You've asked a very complex question and one where there is little consensus. The standard of living for the working class has been stagnant or falling for several decades. Which this is depends upon how you measure standard of living.

In addition to much "wealth" being transferred to the top 1-5% of the population, much has also been transferred out of the country. The US has been living on borrowed money for a long time now (I heard a figure of 6% of GDP per annum from George Soros this morning). It was recognized 20 years ago that the current young generation was going to be the first in US history to be poorer than their parents. This is coming to pass.

There are several causes, but the demographic one of an aging population is not the most important. The population is aging slowly and people are working longer and retiring later. Even Social Security is pushing up the age at which one can get full benefits gradually.

I think there are two big factors. First has been the waste of resources in the pursuit of runaway militarism. Half the discretionary federal budget is devoted to this. Here's a nice chart:
http://www.warresisters.org/piechart.htm

Some claim that military spending provides a Keynesian economic stimulation, but there is no multiplier effect. If you build a billion dollar fighter plane you have a hunk of metal sitting at an air base. If you build a billion dollar bridge you have continuing economic benefits.

Second is the rise of new economic powers elsewhere in the world. The US consumes 40% of the resources and has 4% of the population. This can't continue. As China, India and other areas get more prosperous the US will become less so. Politicians like to pretend that the pie can expand so that the wealthy countries will not have to cut back, but this is pandering. $130 a barrel oil shows the fallacy in this argument. Oil is the commodity getting the most press these days, but strains are also being felt in fresh water, specialized metals and even arable land. US policy is predicated on the idea that our strong military will allow us to continue to grab what we wish at the point of a gun. This hasn't worked out well since the end of WWII. All our attempts have eventually failed and we have had to negotiate with suppliers.

A more equitable society would allow the pain of economic decline in the US to be borne more fairly, but there is little pressure for action on this front. The smallest change in marginal tax rates is met with howls from the super wealthy and their lackeys.

As is the case with all empires in decline the drop in standard of living will be via the stealth tax of inflation. We already see this as the prices of essentials like education, health care and transportation rise faster than the nominal inflation rate while those things one can buy at Walmart stay cheap. Unfortunately the Walmart fraction of the budget keeps becoming smaller and the mandatory part bigger.

There is a nice talk about the vanishing middle class by Harvard prof Elizabeth Warren. If you have an hour to spare, you may find it of interest:
http://www.youtube.com/watch?v=akVL7QY0S8A

Pitting one generation against another is just another conservative trick similar to the ones using ethnic groups or regional groups. I claim there are only two classes in the US: those who have to work to eat and those who don't. Until the 99% of the people who belong in the first class realize that they are all in the same boat those in the 1% who don't will continue to get things slanted in their favor.

Sorry to burst the meme that was first put out by Bush with his assault on Social Security and now Obama with his Reaganesque "uniting" of the generations by carrying on with the theme of blaming of all the world's problems on the older generation but ... the "Boomers," thanks to Reagan and Greenspan, have been and continue to prepay for their approaching golden retirement of ramen noodles and pills. All that cold cash, as Bush infamously pointed out, has gone into paper that sits in some file cabinets. "It's just paper!" Even Krugman, in one of his rare very weak posts (I think it was on his blog rather than his NYT column), claimed that the bonds were as solid as any financial item the U.S. backs. But that ignores the fact that with something as simple as a law, that "paper" and its foundational backing, isn't worth two shits, as the 'French' saying goes.

So you young whipper snappers of Generation X, Y, Z and Obama are the ones that have been living the good life off of grandpas retirement savings. It's not the other way around. The payroll taxes that should be "saved" for future retirements is being spent as fast as it comes in. Faster in fact.

But it isn't one generation that's fucking another, either way. It's everyone but the very very wealthy that's been rat-fucked in classic "fuck gramma Millie" Republican corporate directorship style. Shout "soooeeee!" for me and join the chorus.

