Next month, a desultory Congress will begin its negotiations regarding the 80th debt ceiling raise since 1940, and millennials should be giving it more than passing attention.
With the national debt at 73% of GDP, the unsustainable government spending must be reigned in before it further harms prospects of future economic growth. Weighing in at a total of $16.9 trillion dollars (or $148,000 per taxpaying citizen), these numbers are only going up, leading to an October debt ceiling debate that will soon begin in Congress, vaguely reminiscent of the debt ceiling debates of 2011.
However, this conversation will be slightly different considering changing public opinion: a recent NBC News/Wall Street Journal poll found that 44% of respondents think Congress should not raise the debt ceiling and only 22% believing it should (compare with July 2011 numbers, 31% felt Congress should not raise the debt ceiling and 38% believed it should). Other polls show higher numbers, even as high as 70% of Americans against raising the debt ceiling.
Unlike two years ago, Congress should have a robust debate about the merits of raising the debt ceiling. While the president dismissed this procedure earlier today, arguing, it “has been done over a hundred times,” the debt, in terms of dollars, has never been this high and with an underperforming gross domestic product, is projected to near 100% of GDP in under 25 years. Due to this imminent trajectory, Congress should not raise the debt ceiling for two reasons (in addition to public opinion).
First, our government needs to talk about spending. The federal government spends over $3.7 trillion and the spending is growing at a disproportionate rate to most other economic measures, whether it is GDP, real wages, or purchasing power. While the government has talked about cuts before, the proposals have been embarrassing in terms of their scope and perspective.
Second, our government needs to talk about entitlement reform. The millennial-driven group The Can Kicks Back recently released a report titled “Swindled,” and in it explains a number of important statistics. First, in 2035, it is estimated that net interest and mandatory programs will amount to 78% of government spending. This number has only been growing since the birth of Medicare, Medicaid, and Social Security and these programs are increasingly becoming more insolvent based on changing demographics, spending, and failed funding mechanisms in each program. Second, “Swindled” shows that those 35 and above will continue to receive more in entitlements than they put into the system. However, millennials aged 20-30 will be paying up to $25,800 more into the system than they will take out. Additionally, in less than 35 years, entitlement spending alone (Social Security, Medicaid, health care exchange subsidies, and Medicare) will match historical revenue, meaning that all discretionary spending will have to be paid for with borrowed money.
The debt ceiling should not be raised because the situation will force Congress to discuss the insolvency of status quo systems of mandatory spending. It will force Congress to take long-term concerns seriously. And it will force an often myopic institution to prevent next generation’s obligations.
While this isn’t as sexy a topic as gay marriage or environmentalism, young people must get invested in debt ceiling conversations to lessen our future burdens.