You’d have to believe in Weimar economics to deny that America has a national debt problem. The total debt stands at over $34 trillion, and if you watch the clock at the Peter G. Peterson Foundation website, the amount owed is increasing by the second.
According to the foundation, each person in America would have to pay about $102,000 to pay that off. And the rate of increase is almost logarithmic. In 2006 it was about 35 percent of GDP. It now stands at 99 percent. Projections are even more worrisome. By 2054, it could be 171 percent of GDP.
The reasons are many, and the rise in debt seems apolitical. Both Democrats and Republicans love to spend more than the revenues they collect. So much is also “baked in.” Some 65 percent is non-discretionary — that is to say, pre-programmed benefit payments of entitlements such as Social Security and Medicare, which cannot be altered in the appropriations process without major legislative changes that are highly unlikely.
Alarmingly, paying off the interest on all these loans now consumes more than 5 percent of the budget — a bad situation familiar to anyone who has overspent on their credit cards. That leaves just 30 percent that Congress can even touch.
Economists argue that this debt is even more crushing to the economy than it sounds because it crowds out more growth-oriented investments, increases inflation (from all the money printing) and robs the next generation of wealth, as it has to assume debts for programs it neither voted for nor benefited from.
Of course, there are counterarguments. Many economists believe that America can grow itself out of these debts; that we hold the world’s reserve currency and are its most secure creditor, and therefore enjoy “an exorbitant privilege,” such that this slow-burning American crisis doesn’t at all feel like some Argentine or Zimbabwean experience.
But while Uncle Sam may be broke, there is one group that is flush with cash and assets: the “Baby Boomers,” those born between 1946 and 1964.
Financial analysts differ on the exact amounts the Boomers hold and what they can pass on to their heirs. But a realistic number is $84 trillion, of which some $72 trillion may be “passed down.” Another study of the generational groups puts Boomers’ assets at $77 trillion. The older Silent Generation has $18 trillion, Generation X owns $42 trillion and Millennials possess a paltry $8 trillion.
And so the post-World War II economy and its hyper-productive decades, plus accompanying rising stock and home prices, have left one generation extraordinarily rich — so rich that the Boomers have more net worth than the three subsequent generations combined.
To avoid shackling the post-Boomer generations with the onerous task of paying off the national debt, the Boomers’ wealth needs to be on the table.
In his book, “A Generation of Sociopaths: How the Baby Boomers Betrayed America,” Bruce Gibney argued that “generational plunder” was their economic legacy. Through tax cuts and deficit financing of several wars, the Boomers left America in shock. “Plunder” is a strong word. In the corporate legal world, it is enough to justify a clawback of the plunderers’ assets.
That the rich and powerful owe something to the government that gave them the ability to amass so much wealth is not unheard of. The group Patriotic Millionaires and its most visible member, Abigail Disney, argue that they themselves should pay more in taxes. They claim that American tax codes are riddled with loopholes that often make the rich pay lower average rates than working people — something Warren Buffet has spoken about for years and which was recently brought up in President Biden’s State of the Union speech.
This will never happen, but basic math says that if roughly half of all the Boomers’ assets were redirected toward eliminating the debt, it would vanish. The same math shows that a mere 10 percent clawback of this wealth, borrowed mostly by their generation to finance government over the years, would reduce it by 35 percent.
Another interesting observation regarding the ongoing crisis is that, as the debt grows, so do the Boomers’ assets. Stocks, bonds and real estate are assumed to increase as fast or faster than debt.
Of course, both the amount of the debt and the interest to be paid on it are policy questions whose future cannot be known. The same is true for the appreciation of the Boomer wealth to be applied.
Here, flexibility may be the best course. Assessments of Boomers’ wealth could be applied in the form of percentages of the national debt, so that it is paid down regardless of the two unknowns.
In summary, the generation that for decades seized and pocketed the fruits of productivity from the post-war economy and put it in their pockets could, should and perhaps must experience a clawback if the ruinous debt is ever to be addressed. The cleanest method would be through an increase in the estate tax and a reduction in its exemption. This would claw back a portion of the $84 trillion in assets that the Boomers racked up as the nation’s debt rose.
It only seems fair.
Jonathan Russo is a Baby Boomer who writes about politics, economics, foreign and domestic policy, and cultural issues.