I am part of that boomer demographic that you and your cohort dread being taxed to support. It gives me that spidey feeling every time I hear complaints about it.

Greenspan raised FICA taxes. Boomers like me have worked like mules (I have two full time jobs. How many have you got?) and been taxed enough to cover ourselves. Other people squandered that money we paid in on schemes to make their cronies rich, but I promise you that gravy train made no stops for me or anyone I know.

Between 1978-2008 I would have loved to have found work that paid a living wage. If living wage jobs had been available, I would have been happy to pay whatever taxes were needed to provide for my generations' retirement.

But too bad, the jobs they have been gone during my working years. Rent quadrupled though! Plus, they made school loans a venue for high-interest predatory lending. Thank god they did that or I might have gone back to school and retrained myself in some new marketable skills.

So to me it feels like the younger generation of middle class folks are talking yourselves into carrying on the economic destruction of people like me that your parents and grandparents started.

They got rich sending my jobs offshore and spending the money I paid into Social Security from my two Walmart jobs. Now you guys are gonna work yourselves up to deciding that such shreds of my retirement money as your elders didn't spend are still too much for the likes of me.

Such sweet, sweet music.

A more egalitarian society is a must. The necessity of lowering our standard of living requires it.

The baby boomers have no right to expect to continue their current lifestyle in retirement. They never had the right to have it in the first place. They were able to acheive it by ignoring the problems that have now come home to roost.

I'm not talking about leaving them to rot in their own shit in underfunded retirement homes. But increasing the age of eligibility for social security is a good idea. As is elderly communes where people get out of their gated communities and take care of each other.

In the interest of full disclosure, I'm a baby boomer who has never invested in this shit in any way and therefore has nothing to loose.

I don't want to be accused of pulling the old conservative trick of pitting one group of workers against another which is why I think it is essential that the rich 1% are taxed until they are no longer rich.

hyper-inflation wiping out the debt.

The U.S. national debt is (at least currently) denominated in dollars. With the dollar dropping in value, there is a corresponding lowering of the national debt - which will become more evident if overall inflation in the U.S. spikes as a result of the increased costs of goods like food, raw materials, and energy filtering out into the broader economy.

It was long before the meme "McJob" came into usage that I read about "retirees" taking jobs in fast food establishments. I don't see much of that anymore. I guess even that's not available to those living in cushy retirements. Too depressing. Who would want to look at someone sweeping floors and clearing tables, with no tips to expect, and know that their future occupation will be rotting corpse? It's upsetting to the stomach.

If you are really interested in how social security is doing you should read the blog (and other postings) of Bruce Webb. He makes it his personal cause to dissect all the misinformation.

http://bruceweb.blogspot.com/

The most important point that he raises is that projections about SS running out of money or that the treasury won't be able to pay back the "loans" from SS are based upon faulty projections for economic growth. Some of his postings are technical, but if you are going to discuss a technical subject then you have to be prepared to understand the details.

The real motivation by the conservatives in promoting an idea that SS will run out of funds is that this is all part of their plan to privatize SS. This was going swimmingly (not with the public, but with the pundits) until recently when the bottom fell out of the private equity market. How would you feel at this moment if you had moved your 35 years of retirement savings into the stock market and suddenly seen it's value drop by half or more within a year or two?

It would be equivalent to throwing away 15-20 years of your retirement savings. SS is not going bust, is not going to go bust, and is not a problem. Whenever you hear some immutable economic "truth" try to trace it back to its source. In this case all roads lead to those drooling over the prospects of billions of retirement dollars being diverted into the hands of Wall Street firms.

Even the demographic arguments are not accurate. The native US population is now at, or just below, replacement birth rate, but because of the huge number of immigrants (who tend to be young and have a long working career in front of them) the population will not age as quickly as is projected. Countries like Italy and Japan have a much more serious demographic situation, but are not panicking. The rise in the percentage of the non-working population is also not a problem if one is prepared to account for changing lifestyle patterns as one gets older.

