Just When You Thought The Deficit Was Under Control
The fine print in Clinton's budget paints a gloomy picture
IF you think sending a chunk of your hard-earned income to the Internal Revenue Service was tough this year, imagine the responses of future taxpayers who will face average lifetime tax rates of an incredible 82 percent.
Confronted with the burdens of a monstrous national debt, an aging population, and runaway federal entitlement programs, tomorrow's Americans will be turned into a generation of indentured servants. They won't stand for it. Without action today, we are likely to see generational political wars by the end of the decade.
It's a mess created by bipartisan fiscal irresponsibility in Washington. And far from addressing the problem, the politicians are insisting the deficit is ``last year's issue.''
The bad news can be found buried deep within President Clinton's 2,000-page, four-volume budget for 1995, which was recently passed by Congress.
A little-noticed section of Mr. Clinton's budget, entitled ``Generational Accounting,'' looks at what each generation can expect to pay in average net lifetime tax rates - that's taxes paid minus direct benefits (such as Social Security, Medicare, farm subsidies, and home mortgage deductions) received.
Generational accounting tells a startling story. Americans born in 1900 faced an average lifetime tax rate of 23.6 percent over the course of their working lives. Americans born in 1940 face an average rate of 31.9 percent. For those born in 1970, the average lifetime tax rate climbs to 36.5 percent.
Economist Laurence Kotlikoff, who helps the federal government devise the generational accounting section of the budget, says that the first group to feel the squeeze will be the baby-boom generation, those born between 1941 and 1961.
But the worst economic news is for Americans born after 1992. Forced to pay the bills we refuse to pay today, they will face an average net tax rate of 82 percent.
The message is clear: We are bankrupting future generations. If we continue the present course, the America of the 21st century will be unable to compete and be productive. And our children will be the ones to suffer.