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The alarm bells might not be sounding yet, and that’s concerning in and of itself. Today, our national debt is over $35 trillion. If that isn’t enough to make you pause, consider a CNBC report published this March that notes that the U.S. national debt is rising by $1 trillion every 100 days.
Historically, public debt was used for emergencies. This makes sense, as it’s far easier to finance by borrowing than to burden current generations through exorbitant tax hikes. In many ways, our national debt is a contingency plan in times of crisis (like World War II) to help regulate what would otherwise be significant economic shocks.
However, the problem is that we keep borrowing at unsustainable rates day after day, as noted by Peter G. Peterson Foundation CEO Michael Peterson. We’re no longer borrowing solely for emergencies or long-term investments. Rather, our government borrows for immediate consumption.
To act like these borrowing habits will have no long-term effect on our nation’s fiscal future is naive at best. Research presented at the Kansas City Federal Reserve’s annual conference confirms this, with U.S. Treasuries now labeled as riskier investments.
U.S. Treasuries were once labeled the world’s "safe haven" securities. Investors are now putting US debt on par with any other Westernized First World country or big corporation. Last August, Fitch Ratings downgraded the United States of America's Long-Term Foreign-Currency Issuer Default Rating (IDR) to 'AA+' from 'AAA'. In doing this, Fitch cited “the expected fiscal deterioration over the next three years” and “a high and growing general government debt burden.”
This generation of elected officials continuing to run massive deficits without any serious thought to the future is both irresponsible and negligent. Once again, millennials (ages 28-43) will be left with a raw deal. But this irresponsibility will also affect Gen Z (ages 12-27) and the generations to come.
Especially when it comes to Social Security.
This election cycle, Donald Trump, Joe Biden, AND Kamala Harris have all lobbed attacks at their political opponents claiming they want to slash Social Security. In 2012, the progressive Agenda Project Action Fund ran a campaign video where Vice President Nominee Paul Ryan literally threw a grandma off of a cliff.
This is why entitlement programs are labeled the “third rail” of American politics. If you even graze against the issue, you’re practically guaranteed electoral pain and suffering. Donald Trump learned this the hard way in March when he said, “There is a lot you can do in terms of entitlements, in terms of cutting and also the theft and the bad management of entitlements.”
He almost immediately walked these comments back after they were met with outrage by older voters.
When discussing our nation’s ballooning debt, it’s important to understand government spending. Federal spending can be broken down into two categories: mandatory and discretionary. According to the Congressional Budget Office, discretionary spending stems from authority provided in annual appropriation acts. Mandatory spending is authorized by laws other than appropriation acts.
Discretionary spending includes things like our defense budget, foreign aid, government salaries, etc. Mandatory spending includes entitlement programs like Social Security and Medicare.
For all of the talk people on Fox News have about federal money going to illegal immigrants or Ukraine aid running us bankrupt, 60.5 percent of the federal budget consists of mandatory spending. This means that all of the political theater we see from Republicans in Congress about cutting foreign aid to help tackle our debt crisis is misguided.
Case in point:
As it currently stands, Social Security is scheduled to become insolvent in 2033, decades before most millennials will be eligible to receive their benefits. This is why entitlement reform is no longer the “third rail” of American politics for younger voters. But younger voters don’t just want reform, they want wholesale modernization of the program and its purpose.
According to a recent Newsweek article published in December, 63% of Americans believe that Social Security needs to be reformed. This support becomes even more pronounced when you look at millennial respondents. 76% of millennials strongly agree that Social Security should be reformed.
Republican or Democrat, it doesn’t matter. Our generation wants an elected official willing to have the raw audacity to look at the inconvenient numbers and do the hard work to propose viable policy solutions to this debt issue before a sovereign debt crisis comes home to roost. This will take bipartisan support, and change will not come easy. But in this instance, inaction simply isn’t an option.
Millennials have constantly gotten raw deals. Rather than being robbed of their retirement because of Congress’s inaction, this generation wants more choices in allocating their retirement savings. What’s more, they want solutions that are personalized to their individual circumstances and financial considerations.
The clock is ticking and changes need to be made. Entitlements were once considered “third rail” but there isn’t time for this anymore. Politicians and everyday people alike know that this program is archaic. Now is the time to begin to have discussions about what the future of these programs entails, and what the role of the state should be with things like personal retirement savings.
How is it that we can’t even begin to have a discussion about these issues in today’s political climate?
Entitlement programs aren’t the “third rail” of politics for millennials. But partisanship is.
