By Brian Chmelik (CMC ’18)
On December 22, 2017, Congress passed its first piece of tax reform legislation in more than 30 years. The sweeping bill cut taxes across the board in the hopes of spurring economic growth and creating jobs. A few weeks later, the federal government shut down after Congress failed to reach a deal on raising the debt ceiling and fund the government. Despite the short term implications of both tax reform and twice-yearly debt limit battles, the long-term implications of a rising national debt has serious implications for the next generation of workers, especially college students poised to enter the workforce.
The Congressional Budget Office (CBO) estimates that the tax reform will push the federal deficit to almost one trillion dollars and increase the national debt by $1.5 trillion over the next decade, to over 20 trillion dollars. At current rates, the national debt will increase to 150% of U.S. GDP by 2047. Service on that debt (the monthly or yearly interest payments the Federal government makes to creditors) will become the third largest government “program” behind Social Security and Medicare. Interest on the national debt will crowd out other productive investments, such as education, research and development, and infrastructure spending. Social programs that many Americans rely on, especially social security, are not sustainable at current levels of debt and spending. To remedy the problems of a previous generation, millennials must comprehend how the national debt has grown over time and its projections for the future, the national debt’s effect on the economy, and proposals to address the national debt.
The next generation, especially current college students, are particularly affected by the national debt due to burdens of an already high student debt. Service on student loans lowers rates of saving and homeownership among young people, limiting both investing and retirement savings. Millennials are shaping up to be the most educated but poorest generation in the United States history. Wages are stagnant while cost of living and debt are rising. Without social security and other social programs that are shrinking due to service on the national debt, millennials may face challenges buying homes, building assets, affording costs associated with starting a family, and retiring. The current trend of increasing debt is clearly unsustainable for the next generation and it is imperative for the future of our nation to minimize this burden.
Understanding both the causes of and the proposed potential solutions to the national debt is a matter of simple math. To balance the annual deficit, the Federal government must raise taxes or decrease spending. The challenge lies in which programs should have funding reduced,which taxes to raise, what the timeframe for a balanced budget should be, and how to sell higher taxes or less generous government programs to the American public. Balancing social programs, economic growth, and a balanced budget is a politically untenable challenge in the current polarized climate.
While Democrats and Republicans do not often align on policy issues, both sides acknowledge the growing national debt is a problem that must be addressed. Policy experts from across the ideological spectrum have provided potential remedies that can be difficult to reconcile across party lines and loyalties.
Conservatives generally argue that reducing government spending and increasing government revenue through fewer regulations and higher economic growth is the path to a balanced Federal budget. The conservative American Action Forum has addressed the high costs of Medicare, Medicaid, and Social Security by suggesting replacing Medicare and Medicaid with subsidized private programs, and raising the retirement age for Social Security to cut Federal costs. Revenue would be increased through a Federal sales tax or another regressive value-added tax.
Liberals generally believe that to tackle the national debt, the government should raise revenues through new taxes on the wealthiest Americans and social bads, such as carbon emissions. The liberal Center for American Progress has suggested reducing costs through increased cost controls for Medicare that reduce program costs and reductions in defense spending. Revenue would be raised through increased taxes on the wealthy, a carbon tax (a tax on greenhouse gas emissions by industrial emitters), higher gas taxes, and immigration reform designed to reduce the costs of border security. While the plan is designed to be revenue neutral, any excess revenue would be spent on more social programs for the poor, infrastructure revitalization, and increased education spending.
It is clear that current trends are unsustainable and the next generation of workers are uniquely unprepared to shoulder the excesses and mistakes of the current generation. Both sides of the ideological spectrum have presented plans for balancing the Federal budget and tackling the debt. However, without Congressional action, even the most sensible plans cannot produce concrete change in the national debt. Millennials must ensure that the current and future members of Congress are cognizant of the importance of curtailing the growth of the national debt. As one of the most educated, informed, and politically active generations ever, young people are in a unique position to advocate for action that can prevent the grim predictions of the CBO. Raising awareness of the issue of the national debt is the first step towards a more sustainable future for young people. A future where debt is not a looming concern and the productivity of the millennial generation can be used to achieve better standards of living.