Now that we have all gone through the painful process of paying income taxes, let's stop and think what tax-paying – and the federal fiscal environment – may be like 25 years from now.
If we think we have it bad, our children and grandchildren face potential tax and financial burdens that will be crippling if nothing is done to reduce our nation's growing debt.
A recent AARP Bulletin, belying the stereotype of the greedy senior, put two naked toddlers on its cover and superimposed on their backs the grim headline "$156,000 in debt." That's the amount that every American child already owes, on behalf of his or her country, if you add our $8.3 trillion national debt, plus unfunded commitments to Medicare, Social Security and other entitlement programs.
That's nearly three times the average household's net worth and about four times the average American's annual income.
And it's all because of our fiscal profligacy – or should we say immorality?
We're the grown-ups who should be taking care of America for future generations. Instead, we're bequeathing a fiscal mess of biblical proportions.
This is not just an abstraction or a problem that will go away with faster economic growth, cutting government "waste," or as one focus-group participant recently suggested, requiring the Bush daughters to spend less on designer shoes.
To put it in more personal terms, rising deficits will slow economic growth and reduce the average family's income by $1,800 by 2014, drive up interest rates (costing the average American an additional $2,000 per year in mortgage interest), and force average taxes to rise by $7,000 by 2030 if we keep our current promises to the elderly.
Moreover, deficits have other perverse effects. As our debt grows, we will soon pay one-quarter of our taxes on interest on that debt - with that money going to our creditors, half of whom are Chinese, Japanese, Saudis and other foreigners. That, of course, is if they don't dump our T-bills and send our financial markets tumbling.
The second perverse effect: The more we spend on entitlements and debt service, the less there is to spend on investments in the future. When people talk of cutting nondefense "discretionary spending" - i.e., everything that government does other than support the big entitlement programs and defense - they're talking about less than one-fifth of the federal budget. Yet, it is these investments - not just in scientific research, transportation and other infrastructure or environmental protection, but also in children themselves - that are increasingly shortchanged.
The 77 million 0-to-18-year-old Americans are our future. If we don't invest in their education, health and general well-being, we might as well say that we don't care about their future or the future of the United States. Without the best education, health and other opportunities - which our society is more than wealthy enough to provide - America may well fall behind in global competitiveness.
Secondly, by piling up 12-figure deficits, we constrain our children's and grandchildren's freedom. If most public spending when they are adults is devoured by entitlements and debt service, they will be unable to make the political choices promised by a democracy on what they want to spend their tax dollars. And if their incomes fall, and their taxes and interest payments rise, that will financially constrain their historic American freedom to the "pursuit of happiness."
Is this what we want? No one in his or her right mind would say yes, but that's the course we're on.
The glimmer of good news is that this is not inevitable. It's like the future shown in Charles Dickens' A Christmas Carol – what might be, if nothing is done. With political leadership and public outcry, a can-do country like the United States can reform its entitlement programs, cut wasteful spending and find ways of raising new — but not onerous — revenues.
Look into your child's or grandchild's eyes and think of their future when you consider what our president and Congress must do.