|
What is Generational Accounting? Generational Accounting tracks government spending for social benefits from a generational perspective -- how much did each generation pay in, how much did they take out? |
|
Balanced Generational Accounting (or Generaltion Equity) is an accounting perspective where each generation generally pays its own way through life and does not pass on debts to future generations. |
|
Generational Equity has been a largely ignored principle in our government budgeting and tax code. Indeed, one can have a balanced budget that is not generationally balanced. |
| Our Social Security system is the prime example of an abuse of generational accounting principles -- Medicare is a close second. There are trillions in unfunded future liabilities to fund these programs and other federal employee pension programs. The tax breaks of the typical IRA/pension is perhaps another source of concern. |
| Recently, the principle of generational accounting was introduced into the federal budget process by President Clinton and Kotlikoff. He was using it to show how changing /natinalizing the health care system would reduce the generational budgeting problem. In the following year, this part of his budget proposal was cut from the budget documents submitted to Congress. |
| It was cut because Democrat budget and health care proposals would lock future generations into a reality where our children might pay much of their income as taxes to pay for government programs. Let us not forget that, as far as the PRESSident is concerned, anything that is less than such largess is a "cut". |
| President Bush (43) apparently tossed out generational budgeting from at least one of his budgets. What's that all about?... Buying todays votes with the hard labors of future generations apparently crosses party lines. |
| This all points to the need for any truely balanced budget process to be derived from a generational perspective. Does this mean that occasionally, with generationally balanced budgeting, there will be deficit spending? Yes. Some generations and society as a whole may incur debt during various phases. Generations that are indebted to others should be expected to pay that debt back later on so that subsequent generations will not be saddled with either the debt or interest payments used to support other generations. |
| ---------------- |
| Generational Accounting is a matter for much future economic debate and discussion. Much of it is a new perspective for all but the most astute economic observers. |