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I Am Worried about the Government Debt My Descendants Will Inherit

Politics / US Debt Feb 24, 2010 - 12:54 AM GMT

By: Paul_L_Kasriel

Politics

This is a common concern I hear from seniors and even some enlightened baby boomers. (Yes, Virginia, there actually are some enlightened baby boomers!) Is this a legitimate concern? You betcha. The chart below shows actual per-capita gross federal debt through 2009 and the non-partisan Congressional Budget Office's (CBO) projected per-capita federal debt thereafter through 2020. In 2009, each of us was responsible for $38, 651 dollars of gross federal debt.  By 2020, CBO projects each of us will be on the hook for $62, 808 of gross federal debt.


How can this concern be alleviated? Well, short of bringing about a change in our federal government entitlement programs - Social Security and Medicare - about the only thing parents and grandparents can do to alleviate the huge indebtedness we collectively are passing on to our descendants is increase the inheritance we leave them - i.e., increase our current saving rate. So, cut back on the early-bird specials at your favorite beanery and play one less round of golf a week. Rather, use part of your monthly Social Security check, which is partially responsible for the debt you are passing on to future generations, to fund a trust account for your grandchild.

Feeling a little achy in the morning? Don't rush to the doctor, which will speed the depletion of the Medicare Trust Fund. By not using Medicare as much, you can keep that Medicare Trust Fund topped up and, in effect, not pass on as much debt to your descendants as otherwise. In the immortal words of Pogo, "We have met the enemy and he is us!"

Paul Kasriel is the recipient of the 2006 Lawrence R. Klein Award for Blue Chip Forecasting Accuracy

by Paul Kasriel and Asha Bangalore
The Northern Trust Company
Economic Research Department - Daily Global Commentary

Copyright © 2010 Paul Kasriel
Paul joined the economic research unit of The Northern Trust Company in 1986 as Vice President and Economist, being named Senior Vice President and Director of Economic Research in 2000. His economic and interest rate forecasts are used both internally and by clients. The accuracy of the Economic Research Department's forecasts has consistently been highly-ranked in the Blue Chip survey of about 50 forecasters over the years. To that point, Paul received the prestigious 2006 Lawrence R. Klein Award for having the most accurate economic forecast among the Blue Chip survey participants for the years 2002 through 2005.

The opinions expressed herein are those of the author and do not necessarily represent the views of The Northern Trust Company. The Northern Trust Company does not warrant the accuracy or completeness of information contained herein, such information is subject to change and is not intended to influence your investment decisions.

Paul L. Kasriel Archive

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