InsideSources – Posted to Finance February 18, 2020 by Gordon Gray
Lazy clichés abound regarding the character of younger Americans. Google “millennial” or “Gen Z,” and the results suggest these generations of Americans are singlehandedly “ruining” cherished traditions with avocado toast in one hand and an iPhone in the other. Surely the last thing on these Americans’ minds is something as serious as the national debt, so distracted they must be with TikTok and other vapidities.
Policymakers indulge this kind of thinking at their own political peril. Millennials and Gen-Z’ers are rational political actors, and recognizing that fact is an important first step in engaging this next generation of lawmakers and voters.
Rather than starting with a flawed assumption that younger Americans are ignorant to the federal debt’s threat, policymakers and observers need to grapple with the challenge that younger Americans are informed and engaged — they just prioritize other issues over the national debt. The reality of the younger generations’ political engagement offers both cause for optimism and concern for the country’s ability to solve the problem of its rising national debt.
The Brookings Institution recently convened an event featuring experts and policymakers examining how and why millennials think differently about climate change and the national debt. Among the more striking findings in the research presented by the Pew Foundation was the similarity across age groups in recognizing that the debt will likely grow over the next 30 years. Over 50 percent of millennials agreed that the deficit is a “very big problem today.”
While the share of older generations holding this view is higher, the millennial share is nevertheless quite robust. This suggests that despite the lazy cliché, this group is no less informed and aware of the nation’s debt challenge than other age cohorts.
That this group of voters is relatively informed and engaged is cause for optimism. Concern for the national debt need not be the leading national priority to still have political salience. The cause for pessimism, however, is that millennials will be just as apathetic to the political challenge of taming the rising debt as their predecessors.
The biggest challenge in getting anyone, including millennials, to care about the national debt is that it is largely an abstraction. Debt in and of itself isn’t harmful. Anyone who’s ever bought anything on credit necessarily understands that debt is only one side of a transaction. You get something for it — be it a meal, a house or a college education. Indeed, in the modern economy, some debt is good — it means people are good credit risks.
The danger, of course, is when debt gets “too high” — yet the “too high” part is where some of the trouble is. No credible budget analyst can tell you when the United States will run out of credit. Debt levels are at their highest levels since World War II, but U.S. Treasuries are viewed as riskless — they are essentially as good as cash.
That’s the first challenge — no one can tell you when the level of debt will actually matter.
Setting aside the science, this used to be the same challenge for climate change advocates. But storms and conspicuously aberrant weather and other natural phenomena have certainly raised the profile of climate change as a real and present danger. Meanwhile interest rates are at historic lows while the leading lights of the major political parties have largely flouted the norms of fiscal responsibility.
The trouble with this outlook is that once the debt becomes a conspicuous problem, it may be too late. Fiscal crises tend to occur quickly, with rapid and precipitous declines in credit markets’ confidence in the ability of governments to repay their bonds.
That a debt crisis is a future risk necessarily shifts that risk to younger Americans. That so much of our debt challenge is a function of legacy programs — Social Security and Medicare alone will comprise 42 cents out of every federal dollar spent in 2029 — while other domestic priorities are being squeezed suggests that younger Americans may be more amenable to tackling the intractable political task of reforming these programs.
By the same token, younger voters do appear to have more faith in government to tackle problems. The upshot is that this group is likely not going to usher in a new era of lean, libertarian governance.
Rather, there is some reason to have optimism that this group, with its distinct interests, could become a catalyst for substantive reform on this issue and defy the moribund political interests that have stymied debt reduction to date.
About the Author
Gordon Gray is director of fiscal policy at the American Action Forum. A longer version of this essay originally appeared in “The Catalyst: A Journal of Ideas from the Bush Institute.” It is being distributed by InsideSources.com.