BOSTON – The Bible enjoins us to do better unto our children than we would do unto ourselves: “From generation to generation.” But, in much of the developed world, we have foresworn that sacred pledge. For six decades, the watchword of our economic faith has been quite different: “Taketh from the young and giveth to the old.”
We have minded our words carefully in describing this moral transgression, lest we provide a clear record of our fiscal child abuse. Our debts are clothed primarily in benign-sounding language like “pension benefits” and “health-care benefits,” not official IOUs.
By calling what’s being taken from the young “taxes,” rather than “borrowing” – that is, a promise to repay far more than what’s being taken – the implicit debts have been intentionally kept off the books.
The United States is not alone in doing this, but its refusal to acknowledge the true magnitude of its old-age liabilities has left it facing perhaps the worst impending fiscal crisis of all the advanced countries. Today, the US is staring at a present-value fiscal gap (present value of projected non-interest spending, minus taxes) of $202 trillion.