False fears, real dangers

Dean Baker of the Center for Economic and Policy Research nails the economic illiteracy that fears an unbalanced national budget more than a stalled national economy. And in the process, he explains why future generations should be more afraid of current penny pinching than of the Feds taking on more debt to get the country moving again.

In terms of burdens on future generations -- people have to get over the lunacy that this is somehow measured by the debt. Suppose we sold off all the government's property and retired the debt. Have we made our children better off? How about if we spend nothing on infrastructure and education for 20 years so that we can pay off the debt. Are our children better off? We hand future generations the entire economy, society, and natural environment. The notion that generational equity is in any way captured by the size of the national debt is lunacy.

... the value of private assets also affects the burden placed on future generations. If the stock market is valued at $20 trillion rather than $10 trillion (for the same set of assets), then the return for people buying into the market will be only half as great on average. This would be the same as if we taxed all their earnings by 50 percent, and then imposed ordinary income taxes on the remaining 50 percent.

If our kids somehow would rather get a much lower return on their retirement income and pay twice as much for their housing in order to save a few dollars on their taxes, then we have obviously failed to give them a decent education.

TPM Media

My emphasis. Is this so hard?