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Do you remember group projects as a kid in school? Remember how difficult it was to get the work done? A successful group project almost always required one self-motivated kid to take on the work and selflessly do all of it.
This is because human beings, even little ones, respond to incentives. We want credit for the work we do. It feels unfair for others to be rewarded for our efforts, almost as much as it feels great to receive credit for work we didn’t do.
Group behavior is tricky. The incentives must be appropriately aligned for a group to achieve a goal. Now imagine the morass of competing interests and timelines that plague the United States Congress. It’s a wonder that anything gets accomplished at all. And these days, there is less and less wonder indeed.
This year, America is flirting with a $2 trillion deficit. Interest payments on our ballooning $35 trillion national debt surpassed $1 trillion for the first time. Almost no one disputes this is a problem, and most consider it a crisis, including JP Morgan Chase CEO Jamie Dimon, who called it “the most predictable crisis we’ve ever had.”
It’s like we’ve been on a canoe heading towards a waterfall for decades. Everyone can see the waterfall coming, but no one has the incentive to paddle to shore.
The incentives faced by Members of Congress are in opposition to tackling the debt crisis. As Richard Rubin wrote in the Wall Street Journal, “[P]oliticians know that the reward for fiscal discipline can just be giving their successors more room to run up deficits.” Members enjoy the perks of running up America’s credit card and passing the bill on. Future Members have every incentive to pass the bill forward themselves. Eventually, you end up where we are, staring down the real threat of insolvency.
It’s like receiving an “A” for a group project on which a class decades from now will work tirelessly.
In addition to spending money and kicking the can down the road, Members get publicity talking about the problem while doing nothing about it. It’s double-dipping. Members can run on fixing the debt, win an election to do just that, and then do nothing but make it worse. It’s difficult to blame them when you think through their incentives.
Perhaps more conspicuous is that both Republican presidential candidate Donald Trump and Democratic presidential candidate Kamala Harris have failed to mention the looming financial crisis. Not even to their advantage. Not even to score political points— even at their one, and likely only, debate. Why is that?
Both candidates are partly responsible for the problem, and both promise to worsen it. In other words, you can’t run on tackling the debt problem while promising tax cuts and a litany of spending increases.
But tax cuts and marginal spending increases are the least of our concerns. Social Security, Medicare, and interest payments on the national debt are the actual drivers of our debt spiral. Yet, few Members, and certainly not Trump or Harris, are willing even to discuss doing anything about it. Trump has not only doubled down on protecting Social Security as is but also suggested eliminating taxes on Social Security benefits.
Eliminating taxes on Social Security benefits would gravely impact the sustainability of Social Security and Medicare. If Trump gets his way, the Committee for a Responsible Federal Budget projects Social Security will be insolvent in 2032—one year sooner than currently projected—and Medicare will be insolvent by 2030—six years sooner than projected.
The waterfall is fast approaching, and the incentives are such that we paddle towards it.
Millennial and Gen Z voters are young enough to remember the politics of group projects. We recognize that it ultimately comes down to that one kid prioritizing getting a good grade over their short-term self-interest to get things done. It requires someone with the fortitude to ignore the prevailing incentives and do something bold, even if future Members of Congress benefit from it.
Independent Center research indicates that 65 percent of 18—to 49-year-olds want to “reform” or “modernize” Social Security and Medicare. We understand that if we don’t do anything, we won’t get anything. We must reassure Members willing to forgo the current incentive structure and fix entitlements that we will recognize them and have their backs.
Or, real reform may require a Millennial or Gen Z Member of Congress to lead the charge. Only then will the incentives be properly aligned.
