The best way to uphold their bargain would be for the state to decline in size and in proportion to their population, shifting resources from a disappearing segment (children) to the other (old people) if need be
Unfortunately, this doesn't work financially. Total costs per K-12 student are $8,200 per year, just $1,200 from the Feds. CHIP, the program for children's healthcare, accounts for just $18 billion; Medicare, for seniors, is $1.2 trillion (both demographics also use Medicaid). Just Social Security and Medicare cost about $38,000 per senior living in the US. This is why these programs are causing the deficit to surge. Throwing all the money used to children today at the problem wouldn't plug the gap.
Medicare also doesn't cover key services more and more older adults need. Long term residential care isn't covered for example. A person's assets need to be liquidated to qualify for Medicaid, which will cover nursing homes, but not other forms of assisted living.
Thus, who ends up inheriting middle class estates from their parents can be determined by how the parents die. Heart problems that cost $800,000 in care? You can pass on the estate, Medicare will pay the cost. Alzheimer's that requires $800,000 of residential care? The estate goes to the government (but notably, retirement savings accounts that the wealthy tend to have more of their net worth in are exempt, while real estate, where the middle class has most of its net worth, is not). Reforming this would be very expensive though.
Seniors are by far and away the most expensive demographic to extend health insurance too, which partly drives the problem. The state will shrink; it will have to due to the financial pressures of meeting entitlements, but taxation will also have to go up significantly. Hence, slower growth and less real disposable income (life expectancy is also falling).
But the state has spent their investments, in some cases giving it to the other states, for other citizenry.
In the US at least, this is not quite the case. Neither the Medicare nor Social Security Trusts are empty yet. The big issue facing those programs is that not enough taxes were collected while the Baby Boomers were working. The cap on payroll taxes should have been lifted or removed decades ago.
Right now, the current system is not only regressive (high earners pay a lower %), but increasingly cuts off a larger and larger share of all income from taxation as more of it is earned by the highest earners. In essence, skyrocketing inequality has contributed to the entitlement crisis by allowing more and more income to escape taxation due to an arbitrary cap (a greater share of income coming from capital gains has a similar effect).
This is in part because Baby Boomers, in the aggregate, voted for politicians who promised to stop such tax increases, and further, who slashed their other taxes, resulting in them reaching retirement age as the US achieved an all-time high debt to GDP ratio, with debt eclipsing $31 trillion.
Here is how the situation stood in 2008 vis-a-vis extending W. Bush's tax cuts.
The largest legislative achievement of Donald Trump, who lost voters under age 55 by 9 and then 11 points in his two elections, was to further slash revenue, resulting in US borrowing tripling during his term even before the pandemic.
It is unfair to ascribe a given set of positions to a large demographic cohort. However, in the aggregate it has been the people soon to be directly affected by the crises who voted for the conditions that created it, i.e., slashing taxes during their peak earning years while not reducing their entitlement benefits.
Broadly speaking, that generation has held the White House since 1993, when they were in their late 20s to mid 40s. They will have held it for at least 32 years, but 36 seems more likely. They became a majority in Congress in 1998, when the midpoint for the generation was 42 years old. By contrast, Congress had just
five Millennials through 2019, at which time the oldest in that cohort reached 38 years of age. This was 0.2% representation for 29% of the adult population. Today, the House has 31 Millennial or Gen Z members, the Senate just 1. Congress still has more members 78-90 than 18-45.
Party leadership is even more lopsided. Think of Sanders, head of the progressive wing, McConnel, Pelosi, Feinstein (although her influence has waned), Clinton, Trump, Biden. The average age of the last two cabinets has been close to retirement age. A similar phenomena can be seen throughout the West to varying degrees.
I don't think gerontocracy explains the entitlement crisis, but I think it is definitely an overlooked element in it. I also think the life experiences of leaders' generations play a roll. The Baby Boomers experienced the best period of economic growth in US history outside of their parents, while also avoiding World War II and the Depression. Millennials came of age during the worst period of economic growth in US history. A preference for the present, and faith that things will work themselves out might be colored by these different experiences.
Realistically, the problem will require a two pronged solution. Significant tax increases, especially on the wealthy and on the estates of retirees after they pass away, and also cuts to benefits or restructuring to reduce costs (e.g. nationalizing healthcare, or forcing the AMA to allow more medical schools to open and cease their horrific rent seeking behavior).
And of course, inequality also tracks with age at the macro level.
Millennials still hold far less wealth than previous generations did at similar ages. When boomers were around the same age as millennials today, they held roughly 22% of the nation's wealth compared to Millennials' 7%, Fed data shows.
This will get compounded as less wealthy younger people have to dedicate resources to support their parents while others inherit this huge share of wealth.