, twice as many as the AFL-CIO and second as a "membership group" only to the Roman Catholic Church. The AARP has a paid staff of 1,300 and annual revenues from several businesses, as well as dues of $235 million. Its magazine, Modern Maturity, has now passed TV Guide and Readers Digest to become the nation's largest. On Capitol Hill, Congresspeople say to the AARP's army of lobbyists, "Thy will be done."

What has been done, on the Hill and down the street at the White House, is a series of federal fixes that tilted the generational playing field. The old were helped and the young were hurt. As benefits to the old ratcheted up, taxes on the young shot ahead. In 1958, the maximum Social Security payroll tax was $95 per annum; this year it will be $3,380. For more than half of all U.S. workers, Social Security taxes are now higher than federal income taxes. Medicare benefits moved ahead even more smartly, with the result that during the current year almost $300 billion will be paid out to elderly beneficiaries of Social Security and Medicare. Forget for a moment that old people benefit from all universal government programs. From these two programs alone, old people, accounting for 12 per cent of the population, consume 27 per cent of all federal spending.

To justify these intergenerational transfers, one could point with alarm at the plight of the elderly poor. A heartbreaking sight, to be sure. One could point with alarm, that is, until the numbers began to shift a halfgeneration ago. Now they point in a very different direction. Consider these generational wealth figures and how they have moved over time.

NET WORTH

AGE 1973 1983

65-69 $169,366 $321,562

25-34 59,624 49,046 In other words, the old get richer and the young get poorer. Another way of putting it, one with grave psychodemographic portent, is to say that the longer one works the poorer one gets.

One is obliged to remark here that federal transfer programs have not been the only engine of wealth-creation for the old. The other major contributor has been the escalation in residentialreal-estate values. The old owned the houses and theyoung did not, in part because the generational tax made it impossible to save a down-payment and carry costs. So what has the incumbent policy, whatever its intentions, actually wrought? We are taxing the producing citizens to protect the assets of the non-producing citizens-assets that were put aside precisely to finance retirement!

By 1988 we as a nation have recorded an historic accomplishment. We have virtually eradicated poverty among the old. Responsible authorities, much to the chagrin of the old folks' lobbyists, have put the figure as low as 5 per cent (compared with 20 per cent for children). Good for us, and let's hope that we can eliminate it altogether. But let's pause to look at the price tag and kick the tires and cut through the spiel of the guy in the window-panechecked sportsjacket. When the subject gets around to Social Security, let's go through the numbers and point out that the benefits are not simply a return on weekly payroll deductions of the past. The average beneficiary receives almost four times what he put in after adjustment for the interest he would have earned on private investments. He receives, on average, a full payback of contributions and interest within 21 months. After that, he's not on his own, a prudent retiree who saved for his golden years. He's on us. He's on welfare. Which is fine with the rest of us if he really needs it. If he's part of the 5 per cent. Otherwise, he's asking us to fund an asset-protection program by overtaxing workers in their middle years and by denying benefits to the voiceless young.