Dae Hemphill, TCKB's campus leader at Hastings College, co-authored the following op-ed in the Omaha World-Herald on the need for a generationally balanced deficit agreement with Hal Daubt, a former Representative from Nebraska (1981-1989).
Our $17 trillion-and-growing national debt is devastating the country’s ability to provide for our next generation. If our leaders fail to address our fiscal dysfunction, future generations face an uncertain economic outlook, with the potential of higher taxes, higher unemployment and a lower standard of living.
To ensure our country’s fiscal soundness, our leaders need to adopt a balanced approach to reduce our federal deficit, one that takes into account the relative burdens borne by each generation. Such an approach would address the fundamental problems of existing fiscal policies that have done little to control our debt and deficit.
Any plan large enough to put our debt on a downward path as a share of the economy must include $2.4 trillion in additional deficit reduction over the next 10 years. This objective would be accomplished through a two-pronged approach: overhauling our tax system and reforming our entitlement programs.
Our newest campus chapter at Dartmouth College launched with an event featuring former Senator Judd Gregg (R-NH) and former Representative Dick Swett (D-NH) on Monday, May 13. The event, spearheaded by Campus Leader Thomas Wang and his team, was attended by over 50 students and came complete with local BBQ. Gregg and Swett impressed upon students the need for young people to stand up and speak out over the trajectory of the federal budget and our growing national debt, which threatens to diminish our collective future.
From The Dartmouth: "Gregg said the country is rapidly approaching a consensus to act on the growing debt, citing a working group of 40 senators and recent presidential involvement. While Gregg expressed hope that politicians inside the Beltway might reach an agreement soon, he said that members of Congress must hear from American youth."
On Tuesday, the CBO released updated projections to its 10 year budget outlook which shows an improved short and medium-term outlook on deficits and the overall debt. Good news for some but only part of the story for Millennials.
Deficits decreased by 1.3 percent of GDP and 0.3 percent of GDP over the next 10 years. These declines are mainly due to higher than expected corporate tax revenue, a slowdown in Medicare and Medicaid spending and payments from Fannie Mae and Freddie Mac. This is welcomed news, especially the slowdown in healthcare cost, though there is still some debate as to the cause and whether the situation will continue. However, just as in CBO’s February projections, deficits would rise toward the end of the decade. Millennials in particular should pay attention to this CBO warning:
“Such high and rising debt later in the coming decade would have serious negative consequences: When interest rates return to higher (more typical) levels, federal spending on interest payments would increase substantially. Moreover, because federal borrowing reduces national saving, over time the capital stock would be smaller and total wages would be lower than they would be if the debt was reduced. In addition, lawmakers would have less flexibility than they would have if debt levels were lower to use tax and spending policy to respond to unexpected challenges.”
Adding to the threat of increased levels of federal debt, Millennials hold an average of $26,000 in student debt and suffer from an effective unemployment rate of 16.1 percent, not including those who are underemployed. We will be feeling the effects of the recession for decades, as many of us will not see expected wage growth, most of which occurs in the your 20’s and early 30’s. In fact almost two-thirds of your lifetime wage growth happens in the first 10 years of your career. The result will be lower savings and fewer of us with the ability to make large purchases such as homes and cars, two areas we are already behind in.
As of 2012, just 36.8% of Americans under 35 owned a home. That may seem good, but consider 6 years earlier when that number was 43%. Those of us even attempting to get a home dropped to 9% between 2009 and 2011, compared with 17% a decade earlier. Traditionally, Americans have held most of their wealth in their homes, resulting in a generation with less wealth then those before it.
On top of this, Congress’s inability to deal with long-term deficits has led them to reduce the deficit at the expense of discretionary spending. That means in an era when global competition is increasing, we have decided to spend less on education, infrastructure and research – the very things that make us more competitive. I recently heard a comment from Bill Gates that sums up our situation. He pointed out that by far our biggest cost driver is healthcare, yet both the sequester and Budget Control Act have cut funding to the National Institutes of Health. That's the agency we would rely on to come up with many of the innovations that decrease the cost of healthcare.
The bottom line is that our generation will have less wealth and savings. Combine that with increasing federal debt and decreasing investment and the future does not look so great. We may not have much control about the effects of the recession but we do have control over our spending path. Let’s not waste the opportunity we have now, while the debt is toward the top of the policy agenda to make the long-term changes that will ensure a strong future for our generation and others to come.
A republican, a democrat, a libertarian, and a concerned citizen all walk into Med Deli. Although I know this sounds like the beginning of another unfortunate political joke, it actually happened last Thursday night in Chapel Hill, NC. The leaders of various student political organizations on UNC Chapel Hill’s campus all sat down to dinner together to talk about the debt and discuss possible solutions- this is technically a non-partisan issue after all. Sponsored by The Can Kicks Back, the dinner was not only incredibly delicious (thanks to the Franklin Street staple, Med Deli) but was filled with lively and productive conversation.