My generation will be financially crushed by the national debt because our elders refused to pay for their government benefits.
When I was six years old, the newly elected speaker of the House, John Boehner, gave a speech decrying the unsustainable trajectory of the national debt. “Yes, this debt is a mortal threat to our country,” he said. “It is also a moral threat.” How so?
It is immoral to bind our children to as leeching and destructive a force as debt. It is immoral to rob our children’s future and make them beholden to China.
No society is worthy that treats its children so shabbily.
“A good man leaves an inheritance for his children’s children,” Proverbs reminds us. For too long, Washington has been ignoring this time-honored principle.
Speaker Boehner was far from the only Republican of that period to say that the national debt was not only imprudent but immoral. Passing down a massive financial burden for future generations to pay, though they had no hand in making it. Forcing your children and grandchildren to pay for your retirement and health care, because you didn’t want to. That was immoral, wasn’t it?
When Boehner gave that speech in 2011, the national debt stood at just over $14 trillion, or 93 percent of America’s economy. Now, it’s over $36 trillion, or just under 121 percent of gross domestic product. So the problem — that “moral threat” we were so concerned about — has gotten a lot bigger. Yet we don’t hear those same messages about immorality from politicians these days.
What else has changed? Well, I am no longer six years old. I am 21, about to graduate college in a year and hopefully begin my career. When I begin working full-time, I will pay relatively low taxes on what I earn and spend, as compared with other rich countries, as Dominic Pino celebrates. Wonderful! But I won’t get to enjoy those low taxes for too long. The national debt, by way of arithmetic, ensures that I will soon pay much more to cover the federal benefits of earlier generations.
There is a relentless fiscal cycle at work in America. Higher debt produces higher interest costs, which we don’t want to pay for with higher taxes, so we simply borrow around a trillion dollars every year to pay interest on the trillions we have already borrowed. But that cycle, as budget expert Jessica Riedl of the Manhattan Institute notes, cannot last forever. U.S. financial markets simply cannot supply the $150 trillion in lending implicitly expected of them over the coming decades. Penn Wharton’s premier budget model estimates that, under the “best case” scenario, markets sustain no more than 20 years of projected deficits before defaulting on the debt is inevitable. Forward-looking markets will bring that day of reckoning even closer.
When the crisis arrives, Riedl says that “financing the projected budget deficits might require payroll tax increases as high as 10 percent combined with a value-added tax exceeding 10 percent.” Those would be “European-sized taxes — without the accompanying social benefits enjoyed by working European families.” They would need to remain indefinitely to prevent a catastrophic default. The only other option would be debt monetization — printing money to pay for it — which would produce significant inflation of the sort Americans suffered after the pandemic. That, too, would be indefinite.
What will these taxes cost me, personally? Let’s assume I earn the typical income for a college graduate, $80,000, across my career. An additional 10 percent payroll tax would subtract $8,000 from my annual paycheck. A 10 percent value-added tax on consumption — calculated roughly as a share of post-tax income in, say, my home state of Iowa — would cost me another $5,350.
Add that up, and the total cost in taxes that I will pay to prevent default on the national debt comes out to $13,350 — every year, for the rest of my life. That is the cost of paying, in effect, for two entitlement states simultaneously: one for the next generation of retirees, and one for today’s retirees who have heaped the bill onto their grandchildren.
I did not have any say in our racking up tens of trillions of dollars in national debt. I did not get to vote on stimulus packages during the 2008 and 2020 recessions, or tax cuts under Presidents Bush and Trump, or the Iraq War, or expanding prescription drug coverage for seniors. I haven’t yet received a single cent in Social Security or Medicare. But I’ll be paying for all of it.
When Republicans of yore spoke about the sin of passing on the national debt to future generations, it seemed like an abstraction. Those generations were tomorrow’s problem to worry about.
Well, now we’re here. And the bill is coming due.
In civilized societies such as ours, we allow children to inherit the left-over assets of their parents, but we would never permit parents to pass on their personal debts to those who did not incur them. Now that would be immoral, wouldn’t it?