Planning Articles by Gary Silverman
Stealing from the Kids
Summary of this series so far: The United States is spending more than it is taking in.
Being our servants, our elected friends in Washington try to deliver what we want. After all, if they don’t, there is a pretty good chance that we would force them into the ranks of the unemployed. So they craft budgets that pay out more money than is available. They forecast program costs without realizing the possibility (some would say the probability) of cost overruns. They project tax receipts ignoring that the populace will change their habits to minimize the effects of new tax laws. And they assume savings from other programs that are a bit on the optimistic side.
The result is debt. Increasing debt. Debt that will be increasingly painful to pay off.
According to a June 2009 long-term budget projection from the Congressional Budget Office:
Under current law, the federal budget is on an unsustainable path—meaning that the federal debt will continue to grow much faster than the economy over the long run. Although great uncertainty surrounds long-term fiscal projections, rising costs for health care and the aging of the U.S. population will cause federal spending to increase rapidly.
The U.S. has been spending more than it has been taking in for a long time. The Democrats did it, the Republicans did it. So while we can argue who’s more at fault, it just doesn’t matter. We need to fix this. We need to start now.
Why is it imperative that we fix our budgetary woes? Because it’s not right to spend someone else’s money. You see, if we borrow money to spend now, we will have to pay that money back in the future. We are, in essence, spending future money today.
At the family level, this is acceptable (although not advised). A family borrowing money is spending their future money today. They will have less to spend in the future. They will have to lower their standard of living to pay back the money they’ve already spent. They will suffer tomorrow. But at least the ones who benefited will do the suffering.
This isn’t true at the society level.
By spending money today that we don’t have, we are passing those debts to our children and their children.
Imagine a parent arranging to borrow his child’s future wages so he could take a vacation. It’s one thing for a child to decide to send their parents on a cruise. It’s another thing for the parent to decide this for the child.
That parent would be a jerk. And we, as a society, are acting like jerks to our future generations.
Fixing this, as a nation, will take three steps:
First, we must match our current spending with our current income.
Second, we must pay down the debts that we have already accumulated.
Third, we must realistically project what our current generation will need in the future and save for it.
Only then will we be able to invest in the future of our nation and stay competitive with the world.
Each step is painful. Each step is politically difficult (some would say impossible). Each step will take courage and sacrifice.
We will examine these steps, after we consider just how large this problem is. See you next week.
This article was published under the title "Using the kids' money must end"
in the Wichita Falls Times Record News on August 8, 2010.
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