The Need for a Deal: Intergenerational Equity
In today's The New York Times, Fix the Debt Steering Committee member Steven Rattner writes on the need for a comprehensive deal to put the debt on a downward path as a share of our economy. According to Rattner, a failure to enact a long-term deficit reduction plan creates unfairness for future generations who must shoulder the burden later on. He calls for action now, not later:
Our budget outlook is so grim and the policy changes that are required will be so painful — politically as well as financially — that putting efforts to get our fiscal house in order on hold would be the height of irresponsibility.
Proponents of taking a pause offer a variety of arguments in support of their view: Congress can’t do two things at once, and the need to fight the sequester should take precedence. The budget outlook for the next 10 years isn’t so bad. The bond market is quiescent, even in the face of continuing large government borrowings.
Those assertions may contain grains of truth, but none changes the overarching fact that working toward a sensible long-term fiscal policy is every bit as important as pushing for better short-term policies.
Thanks to decades of accumulated federal budget deficits and, more significantly, imprudent Medicare and Social Security policies, we’ve stolen almost $60 trillion from our children.
That’s the amount that would be required to both pay off our national debt (a comparatively modest $11 trillion) and provide for benefits that we awarded ourselves without paying for them.
Every year that goes by – indeed, every day that goes by – causes this amount to increase. As shown below, just five years ago, these unfunded liabilities totaled $45 trillion.
Rattner says that the focus should be on the long term, so younger generations can prepare for changes that must eventually be made. He also notes that the longer we wait, the worse the longer-term problem gets:
Starting to chip away at this mountain of obligations doesn’t require immediate austerity. In fact, what often gets lost in the debate over whether to address long-term deficit reduction now is that the policy changes needed to fix the long-term problem need not have any immediate deleterious effect.
History and common sense tell us that those kinds of changes are likely to be more palatable if they are phased in very gradually. So waiting for the problems to become more acute is exactly the wrong approach.
Click here to read the full piece.