If we keep raising successive generations’ lifetime net tax rates, we will eventually be hitting up our progeny for every penny they earn, leaving them unable to consume or save. If they can’t save, they can’t invest, which means they won’t be able to maintain -- let alone increase -- the economy’s stock of capital needed to produce goods and services.
The U.S., incidentally, has a national savings rate of zero and a domestic net investment rate of only 4 percent of national income. Both are postwar lows.
Memo to House Republicans: Budget balance doesn’t imply generational balance.[snip]So what's the bottom line, hmm?
The Youngsters have hired some young economists to use generational accounting to examine the lifetime net tax treatment of different cohorts. Their report isn’t pretty. It shows that past cohorts received, on a lifetime basis, far more than they put in and that the current young are being asked to participate in a Ponzi scheme.
They also learn that measuring debt is a meaningless labeling game since the government can take from the young with the words “taxes,” rather than “borrowing,” and incur debts via promises of future repayment that are tied to the “taxes.”Today's young aren't feeling the love. They thought it was embodied in Obama. Now more than a few are figuring out he's an empty shell.
Who will be the next young, hot star?
P.S. Rep. Joe Walsh (TEA Party R-IL): Sen. Rob Portman: Matching debt increases with spending cuts will balance the budget in a decade without raising taxes. Wall Street Journal
UPDATE: Doorbell, a Powerline entry: