Laurence J Kotlikoff, Columnist

Generational Balance, Not Budget Balance: Laurence Kotlikoff

August 3, 2011 at 12:00 AM UTC

Laurence J. Kotlikoff is an economics professor at Boston University and the author of "Jimmy Stewart Is Dead: Ending the World's Ongoing Financial Plague With Limited Purpose Banking." Kotlikoff served as a senior economist on President Ronald Reagan's Council of Economic Advisers, and is now a research associate at the National Bureau of Economic Research and the president of Economic Security Planning, Inc., a maker of financial planning software. He received a bachelor's in economics from the University of Pennsylvania and a doctorate in economics from Harvard University. He is also the coauthor of "The Coming Generational Storm: What You Need to Know about America's Economic Future" and "Spend 'til the End: The Revolutionary Guide to Raising Your Living Standard - Today and When You Retire."

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Debt crises make great drama. The big shots attend meetings, look terribly worried, then stomp out, accusing each other of bad faith. Finally, at the witching hour, they reach agreement and tell us all is fine, for now.

The tough thing is sorting out what’s really going on. In the U.S. case, the answer is: not much. We need tax increases and spending reductions far beyond what’s being negotiated. Cutting the deficit by $1 trillion to $2 trillion over 10 years sounds like a big deal, but not when our unfunded Medicare and Social Security liabilities, by my calculations, are growing by more than $4 trillion a year.