Money & Ethics
We're Leaving Our Children a Shameful Legacy
It's unethical for our nation to pass the buck -- literally -- to future generations of taxpayers.
By Knight Kiplinger, Editor in Chief, Kiplinger publications
May 2010
- Comments
- Email This Article
- Print This Article
- Order a Reprint
Advertisement
Q: We all know that the soaring federal budget deficit is a huge economic challenge for the U.S. But what about the ethics of it?
A cardinal rule of ethical living is that you take responsibility for your own choices and you don't place the burden of them on others. By that measure, it is highly unethical of today's voters and their elected representatives to allow the federal government to grossly overspend current revenues -- year after year, in good times and bad.
Sure, that debt can probably be rolled over forever, with the principal being reborrowed through countless new Treasury-bond issues. But as the federal debt mounts, the burden of our profligacy will fall on future taxpayers: our children and their children. That's unethical.
Current tax revenue paid out in interest on past deficits -- now about 7% of the federal budget and rising -- is revenue not available for the societal needs of future generations. A rising share of those interest payments (today about half) is paid to foreign creditors, so it's not even recycled in our own economy. And we can expect that creditors will demand higher interest rates over time.
There are some who believe that it is acceptable -- indeed, highly ethical -- to run budget deficits in times of recession, to relieve the distress of the unemployed and stimulate the economy. I'll accept that -- as long as the budget is brought back into balance, ideally by spending cuts, when strong growth resumes. Even better, Washington should run surpluses in boom times and bank them for a rainy day -- as some states do -- to help weather the next recession.
Reality check: In the past 50 years, Congress has balanced the federal budget only six times -- in 1960, 1969, 1998, 1999, 2000 and 2001 (and the last four needed an accounting boost from Social Security surpluses).
The budget went back into the red after the economy faltered because of the dot-com bust of 2000 and in the aftermath of 9/11. But even with anti-recession tax cuts and heavy military spending, the deficit stayed under 4% of gross domestic product until the Great Recession pushed it to $1.3 trillion -- more than 10% of GDP -- and it continues to soar.
Send your own money-and-ethics question to Editor in Chief Knight Kiplinger.
Topics:
- Comments
- RSS
Permission to post your comment is assumed when you submit it. The name you provide will be used to identify your post, and NOT your e-mail address. We reserve the right to excerpt or edit any posted comments for clarity, appropriateness, civility, and relevance to the topic.
View our full privacy policy
Reader Comments (6)
Posted by: john at 04/09/2010 12:09:45 PM
It’s time to stop talking in generalities and talk specifics. The federal budget submitted in February, 2010 by Barack Obama to 111th Congress is as follows: Total revenue $2.57 trillion (estimated) Total expenditures $3.83 trillion (estimated) Deficit $1.267 trillion (estimated) 33% of our total expenditures is borrowed. The expenditures break down as follows Non descretionary defense 18% Defense 20% Medicare/Medicaid 33% Social Security 21% Interest on debt 8% Cutting all of our non defense discretionary spending would not be enough to stop adding to our national deficit. We need to face facts and figure out the best way to reduce spending on social security, medicare, and Medicaid.
Posted by: Bob at 04/09/2010 04:37:30 PM
"It's unethical for our nation to pass the buck..." Who's unethical? From the polls I read, over 50% of the general public was against the generous stimulus bailout for Wall Street and again over 50% were against the new health care legislation. It would seem that Congress has little concern about representing the will of the majority. Congress is also responsible for backing trade agreements that open our markets without getting equal access to foreign markets. For instance, I read that Japan's "Cash for clunkers" program excluded American made autos. I also read that approval of Congress is now at an all time low in any polls being taken. So before you make comments that begin with "it is highly unethical of today's voters..." , you had better step back and look at who is actually responsible for this huge debt. How is the voter responsible when an elected official does exactly the opposite of what was promised when he or she was campaigning? Who do you vote for when you can't believe anyone? Now tell me again. WHO IS UNETHICAL?????
Posted by: Nomen at 04/10/2010 06:25:38 PM
We??? What we? I'm not responsible for the Wall Street risk taking and the subprime mess. I'm not responsible for banks making bad loans. I'm not responsible for the wholesale outsourcing of good American jobs or the huge influx of illegal workers. I'm not responsible for lobbyists with barrels of money buying favorable legislation to the detriment of the rest of the country. I didn't want the stimulus nor do I think the banks should have been bailed out. What I am is one of the average people who lost a chunk of my retirement and am living on reduced expectations thanks to our greedy and unethical business, financial and government leaders. Next time you want to place blame, be careful who you include in "we".
Posted by: J. Wilson at 04/11/2010 03:17:31 PM
Our forebears would have called this "taxation without representation" and maybe have used it as a rallying cry for revolution. Pending one's political biases, we have all been far too quick to assign blame to the current President or his predecessor, but the fact is that BOTH Republicans AND Democrats have fed this national debt-monster that threatens to devour us. Yes, Obama has added a trillion dollars with healthcare, but so too has Bush added twice that amount with his corporate bailouts and frivolous Iraq War. Everybody literally has a hand out, but sooner or later tough decisions are going to have to be made about paying the piper. The problem is that any political candidate who suggests that we spend less and tax more in order to pay of our collective debt will be ridden out on a rail come election day. In a democratic republic, the ultimate fault of this situation rests with us, the American voter and tax payer. Will we have the guts to keep electing representatives based on their frugality and commitment to debt payment even if (or especially if) it means that we pay more in taxes and limit our consumption, or will we continue to vote as if our individual comfort and luxury were all that mattered? I doubt we have the clarity of vision to do what needs to be done, but time will tell.
Posted by: Daryl at 04/27/2010 08:37:40 AM
Although most of us did not directly pass healthcare legislation, engage in risky loans or decide to outsource jobs, the majority of us voted for the current and past crop of idiots that make the decisions in Washington. We need to demand btter politicians by voting for smart, data driven people, rather than slick salesmen.
Posted by: Sidney James Nakhjavan at 05/20/2010 10:51:32 PM
Amen to this!