Remember "Blessed are the meek, for they shall inherit the earth"? Today, it's more like "Blessed are the young, for they shall inherit the debt."
The federal deficit this year will hit a record $422 billion, according to the latest projections from the Congressional Budget Office. That's over a billion dollars a day in red ink, more than a billion a day in federal spending that's over and above the level of federal tax revenues.
Over the next decade, the CBO is projecting $2.3 trillion in federal red ink and that's assuming Congress doesn't pass any of the additional tax cuts that President Bush has proposed. Make the Bush administration's previous tax cuts permanent, as sought by the White House, and the CBO is forecasting a doubling to $4.5 trillion in the 10-year flow of red ink.
When President Bush entered office, the CBO projected a 10-year budget surplus of $5.6 trillion. We're looking at a 10-year negative switch, in short, of being in the black to being in the red to the tune of some $8 trillion to $10 trillion or even more if the politicians decide to escalate the level of pork, or if things get worse with Al-Qaida, or if the foreigners who are funding our deficits lose faith in the dollar and decide our interest payments should be higher, or if the politicians settle on the idea that more tax cuts are required to stimulate the economy.
Taking a longer view to when today's 76 million baby boomers are retired in large numbers, the annual cash-flow deficit in the Social Security and Medicare programs is officially projected to reach $783 billion in 2020 and $4.3 trillion by 2040 (or $519 billion and $1.6 trillion, respectively, in today's dollars). Improve life expectancy or raise the projected price of health care and the numbers only get worse.
In his new book "Running on Empty," Peter G. Peterson, chairman of the Council on Foreign Relations, former chairman of the Federal Reserve Bank in New York, former Secretary of Commerce in the Nixon administration, and founding president of the Concord Coalition, points to the burden that today's young Americans and future generations will inherit just due to the long-term deficits in Social Security and Medicare and what the federal government has promised to pay in future benefits: "Just financing the projected increases in Social Security and Medicare through higher contributions would require payroll taxes to rise by 50 percent by 2020, and by 200 to 350 percent by 2040, according to the Social Security Administration."
The answer from President Bush was to toss spending restraint to the wind and enact a new prescription drug program, the largest entitlement expansion since the days of the Great Society, which will add a projected $535 billion over the next 10 years to the nation's already unsustainable multi-trillion dollar shortfall in unfunded future retirement and health care obligations. The retort from the Democrats is that this new $535 billion "didn't go far enough," suggesting that we should dig ourselves even faster and deeper into a full-blown fiscal crisis.
Neither party, neither Bush nor Kerry, offers any solutions. Both are more concerned about votes in November than about getting America off a path that could end in an economic and political meltdown.
For Republicans, Peterson writes, "the pursuit of lower taxes has evolved into a religion, indeed a theology that discards any objective evidence that violates the faith," while the government, for Democrats, has become "a massive vending machine which operates by dispensing new benefits in return for organized political support and by deferring costs as far as possible into the future."
On both sides, asserts Peterson, good sense takes a back seat to ideological purity: "The high priests and assorted ayatollahs of the Republican Party have never met a tax they didn't want to cut. The revered theologians and ragtag mullahs of the Democratic Party have never met an entitlement program they didn't want to expand."
The result is that we end up adding programs, cutting taxes, and sending off crushing burdens to our kids. For those younger people who'll be stuck picking up the tab, Gary Lloyd provides a cautionary word about trusting either side: "When the government's boot is on your throat, whether it is a left boot or a right boot is of no consequence."
September 16, 2004