Our predecessors created a Ponzi scheme that would make Bernie Madoff proud

Things that can't continue on forever, won't.

Our predecessors created a Ponzi scheme that would make Bernie Madoff proud. They pledged tax revenues to be collected from future generations under the assumption that the population would continue to grow and that more people would always be available to fund the programs. This is just like assuming that housing prices will always go up, and we know what that is costing us. Now, however, the pool of future taxpayers is smaller than the present one, and the burdens they must assume are proportionately greater. In short, this is “taxation without representation.”

The current recipients claim they have paid into the plan, which they have. But their payments were not contributions that prefunded their own retirements or their need for medical services. Rather they were part of a pay-as-you-go scheme. Their tax payments were given to those who already retired or had medical needs. Now, the present generation of retirement age also refuses to recognize this problem, which is on track to absorb the whole of projected government revenues and then some. Instead we seek to do what our parents did by passing on an even more burdensome set of obligations to our children and grandchildren.

If this isn’t “taxation without representation” then I don’t know what is. We are making commitments today for those who will have to pay but who do not have a say in what those burdens are. Not only does this go against the grain of the sentiments that helped to trigger the American Revolution, it is also naïve to think that future generations will continue to honor promises made by past generations. What makes us believe they won’t simply decide to renege on the promises we have forced upon them when the choice might be whether or not to put food on the table for their own families?

We can’t continue to grow government and transfer payments forever, and the time to address those issues is now, while they are still manageable. Nor can we avoid the problem by cutting only discretionary spending, as is the approach in the current deficit agreement.

Unfortunately, the course taken by the leaders of both parties and the administration fails on all counts. They have placed us on the risky path of financial fragility rather than stability. A ratings downgrade might be the needed wake-up call for the country, our politicians and its senior citizens.