Tomorrow's generation will foot the bill
The latest US budget numbers indicate that the deficit for 2004 will exceed $500bn, an increase of almost $150bn over 2003. This cloudy fiscal outlook prompted Alan Greenspan, chairman of the Federal Reserve, to issue a strong cautionary message this week: "The imbalance in the federal budgetary situation, unless addressed soon, will pose serious longer-term fiscal difficulties. One critical element - present in the 1990s but now absent - is a framework of procedural rules to help fiscal policy makers make the difficult decisions that are required to forge a better fiscal balance."
Mr Greenspan's remarks hint at the need to reintroduce federal spending and financing constraints, similar to those included in the Budget Enforcement Act of the 1990s.
The BEA was allowed to lapse when projections began to show federal surpluses. This may have been prompted by any of several sensible reasons: to avoid federal purchases of private assets; to help an economy in recession; to return taxpayer funds, and so on.
This suggests that such budget constraints alone may not be sufficient to encourage the higher saving, investment and output growth needed to prepare for the coming wave of baby-boomer retirements. A new Budget Enforcement Act would, again, be abandoned as soon as big federal surpluses re-emerged - and for good reasons. The problem is that, in the absence of constraints, the remaining budget institutions are inadequate to prevent current generations from socking it to future ones: witness the post-BEA enactment of a massive and unfunded Medicare prescription drug benefit for America's senior citizens.
Existing institutions fail to arbitrate a resource-allocation "dispute" between living and future generations, both of which have "claims" on present and future national output. While successful economies have effective systems to adjudicate property conflicts among the living, fairly arbitrating one between living and future generations is difficult, because the unborn cannot stand up for their claims. This leaves current generations free to vote large and unfunded public benefits for themselves, and to bequeath massive public debts to future ones. Under current budget accounting in America, most such debt remains hidden. Less appreciated by current generations is that if they grant themselves too much by way of unfunded benefits today, they could end up winning a battle but losing a (generational) war.
The anticipated impact of today's policies on tomorrow's outcomes will influence today's private economic choices - especially choices made by today's younger generations and succeeding generations as they grow up. For example, current policy decisions may imply that taxes on labour or capital will be much higher in future. In anticipation of much higher labour taxes, younger generations may choose to invest less in acquiring productive skills - because the higher salaries they would win as a result would be taxed away. Higher labour taxes might also discourage skilled immigrants. Both reactions would amplify the "sucking sound" of jobs being shipped abroad. When jobs go overseas, capital is unlikely to be far behind. In addition, the prospect of higher taxes on income from capital - and therefore lower investment returns - could make it difficult for the US to attract the level of foreign capital that supports domestic investment.
These tendencies will reduce employment and productivity, and shrink the national output available for today's voting generations when they retire. So when today's voters promote ever larger unfunded benefits for themselves, they may be increasing their share of overall output, but they are also reducing the pool from which it will be drawn.
Of course, one could argue that living generations' fear of losing the generational war will check their fiscal profligacy.
But, unlike the war that some observers predict - in which the younger generation votes to cut benefits, while the older lobbies to raise taxes - this one will be fought covertly. It will involve younger generations making private choices in response to profligate increases in unfunded benefits by older ones. To avert the consequences of such actions, younger generations, and their successors, will have to be encouraged to behave in ways that promote growth.
Because greater government saving is undesirable, the only remaining avenue for increasing saving and investment appears to be a private, and necessarily decentralised, system of retirement saving: an "individual accounts" reform of Social Security would be a good start. A similar reform of Medicare appears even more imperative, given its much larger fiscal imbalance - $40,000bn including prescription drugs. Such reforms could limit the ability of today's electorate to vote itself unfunded benefits.
President George W. Bush's call for this type of Social Security reform in his 2004 State of the Union speech points in the right direction. The chances are, however, that such institutions will only develop if budget accounting reforms are passed to reveal the full extent of the debt being bequeathed to future generations.
