Can Millennials help re-ignite a conversation about the national debt?

As the class of 2015 is set to graduate with the most student debt in U.S. history, many Millennials are entering the workforce with a high degree of anxiety about their financial future. And while the student debt debacle is certainly something that needs to be addressed, its prominence in the national conversation is displacing another form of debt that is also crippling Millennials; a type of debt that will strike just as many are entering the prime of their working career, raising families, and hopefully getting close to paying off their massive student debts. This debt is the National Debt and the underinvestment it has created. Thanks to temporary decreases in the deficit brought on by an improving economy, the problems the debt will cause have flown under the radar, but trouble is still brewing beneath the surface. Neither party is blameless. Democrats have failed to address growing entitlements, and Republicans, for all their talk, have only made things worse since gaining a majority in both chambers of Congress.

In an effort to engage Millennials in open dialogue on this issue, today The Can Kicks Back released a new report called, Restoring Balance: Millennial Perspectives on America’s Spending and Investment Challenges. The report examines ways to “restore balance” between deficit spending and long-term investment and features six policy recommendations from Millennials on issues ranging from Social Security reform to infrastructure investment.

{mosads}The theme of Restoring Balance underscores the need to shift economic investment toward the future. According to the Congressional Budget Office’s (CBO) Budget and Economic Outlook 2015 to 2025, the U.S. federal deficit will return to $1 trillion annually over the next decade and economic growth will lag unless current laws governing taxes and spending are amended. The acceleration in the deficit will be driven primarily by costs associated with health care, social security, and interest on the debt, while investments in areas determinative of future well-being, such as education, national security, and infrastructure, are on path to reach their lowest levels in history. This unproductive use of federal funds will “crowd out” investments necessary for sustainable long-term growth. What’s worse, the fiscal situation beyond the coming decade is even more unsettling. With outlays continuing to outgrow federal revenue, the CBO projects debt held by the public to exceed 100 percent of GDP by 2039—levels not seen since just after World War II.  

Deficits crowd out domestic investment in the long run by reducing national savings (the aggregate amount of savings from households, business, and government)—thus diminishing funds available for investment in productive capital. Over time, less domestic investment leads to a decrease in output and a lower standard of living for future generations. For every dollar increase in the federal deficit, the CBO estimates a reduction in domestic investment ranging from 15 cents to 50 cents with a central estimate of 33 cents (the wide range reflects the high degree of uncertainty about the magnitude of the offsets). Thus, as the deficit continues to increase, GDP will decrease and with it our economy’s ability to keep up with the growing burden of debt. 

There is of course no doubt that some level of debt is necessary to make investments we would otherwise not be able to make out of current resources—this is the concept of leverage. Millennials, however, should be concerned that the debt currently on our balance sheet does little to leverage long-term growth. As federal infrastructure deteriorates, the skills gap widens, and many of us experience diminished savings due to burdensome student loans, Millennials are increasingly growing concerned over their ability to simply maintain the living standards of previous generations. 

As the largest and most educated generation in American history, Millennials have no reason to continue to remain apathetic on fiscal policy. To make a positive impact, they can focus on fostering greater understanding between generations. The Can Kicks Back uses the term “Generationship” to express the need for cooperation and compromise between the young and the old to revive our economy, reduce the deficit and restore generational balance to the federal budget. Millennials who have an interest in restoring generational balance to the federal budget can begin the process by having a conversation about Generationship with folks outside of their generation about the tradeoffs each of us need to make to ensure opportunity for all generations. Together, through a renewed sense of unity, perhaps we can help restore the spirit of the American Dream for future generations.

Hicks is a director at The Can Kicks Back and lead on the Restoring Balance Report. Schoenike is the executive director of The Can Kicks Back, whose mission is to educate, organize and mobilize young Americans in order to promote a sustainable, generationally balanced federal budget.