"...Congress has been using incomplete accounting practices that misstate our nation’s financial health and, subsequently, place the financial well-being of future generations in serious jeopardy.
Official Federal debt—the number politicians reference when talking about “debt reduction”—fails to include the expected costs of mandatory spending for programs like Social Security and Medicare.
Creative accounting labels these unfunded liabilities “mandatory expenditures” rather than “debt,” allowing these costs to stay off the books despite the fact that millions of Americans have been promised these payments. Accounting for all expenditures, both present and future, and making adjustments for expected future revenues, Boston University Economist Laurence Kotlikoff estimates a more accurate measure of our country’s debt actually exceeds $200 trillion.
...these mandatory expenditures are rising rapidly.
...by 2038, mandatory spending on Social Security, healthcare, and interest on the debt alone will nearly equal total federal revenues. In other words, nearly every penny the IRS collects from our children that year will go towards paying some form of previously-promised obligation to the generations before them.
...There is something fundamentally wrong with this system. Just as I (and I’d wager most parents) would not expect my son to pay off my debts, we as a nation should not put future generations on the hook for our own failure to budget responsibly.
It’s time to face fiscal reality and adopt more accurate accounting practices in addressing our nation’s budget.
...Money owed is money owed, period. By ignoring the rising costs of these future obligations and addressing an incomplete measure of debt, any proposed solutions to our nation’s fiscal woes will merely amount to rearranging deck chairs on the Titanic.
The simple truth is that these unfunded liabilities must be paid and without meaningful reform, future generations will bear the cost with substantially higher taxes, drastically curtailed government services, or some combination of the two.
We must increase transparency and begin treating all future spending obligations equally to make clear the impact current budget decisions will have on future generations."
George R. Crowley, Ph.D. is an assistant professor of economics at Manuel H. Johnson Center for Political Economy at Troy University