The writer is senior fellow at the Cato Institute. This article is based on a recent speech given to the National Economists Club and Society of Government Economists
今天决策明天买单
美国最新的预算数据显示，2004年财政赤字将超过5000亿美元，较2003年高出近1500亿美元。这一阴云密布的财政前景，促使美联储主席艾伦o格林斯潘(Alan Greenspan)上周发出强烈警告："联邦预算的不平衡状况，如果不马上解决，将造成严重的长期财政困难。目前缺乏一个程序性规则框架，只有凭借该框架，财政政策制定者才能做出改善财政平衡状况所需的困难决定。这是个关键要素，上世纪90年代有过，但现在却没有。"
格林斯潘先生这番话暗示，有必要重新采取限制联邦开支及融资措施，即类似于上世纪90年代《财政预算执行法》所包含的措施。
当预测显示联邦财政开始出现盈余时，《预算执行法》就中断了。促成此事的合理原因可能包括：为了避免联邦政府购买私人资产；为了帮助经济摆脱衰退；为了归还纳税人税款等等。
这表明，单凭此类预算限制措施，也许不足以鼓励人们多储蓄、多投资或多增加产出，以便为即将来临的婴儿潮一代大批退休的前景做准备。即使出台新的《财政预算执行法》，一旦庞大的预算盈余再次出现，该法律还是会被废除，而且理由会很充分。问题在于，如果没有限制措施，那么其他预算制度均不足以阻止当代人将难题留给后代：《预算执行法》废除后，美国为老年人提供的医疗保险处方药福利计划规模庞大且无资金支持，这就是证明。 .
对于这一代和未来几代人之间的资源分配"争议"，现有制度未能做出公断，因为双方都对目前和未来的国民产值有"索取权"。在成功的经济体内，有效的制度能对生者间的财产冲突做出仲裁，但要对这一代和未来几代人之间的财产冲突做出公正裁决，则存在困难。因为尚未出生的人无法站出来维护自己的权利。这样一来，当代人就可随意为自己争取大量无资金支持的公共福利，却把巨额公共债务留给后人。根据美国现行的预算会计制度，大多数公共债务仍是隐性的。当代人往往对一件事认识不足，那就是，如果他们今天利用无资金支持的福利而为自己谋求太多，那最终结局可能是，他们打赢了当前的小仗，却输掉了跨越时代的大战。
可以预见，当今的政策会对日后的结果产生重大影响，而这种影响将改变当前个人的经济选择，尤其是年轻一代及以后几代在成长过程中所做的选择。例如，当前的决策可能暗示，未来的劳动力或资本税赋将比现在高得多。由于对这种劳动力税赋提高的预期，在获取生产技能方面，年轻一代可能就会选择降低投入，因为由此赚得的更多薪水，将以赋税形式流失。劳动力税赋增加还有可能阻碍技能熟练的移民前来。这两种反应都会加大美国就业岗位的流失。一旦就业岗位流向海外，资本外流可能也就为期不远了。此外，若资本所得税提高，从而导致投资回报率降低，那么，美国就可能难以吸引足够的外资来支持国内投资了。
这些趋势将使就业与生产力水平降低，从而缩减当代选民在退休时能够获得的国内产值。因此，当今天的选民为自己争取越来越多无资金支持的福利时，他们也许正在提高自己在全部国内产值中享有的份额，但与此同时，也降低了将来可供提取的储备规模。
当然，有人也许会认为，当代人害怕会在代与代之间的大战中失利，因此可能抑制自己在财政上的挥霍无度。
一些观察家预言，在这场战争中，年轻一代将要求削减福利，而年老的一代则将游说相关部门提高税收。但与观察家的预言所不同的是，真正的战争将会在私下秘密地进行。在战争中，对于年老一代肆意提高对无资金担保福利的索取，年轻一代将作出自己的选择。为避免这些行动造成的不良后果，必须对年轻一代及其后代加以鼓励，令他们的行为方式有助于促进经济增长。
由于提高政府储蓄的做法不受欢迎，因此为增加储蓄和投资，剩下来唯一可走的途径就是，设立一个私有的、而且必须是分权制的养老储蓄体系：对社会保障体系进行"个人账户"改革将是个良好的开端。对医疗保险制度进行类似的改革则更有必要，因为该制度的财政失衡状况更为严重，赤字高达40万亿美元，其中包括处方药支出。采取这些改革措施，也许会限制当今选民为自己争取无资金支持福利的能力。
在2004年国情咨文讲话中，布什(George W. Bush)总统呼吁实行这种社会保障体系改革，为大家指明了正确方向。不过，或许只有在实施预算会计改革，彻底暴露当代人将遗留给后代的债务后，上述制度才有可能确立。
