Our national debt is worse than most of us realize, and without serious entitlement reform, it will crush today’s younger generation.
During the past decade, congressional Republicans and Democrats have periodically practiced the rhetorical art of fiscal discipline.
They have decried earmarks and special interests’ influence on federal funds. They have even tried to cut small percentages of the federal budget, as Republicans are now attempting.
Meanwhile, federal spending grew 62 percent faster than inflation between 2000-10, rising from $21,875 to $30,543 per household. This has resulted in a burgeoning national debt that imperils America’s future. Why? Because entitlement spending, not the spending Congress is currently debating, will drive the debt up at record rates.
Last year, the Government Accountability Office projected that 93 percent of federal revenue in 2020 will go to Social Security, Medicare, Medicaid and interest on debt. By 2040, our federal revenue will only suffice to cover interest payments and Social Security expenditures.
These numbers are startling by themselves, but the real wake-up call comes when we look at what the debt means for individuals. Using Treasury Department and Bureau of Labor Statistics figures, we calculated the national debt per American worker for the start of each presidential term since 1961. We estimate that the number of American workers has gone up by nearly 220 percent since 1961, while the national debt has gone up nearly 4,450 percent.
What does this mean for the average American family? It means that a dual-income married couple’s share of the national debt has gone from approximately $8,200 to $202,000 in current dollars over the past 50 years. Using President Barack Obama’s budget, we estimate debt will be more than $320,000 per couple by 2021.
By 2021, the federal debt will be more than 4½ times the size it was just 20 years earlier. Between 1961 and 1981, federal revenue climbed as a percentage of national debt from 33 to 60 percent, but it has dropped since then to 27 percent in 2005 and 17 percent in 2011. Even when we account for slow economic growth since 2007, revenue is still on a downhill slope as a percentage of national debt.
Without significant reform to entitlements, young workers can expect to pay a historically unprecedented percentage of their income toward the national debt, which will affect everything in their lives, including education, health care and the number of children they have.
Most importantly, today’s young people might not be able to retire, and their ability to hand down assets to their children will be significantly diminished. Several observers have called today’s young people the “Debt-Paying Generation.”
The lines need to be redrawn — and quickly. The House-passed discretionary spending cuts, which have been a subject of tense and prolonged debate in Washington, D.C., would hardly amount to line redrawing — they would account for less than 2 percent of this year’s expected deficit.
More promising, House Republicans have pledged to include entitlement reforms in their spring budget, and some Democrats have indicated a willingness to move in the same direction.
However, if public resistance is too great, it won’t take party leaders long to kick the can down the road on entitlements yet again. Building political will among everyday Americans is thus the greatest imperative of would-be entitlement reformers.
Without that will, can-kicking equates to older Americans saddling younger Americans with fiscal obligations the latter cannot possibly meet.
Ryan Streeter is the editor of ConservativeHome.com and director of fiscal studies at the Sagamore Institute. Dustin Siggins is co-authoring a book on the “Debt-Paying Generation” with William Beach of The Heritage Foundation.