Runaway entitlement spending is devouring the future.
In 2001, David Brooks penned an Atlantic cover story titled “The Organization Kid.” He observed that, unlike previous generations, those in college between the end of the Cold War and 9/11 “felt no compelling need to rebel.” Not only did they submit to authority, they seemed to “admire it,” he wrote. They wanted to join the system, not tear it down.
Two protracted wars, a deep recession, and a Trump victory later, that admiration has been tempered and then some. Several polls have shown that a majority of Millennials, those born from the mid 80s to the late 90s, rejects capitalism. Socialism, a YouGov survey found, is viewed more favorably among the young. More troubling, only 56 percent of Millennials, our generation, say they “love America,” compared to over 80 percent of the Silent Generation, born between 1920 and 1940.
Many left-wing commentators think that this iconoclasm will enable Millennials to break free of society’s oppressive structures. Pointing to distrust of Wall Street and Big Business, Jacobin’s Corey Robin, a prominent left-of-center writer and professor, claimed that “Millennials are the American Earthquake.” He might also have mentioned young people’s passionate embrace of Bernie Sanders, who promised a “revolution.” The “will of this new generation is not like that of its recent predecessors,” Robin concluded.
He may be right, but Millennials are wrong. In fact, Millennials are ignoring the biggest inequity of all: the looming, unsustainable debt load that their elders are accumulating.
Government today is — to borrow a phrase from French economist Thomas Piketty — “devouring the future.” In amassing unconscionable amounts of debt, Baby Boomers are financing their own largesse with their children’s and grandchildren’s money.
The nation’s fiscal gap, i.e., the difference between its future liabilities (spending commitments, debt obligations, and more) and its future revenues, is between $150 trillion and $250 trillion, depending on who measures it. That’s at least twice the GDP of the entire world, and that figure doesn’t even include the trillions of dollars in unfunded liabilities racked up by state and municipal governments or the future costs of environmental degradation.
With a gap that large, there is no way that Millennials will receive the same government services and benefits in retirement that Boomers receive now. The Congressional Budget Office projects that by 2033, Social Security, health-care spending, and interest payments on the national debt will consume every dollar of federal revenue. Spending increases, broadly popular among the young, will leave even less for Millennials when they need support. To expect otherwise is to deliberately bury one’s head in the sand.
But that’s what the Trump administration and everyone else is doing. With Mick Mulvaney, the director of the Office of Management and Budget who is rapidly shedding his reputation as a deficit hawk, now on board, the Trump administration is almost unanimously in favor of raising the debt ceiling, yet again, without spending cuts.
When austerity is no longer a choice but an imperative, Millennials will know that they have been cheated. Young people can look forward to higher taxes to meet the ever-increasing burden of entitlements — even though the Millennials paying those taxes will not receive anything close to what they have paid in. Consumption will become more expensive and will have to be reined in. Growth will be sluggish and job opportunities sparse.
Even effective government programs would have to be scaled back. Little would be allocated to educating our workforce in an increasingly competitive world; to helping middle-class citizens through programs such as the Earned Income Tax Credit; or to programs such as Food Stamps and disaster insurance, which aid those in need.
When austerity is no longer a choice but an imperative, Millennials will know that they have been cheated.
Such a society will undoubtedly be less dynamic, less prosperous, and less generous. But when the money runs out, what choice will we have?
Opportunistic politicians say that we can keep spending more and more while taxing less and less. “But the bills keep coming in,” says Larry Kotlikoff, professor of economics at Boston University and an expert on the fiscal gap. He explains that our choices are limited: We can either print our way to hyperinflation, borrow until the interest on the debt swamps the budget, tax our way to severe stagnation, or finally undertake “painful but intelligent entitlement reform,” the sooner the better.
As Kevin Williamson puts it, “The question is not ‘How do we go about paying these benefits?’ but ‘How do we go about not paying these benefits?’”
The novelist Christopher Buckley once envisioned the conflict coming to a head with young people rioting outside of gated retirement communities over Social Security tax hikes. This is far-fetched, but mostly because it presents an alternate reality in which Millennials actually understood where their interests lay.
Young people seem to understand that “the system” is flawed, but they direct their ire at bogeymen and make the underlying problem worse. When Millennials protest rising in-state college tuition, for example, their focus is on plutocrats and fat-cat financiers, not on the defined-benefit pension plans for public employees that are eating away at state budgets. In reality, it is these unfunded retirement plans that are restricting access to public universities — engines of upward mobility and the American dream — and worsening inequality.
Yet young people continue to elect politicians who add to the “$4 trillion in debt owed to public employees,” says Josh Rauh, a senior fellow at the Hoover Institution. The irony, he adds, is that it is these Millennial voters “who stand to lose the most” from unfunded pension obligations.
Older Americans take a more strategic view of politics. They organize in groups such as the American Association of Retired Persons (AARP) to preserve and expand their slice of the pie. More importantly, they vote. Consequently, over half of benefits already go to the 13 percent of the population over 65 years old. The gaps between under-35s and over-65s in income, wealth, and home ownership have all expanded, recently reaching decades-long highs.
This is not just unequal, but unjust. It is not right to spend so extravagantly during a period of relative prosperity and peace, only to burden the next generation with the bill. There is a reason why many Americans work extremely hard in order to pass on some wealth to their descendants: They feel an obligation to leave their children and grandchildren better off than they were. They understand that society is a partnership and do not want to default on their generation’s obligations. Yet by working to perpetuate an unequal system in the political domain — by kicking the entitlement can down the road — they are doing just that. They are devouring the future.
Niall Ferguson once quipped that if “young Americans knew what was good for them, they’d all be in the Tea Party.” We’re not holding our breath. But our generation has already proven its ability to mobilize. If only Millennials would look up, we would notice the Sword of Damocles hanging above our heads. Then we could correct one of our society’s biggest injustices and defend our own interests.
— Elliot Kaufman is an editorial intern at National Review and Kiran Sridhar is a student at Stanford University.