Easterbrook: Borrow-and-Spend Replaces Tax-and-Spent.

Gregg Easterbrook's latest Tuesday Morning QB column is devoted mostly to wrapping up the Super Bowl, but near the end he has some smart things to say about our budget quandry in the section "Borrow-and-Spend Replaces Tax-and-Spent." An excerpt:

The younger Bush was hammered in the press because his two tax cuts reduced the rate paid by the rich: But the same cuts nearly eliminated federal income taxes on the working class and lower middle class. That is, George W. Bush's tax cuts were progressive. Last year, 43 percent of Americans paid no federal income taxes -- in 2009; this year, as many as half of Americans are expected to pay no federal income taxes. Yet public discourse is full of complaints about taxes, and many people claim to hate Washington because of taxes, while practically everyone demands more federal benefits and services.

As middle-class taxes are being eliminated, the top 20 percent of filers -- the well-off -- pay for a steadily higher share of federal government, last year paying 70 percent of total federal taxes. The well-off are financing most of the federal government, and that will intensify next year as taxes go up on household income above $250,000. Other than the spending paid for by the well-off, the rest is being billed to the young, via deficit spending and borrowing.
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Understanding government note: Here is a fantastic graphic showing how the federal budget is spent. Entitlement spending for individuals -- Social Security, Medicare, Medicaid, other health care -- totally dominate. The ticking time bombs are Social Security and Medicaid costs, both of which increase as Boomers retire, and "net interest," which could increase by hundreds of billions of dollars annually if interest rates rise, which seems close to inevitable. Today's undisciplined federal borrowing is happening before pension and Medicare costs will shoot up, owing to Boomer retirements. If Congress has already tapped out the national debt in order to give every interest group everything it demands today, how is the country going to finance the approaching retirement wave?

RTWT (in that section)