Are my children heathen?

I was just reading some of the Federal Vision / Knox Seminary papers that I downloaded a while back. One of the articles I was reading was “Covenant and Salvation, or What is a Christian” by Richard D. Phillips (minister of preaching at Tenth Presbyterian Church, Philadelphia, and speaker-at-large for the Alliance of Confessing Evangelicals). After the author makes some unsupported statements such as “The Federal Vision says we are saved by the covenant; Reformed Theology says we are saved by Christ.”, he writes on page 80 of his essay something that totally floored me:

By Faith Alone
God’s covenant is the means for what we tend to call a “saving relationship” with God. That Abraham’s physical offspring formed a covenant community which as a whole was presented with the covenant, but not all of which realized its blessing, is essential to understanding the matter of infant baptism and the Christian church. A baptized child is objectively presented with the covenant. This does not, however, bring the child into the relationship with God offered by the covenant, but rather brings him into the community of the church in which this offer is presented. The church is the new covenant corollary to the tents of Abraham; here the covenant is presented for salvation, in contrast to the outside world which knows not the way to God. The covenant has its conditions, along with blessings for fulfillment and curses for non-fulfillment. But the child is not in the fulfilled relationship with God offered by the covenant simply because the covenant has been presented to him or her. The covenant is a means to the relationship contingent upon its fulfillment. Until the conditions of the covenant are fulfilled, the child is not in the relationship offered by the covenant, even though baptism enters the child into the covenant community. Baptized children gain profound benefits by virtue of outward membership in the church: the blessing of the prayer, oversight, Christian nurture and teaching of the church. But the child must still be evangelized and must come to a personal faith in order to receive the salvation offered by Gods covenant, that is, in order to become a true Christian.

Did I miss something? I did not know this was a possible view within Reformed circles! Am I really supposed to treat my children as heathen until they make profession of faith? I thought it was only Arminians and Baptists who believed the that their children are little heathen. I now see why paedocommunion is anathema to these people. How can you serve communion to heathen? But back to the point, I see now that if this is the ‘orthodox’ view of our children and others in the covenant then the Federal Vision truly is outside orthodoxy. But I will take my stand with those, like Paul, who hold that the the child of a Christian should be considered ‘holy’, and that membership in the covenant community will be equated with membership in the Body of Christ until such time that it is proved otherwise.