Acton Institute Powerblog

Stan Druckenmiller on Intergenerational Theft

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In a recent interview in the Wall Street Journal, billionaire Stan Druckenmiller discusses his recent university tour sounding the alarm on intergenerational theft. The article paraphrases his case:

[W]hile today’s 65-year-olds will receive on average net lifetime benefits of $327,400, children born now will suffer net lifetime losses of $420,600 as they struggle to pay the bills of aging Americans.

It goes on:

When the former money manager visited Stanford University, the audience included older folks as well as students. Some of the oldsters questioned why many of his dire forecasts assume that federal tax collections will stay at their traditional 18.5% of GDP. They asked why taxes should not rise to fulfill the promises already made.

Mr. Druckenmiller’s response: “Oh, so you’ve paid 18.5% for your 40 years and now you want the next generation of workers to pay 30% to finance your largess?” He added that if 18.5% was “so immoral, why don’t you give back some of your ill-gotten gains of the last 40 years?”

He has a similar argument for those on the left who say entitlements can be fixed with an eventual increase in payroll taxes. “Oh, I see,” he says. “So I get to pay a 12% payroll tax now until I’m 65 and then I don’t pay. But the next generation—instead of me paying 15% or having my benefits slightly reduced—they’re going to pay 17% in 2033. That’s why we’re waiting—so we can shift even more to the future than to now?”

In my recent commentary, I examined the recent projections of the Congressional Budget Office:

In short, when it comes to the federal budget, the self-discipline we put off today is tomorrow’s hardship. Decreased investment, increased taxes, greater economic vulnerability, and an increased risk of fiscal crisis are what we have to look forward to in the next 25 years on our current course. The result would be increased unemployment and poverty and decreased upward mobility, as well as all the societal ills that go with them. We should not be content with such a future for our children.

Druckenmiller’s tone is a bit harsher than my own, but we both agree about the dire nature of this problem, as well as the need to be careful moving forward. As I wrote last week,

The road of self-discipline is traveled with small steps. If we do not proceed cautiously, we could face other negative, unintended consequences.

Whereas I suggested our problematic disability programs might be a good place to start reforming, he helpfully isolates another area in which we could start on the road to greater financial self-discipline:

“I would go for something simple that is very, very tough for the other side to argue, for example, means-testing Social Security and Medicare,” which would adjust benefits by income. He notes again his impending eligibility for a monthly [$3,500] government check.

“I don’t need it. I don’t want it. I could also make the argument that every health expert will tell you that wealthy people live 4.5 years longer than the middle class or the poor. So I’m going to get paid 4.5 years more than the middle class or the poor,” he says. “It’s not that many dollars, but I think it would be a great symbol in seeing exactly how serious they are.”

Effectively, he is suggesting that we stop giving rich retirees who don’t need it thousands of dollars in Social Security benefits. A small step, to be sure, but certainly one that ought to garner bipartisan support. Enough of these small steps, however, and perhaps financial responsibility could actually become a habit for Congress.

I’d like to think that’s not wishful thinking. We did actually balance the budget in 1998 with a peak surplus in 2000 of $236.2 billion. As difficult to believe as it may be today, our politicians were capable of this kind of self-discipline in the recent past.

But there’s the catch, perhaps: We actually had politicians and voters committed to financial responsibility in the late 1990s. We will need both for it to happen again today. If not, the needs of future generations will continue to be sacrificed for the comforts of the present, and rather than freely embracing a more ascetic path now, austerity will be forced upon us by the heavy hand of hardship, and we will not have the luxury of small steps.

Dylan Pahman Dylan Pahman is a research fellow at the Acton Institute, where he serves as managing editor of the Journal of Markets & Morality. He earned his MTS in Historical Theology from Calvin Theological Seminary. In addition to his work as an editor, Dylan has authored several peer-reviewed articles, conference papers, essays, and one book: Foundations of a Free & Virtuous Society (Acton Institute, 2017). He has also lectured on a wide variety of topics, including Orthodox Christian social thought, the history of Christian monastic enterprise, the Reformed statesman and theologian Abraham Kuyper, and academic publishing, among others.


  • Is it possible that we have so defined what America can and cannot be that suffer from despotism by definition? Another question is are we afraid of criticizing De Tocqueville?

  • exultnu

    Abortions in the U.S. since 1973: 56,741,447.6 and counting. That’s where a lot of the missing money for social insurance is. It’s a practical reality. Generations who have killed off so many that could have been productive citizens are reaping what was sown. And birth rates for “wanted” children sink steadily lower. It’s sad. I wish neither side of the equation was real.

    Average American middle class folks, my husband and I (he with over 40+ years of working) paid in PLENTY to Social Security to support previous older generations – doing our duty. He died before he could get his benefits. I’m still working and paying in. I intend on getting something. It’s ridiculous to demonize those who worked hard and faithfully did their part. The government set the rate and took our money. We didn’t have a choice; just pawns.

    From it’s original 2.7%, the mandatory deduction has climbed to over 12%, presently 6.2 % for both employer and employee. Successive generations experienced a ballooning obligation. Druckenmiller’s complaint isn’t just suddenly true now. It’s been the continuing trend.

    I have little faith changes that might save it or remake it into the self-supporting program it was originally intended to be will ever see the light of day. Politicians will play tug of war over it, until it’s utterly bankrupt. Hopefully not before I can get a few pennies out of the wretched system.

    • Dylan Pahman

      “Politicians will play tug of war over it, until it’s utterly bankrupt.
      Hopefully not before I can get a few pennies out of the wretched system.”

      This sort of fatalism and complacency is precisely the problem.

      • exultnu

        I’m not complacent. I simply understand the heart of man. This nation has jettisoned God and is unraveling. So, I actively engage my senators and congressman on a regular basis, and I also engage through many nonprofit organizations about many issues Acton also cares about. Speaking out makes a difference and it’s my duty as a citizen in a representative government. I just recognize that things are quite broken and that politicians often say, even promise, one thing but do another. Social Security is a prime example. And the polarization … well we’ve all witnessed it.

        We need wise, disciplined leadership and it is in short supply. The immense chasm separating the worldview and philosophical frame of reference of the liberal and the conservative minds has widened. Lawlessness is flagrant and rampant, with no shame in it. The Constitution has been willfully disregarded. Principle is seen as an antiquated idea; real debate pushed aside, because “winning” and the next election is the focus. Reckless lust for power and government taking entire segments of the culture and economy for itself to bankroll its agenda (school loans, mortgage industry, bond market, health industry, and now talk of our IRAs) is undoing us. Without the ability to rebuild a robust economy through private enterprise, money to support all these violations of Constitutional limits, shrinks. Meanwhile, dismantling of the Bill of RIghts is well underway as encroachment on liberty expands.

        I honestly don’t believe that we have the ability to restore our culture without inviting God’s redemptive hand to change hearts and this nation, once blessed and used for His glory. I will not put my trust in man or government, which is folly. Man’s wisdom is lifted up, but God is sovereign and puts rulers in place. There is a reason we find ourselves here. Fixing Social Security is one bandaid on a gaping wound. Jesus’ will “come quickly”. Prayer, and attention to God and His will, is most critical.

        Acton’s analysis and action in these spheres has great value; the apologetic needed! I appreciate their work.

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