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May 20, 2009

Borrowing from future generations to spend now

Andrew Yarrow's book, Forgive Us Our Debts, helped stoke the conversation on intergenerational equity -- on the deeply problematic process of loading the federal balance sheet with debt to benefit today's working adults and retirees while children and those unborn will have to pay the consequences with higher future taxes, a devalued dollar or both. So it's a little surprising to see Yarrow mute his tones in an op-ed in today's Baltimore Sun.

Don't get us wrong: Our nation's fiscal house is in about as much order as Tara after Sherman's march through Georgia. And, yes, the burden will fall to future generations if nothing is done (and, likely, even if reforms are enacted) but so will the benefit....

Intergenerational equity debates usually leave out the concept of intergenerational interdependence. Instead of just talking cuts - which some think need to be made - we also should talk about investing in children and young people... Some think that if we could cut entitlements for older Americans, tens - if not hundreds - of billions, in theory, could be reallocated to spending for children. But spending in Washington doesn't usually work that way. We don't take from Peter to pay Paul, when Peter wants to hold on to what he's got, Paul doesn't have powerful lobbyists, and some apostles of deficit reduction just want to cut government.

Our child policy needs to be more forward-looking and generous now; while we should reform entitlements, we shouldn't wait until that magical day when Social Security and Medicare have been transformed. So, we should reframe the discussion: Intergenerational equity is about sustainability, sharing resources, spending both humanely and with economic prudence, and providing the basics for Americans from birth to death.

This isn't about a "cradle to grave" welfare state or creating new kids' entitlements. It's about re-balancing - not only our allocation of resources between the elderly and children, the haves and the have-nots, but also our talk of "intergenerational equity" as more for children, not just less for those 65 and older. And, of course, Americans between 18 and 65 also have needs that we are not meeting.

Yarrow is the guy who wrote: "If we don't control entitlement spending, coupling it with modest tax broadening, the American people will be faced with a tab that will rise so rapidly that it will be like adding endless lobster thermidors or filet mignons to a restaurant bill faster than the waiter could retally the tab."

There is nothing he wrote in today's paper in today's Web edition of the paper that directly contradicts that. But talk of intergenerational re-balancing that doesn't also address the immediate need to restructure Medicare and health spending generally sounds like just another excuse to do nothing. The REAL rule of Washington is that it's easy to add government programs while it's hard to scale them back. We need to focus more on the second part.

Posted by Jay Hancock at 10:50 AM | | Comments (0)
Categories: Slo-mo fiscal train crash
        

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About Jay Hancock
Jay Hancock has been a financial columnist for The Baltimore Sun since 2001. He has also been The Baltimore Sun's diplomatic correspondent in Washington and its chief economics writer. Before moving to Baltimore in 1994 he worked for The Virginian-Pilot of Norfolk and The Daily Press of Newport News.

His columns appear Wednesdays and Fridays.
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