Young Americans are in the crosshairs of debt
12/10/2010 12:00 AM
12/10/2010 12:04 AM
President Obama's debt commission has earned mixed reviews for its recommendations for reducing the federal government's ballooning deficits. But at least it got the right conversation started.
Yes, the final report would have benefited from no tax hikes, more entitlement reform and bigger spending cuts. But it was encouraging to see political appointees and politicians finally engage in the necessary work to save this country from the future we see in France, Great Britain and Greece. As these and other nations are showing, when the government runs out of other people's money, it can be a very bad thing.
This is particularly true if you are under 30 and have your entire economic life ahead of you. Given current levels of federal spending, and with 10,000 Americans expected to retire daily for the next 20 years, these costs are only going to worsen. Add the multitrillion-dollar cost of the new health care law, and balancing the budget and eliminating the debt will soon become academic.
Someone will have to bear the brunt of this fiscal free fall. Who will it be? Seniors have earned every dollar of their Social Security and Medicare, paying more than 15 percent of their lifetime incomes into these programs. We can't ask them to work much longer than they already have. And it's highly unlikely that Congress will cancel these programs any time soon just because they're insolvent.
Instead, it will be the Debt-Paying Generation — Americans between 5 and 30 — that will carry that burden. With education and health care costs skyrocketing and the older members of the DPG unable to find work to begin saving and invest in their futures, this burden will indeed be a great one.
Which brings us back to the debt commission. Its recommendations are the best effort since the 1990s to at least take a stab at real deficit and debt reform. Young Americans should thank the commission for being this courageous, especially in the face of our nation's current and impending fiscal crisis. Estimates of our national debt obligations range from a few tens of trillions to the estimate of $130 trillion by National Review's Kevin Williamson. Merely cutting nondefense discretionary spending, or dealing with earmarks, won't cut it.
Some members of Congress have tried to head off the coming disaster. Sen. Tom Coburn, R-Okla., has proposed eliminating the $100 billion annual waste he found in Medicare and Medicaid. Rep. Paul Ryan, R-Wis., and former CBO director and founder Alice Rivlin have found a way to save nearly $300 billion in Medicare costs over the next decade; CBO estimates their bipartisan plan will save hundreds of billions of dollars annually by 2050.
Meanwhile, House Financial Services Committee Chairman Barney Frank, D-Mass., and Texas Rep. Ron Paul have proposed cutting $100 billion annually from the Defense Department. And Rep. Jan Schakowsky, D-Ill., has found ways to cut more than $450 billion from the deficit by 2015, largely through defense cuts.
These may not be the best ideas, but at least these members are attempting something. With current levels of debt, the cost of the wars in Iraq and Afghanistan, and unfunded federal government liabilities, a person in his early 20s can count on paying at least $3,000 per year toward the federal debt for a lifetime.
This obligation to pay down federal debt comes at a tremendous personal cost for members of the Debt-Paying Generation. It means that paying off personal debts (such as higher-education, car or home loans) will take longer. It means less income and personal savings. Most important, it means a diminished quality of life, including later retirement, later marriages and fewer vacations.
In essence, the DPG will experience a lifelong recession caused by politicians and voters unwilling to make the politically difficult choices necessary to create a successful 21st-century America.
Fortunately, solutions abound. How about cutting down on the $125 billion the Office of Management and Budget says the government wasted last year through improper payments? Or eliminating tens of billions in annual subsidies to private businesses, especially farms and contractors? What about a bipartisan ban on the nearly $20 billion annually spent on earmarks?
Washington doesn't tax too little — it spends too much. And the sooner Americans realize this, the sooner we can undertake the shared sacrifice of entitlement reform. For the sake of the Debt-Paying Generation, let's hope this happens before it's too late.