Warren Buffet On Our Side

The side of young people, that is–in an op-ed earlier this week, he wrote about the dangers of a growing deficit. (Never mind that this was probably not his primary motivation; he’s probably more concerned about the competitiveness of the American economy. As candidate Norman Siegel said at our PA forum last night, good advocates don’t throw out good arguments!)

Ballooning national debt affects the young because we’re the ones who will ultimately have to pay it off. Right now, government outlays are running at 185% of receipts. That’s not sustainable, even if our economy does recover fully. He also addresses the specter of inflation, which will require enormous political will power to address:

Legislators will correctly perceive that either raising taxes or cutting expenditures will threaten their re-election. To avoid this fate, they can opt for high rates of inflation, which never require a recorded vote and cannot be attributed to a specific action that any elected official takes. In fact, John Maynard Keynes long ago laid out a road map for political survival amid an economic disaster of just this sort: “By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens…. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”

As Buffet writes, it’s paramount we get the economy back on track, and that has to be the priority now. But after the recovery, we must rein it in and return to fiscal prudence–because in the long run, our generation will pay the price if we don’t.

Read more about the generation gap here.