James Truslow Adams defined the American Dream in his book “Epic of America” as “that dream of a land in which life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement.”
As college students, we are utilizing the main ladder of social mobility in today’s society. Additionally, we are told a narrative: work hard, go to college, and get a lucrative job in a fast-growing industry, and the American Dream will be yours. Yet with today’s looming and expanding national debt, this linear path to success seems all the more unlikely to materialize. As we millennials would say, “phat chance.”
So what? The last time the United States was debt free was in 1835, and the United States is still a global superpower. Additionally, our current economy is doing fine; our GDP per capita is rising, GDP growth is at around 3 percent, and the current unemployment rate is at a 17-year low. However, to quote French economist Thomas Piketty, “the past tends to devour the future.” And with our government’s current spending habits, the United States’ fiscal future is comparable to a ticking time bomb.
How bad is the situation now? The president signed a bill on Sept. 8 to raise the debt ceiling, a limit set by Congress on how much it can borrow in a given time, until Dec. 8 without spending cuts. Since then, the nation’s debt exceeded $20 trillion for the first time in our history. Furthermore, depending on who measures it, the United States fiscal gap (the extent to which the federal government’s liabilities exceed its revenues) ranges from $150 to $250 trillion. By 2047, the Congressional Budget Office estimates the average four-person family will have a reduced real income by $16,000, which represents a 4.4 percent loss in income as compared to stabilizing the debt. This, coupled with the crippling amounts of student debt many millennials face, contribute to increased personal economic uncertainty.
All of this has three major consequences: foreign leaders will continue to own portions of the United States national debt, and the United States must constantly repay its debts; millennials (and likely Generation Xers, too), will not receive the same entitlement benefits as baby boomers; and we are electing people into office who do not accurately reflect our nation’s — moreover, our generation’s — needs.
First, as the federal government continues to borrow money, interest payments on the federal debt will continue to increase. In 2016, these payments constituted 1.4 percent of the United States per annum economic output according to the CBO, and in 10 years they are projected to constitute 3 percent of the nation’s economic output. It’s not like these interest payments are exclusively going back to Americans, as foreign entities own about one-fifth of the current United States national debt. These interest payments are taking money away from other things, like education reform or government programs that actually help those in need, and flow into the pockets of foreign investors. And to pay investors, the United States could borrow even more money or increase inflation, both of which add to an already huge problem.
Second, we millennials, and likely Gen Xers, will not receive the entitlements baby boomers receive. The CBO reported that by 2033, all federal revenue will be put toward mandatory spending on Social Security, health care, and interest payments on the national debt. To meet the burden of paying for current entitlement programs, millennials can look forward to hugely increased tax rates, meaning we would sustain a program that would likely not pay back what we pay in. Overall, this reduced fiscal flexibility due to such large entitlement spending would reduce the government’s effectiveness in response to things like natural disasters, wars, and recessions.
Third and finally, it is clear that we need to elect politicians — regardless of political party affiliation — that favor diligent, thorough reform of the tax code, entitlement programs, and Congress’ spending habits to reduce the national debt. For instance, we should prioritize lowering entitlement spending, particularly with regards to health care and the rising costs of Medicare and Medicaid, and raising the retirement age for Social Security. The “free stuff, more spending, higher taxes” mentality so popular among millennials is evidently not sustainable. When we vote, we must be cognizant that the officials we elect will promote policies that benefit ourselves in the long term.
This should be neither a partisan nor philosophical issue. The question centers less on the role of government and more on how to sustain economic prosperity and reduce the national debt so the current situation does not become an inter-generational issue. We need to save our middle-aged selves from paying for the mistakes of today.
JACQUELYN SUSSMAN is a College freshman from Westport, Conn. Her email address is firstname.lastname@example.org. "The Objectivist" usually appears every other Wednesday.
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