The idea that boomers will all be out on the golf course or jet setting around the world is just not accurate. Advertisers know this which is why they track viewership for the 18-54 sector not 55+. Older people buy less, not more, and generally have less income than when they were working. There is an issue about the need for more expensive health services for the elderly, but this is another issue entirely.

Health spending in this country is out of control because of economic and political decisions, not because it is an unsurmountable problem. One only has to look at how Canada, France and Japan handle health care to see that better care can be had for less cost.

As I said originally, getting into an intergenerational fight is playing into the hands of those who want to see the population warring within itself. Follow the money.

To get you started I suggest reading about the handful of super wealthy families who are behind the majority of the right wing think tanks. A good place to start is at the Media Transparency site:
http://www.mediatransparency.org/default.php

Do a search on Scaife, Coors, Koch, or Olin to see all the interconnected institutions they fund. Or start with the institutions themselves: Heritage, Hoover, Cato or George Mason University. People don't believe it, but there really is a "vast right wing conspiracy" and these are the people behind it. About 400 wealthy families have derailed the discussion of equity, altruism and progressive social policies that the majority of Americans favor and made greed and self-interest seem as worthwhile goals.

Compared to other developed countries, taxes in the US are less. That's because other countries have learnt to live within their means.

All you really get for your federal taxes is an over-bloated military.
Albert

and I expect to work until I die, unless of course I move to another country that has sensible taxation AND a more socialized system for taking care of it's citizens, old and young, sober and inebriate, homeless and landed.

I find it odd no one has posted re this issue because it seems readily apparent that this must eventually happen in the US, if for no other reason than the issue of health care. So yeah, there's more taxation but there's also more benefits, if it is done properly and in a timely fashion. And yes, I know, as soon ask for the moon as for properly, timely, and farseeing from the Feds of Americans in general.

_{"I beseech you in the bowels of christ think it possible you may be mistaken."}

Hey, gen xxxers,
Look at where the money is. A 1 or 2% sales tax on all equity transactions of all US stock exchanges would probably solve a lot of your financial worries.
If that is not enough, how about an assets tax on the order of the property tax that supports most school districts in the US.
For those flat tax freaks, yeah, but not on labor.
Go where the money is.
I know it is communistic and all that, but tax capital, not labor.
What a concept?

could get around the need to pay Social Security benefits at all, given the current state of alleged U.S. healthcare.

When poor Americans are young we get around healthcare costs by simply never going to doctors. That way, when we get older, by the time we realize we are sick it is too late to save us. I've personally lost nine friends that way within the past half dozen years.

At this point I don't know who I'd share that retirement commune with, because I don't have enough living friends left to populate the place. And don't even think about parking me in a community with the Boomer weenies who created these problems for my friends and the Gen Xers.

Part of the underlying problem is never really budgeting for maintenance, of anything: highways, military equipment, buildings, forests, parks, courts, schools -- public or private. Short-term thinking runs in our veins, it seems. So if we want to maintain everything we built, we have a backlog of deferred maintenance, in all directions.

Not especially related to my first point, but particularly bugging me today is more of a question... As senators pointed out to oil execs in Congressional hearings, oil was $25/bbl as we invaded Iraq. Now it's at $135 and much of its run up is due to a falling dollar, and some even because of decreased world supply from incomplete Iraqi supply. But did our military expenses bring on the collapsed dollar? If it did, will it ever become clear to Americans that too much military drove up gas prices and contributed to an economic slide. Are we headed [finally] for what happened to the Soviet Union: an economic implosion from spending too much money on the wrong things (military, government support of big business, war on drugs) and not enough on the right (teacher's salaries, public transport, liveable neighborhoods)?

I don't mean to ask rhetorical questions here. Is there a direct link to this damaged future from our terribly skewed priorities? And the practical corollary: Can it be pointed out to Americans so they won't vote for McCain?