How will the debt of the nation impact the future generations?

When it comes to describing how America’s taxing and spending policies
will affect future generations—its generational policy—the old adage
quoted above runs in reverse. The more things remain the same, the more
things change. What’s staying the same is our decades-long practice of
fiscal child abuse. What’s changing, and for the worse, is the fiscal burden
we are passing along to our kids.

Indeed, in the year since publication of the hardback edition of The
Coming Generational Storm, the official 2004 federal deficit reached a
record high—$413 billion! This amounts to $105,000 per child born
that year. Even more ominous, the nation’s implicit debt—its promises
to pay future Social Security pension benefits to retirees and Medicare
and Medicaid health care benefits to the elderly and the poor—increased
over the year by roughly $1 trillion, or $250,000 per newborn! No
wonder those babies came out screaming.

While these obligations increased, our politicians did their best to
ignore them. During the long 2004 presidential election campaign,
George W. Bush and John Kerry treated us to hundreds of speeches. Yet
they studiously avoided acknowledging the nation’s long-term insolvency
and its implications for future generations. When the issue of deficits did
come up, the Republican president said that lowering tax rates would
eventually raise tax revenues. The Democratic senator said spending
more now would eventually mean spending less later.

All of us Americans listened to this malarkey. We didn’t roar with
laughter because our leaders, regardless of party, told us exactly what
we wanted to hear. No one wants to pay more taxes. No one wants to
receive less government support. We prefer fairy tales over the truth—
and that’s what we got. But no wave of the magic wand can solve the
problem of spending more than we have and promising more than we
can afford to deliver.

Our conspiracy of denial will do more than damage our children’s
and grandchildren’s economic welfare. It’s also going to hit each of us
adults very hard and very soon. Any day now financial markets will
put two and two together and realize that our nation is making
fiscal reprobates like Brazil look like models of fiscal prudence. When
that day comes, we’re in for a financial and economic crisis of the first
order.

Exert from "The Coming Generating Storm" What you need to know about America's Economic future. Published by MIT press
To learn how you can secure your financial future see wise investment strategy notes

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