"The Clash of Generations"
Half-reformed welfare states, plus lengthening lifespans, proved a toxic combination for the fiscal systems of most developed countries. Already in the late 1990s, my friend Laurence Kotlikoff had spotted that the true liabilities of the US federal government vastly exceeded the stated government debt. It was he who first drew my attention to the system of generational accounting, which makes explicit the gap between the government’s future outgoings and its future revenues — and therefore the difference between this generation’s fiscal burden and that of future generations. To close today’s fiscal gap, he estimates, would require that every federal tax immediately be increased by 53 percent, or every federal expenditure cut by 34 percent.
Read all of Niall Ferguson's essay here.