Who Wants to be a Trillionaire... of debt?

by Kristen Cambell on Monday, December 29, 2008 - 5:21pm

I don’t know about you, but if I hear the word “economy” one more time, I may scream. As is true of many Millennials, I have no mortgage or investments of which to speak, and the details of the current crisis make my head spin and my stomach hurt. But whether I understand it or not, the reality is, in the long run, this crisis may affect me (as a young person) more than most. So I asked Millennial Michael Davidson to guest blog and talk about what this issue means for our generation, and how we can all be a part of fixing it to ensure economic stability for all our futures.

Michael P. Davidson is CEO of Gen Next, an organization that shapes and drives public and action toward overcoming challenges and solving problems for the next generation in the areas of economic growth, education, and international security. Michael was also an expert panelist for the Youth Entitlement Summit, a coalition of young leaders who develop findings and principles on how to eliminate the projected shortfalls in Social Security, Medicare and Medicaid in ways that are fair to all generations. Who Wants to Be a Trillionaire... of debt?

By Michael P. Davidson

A trillion is a number so large that comprehension requires creative conceptualizations and seemingly cosmic exaggerations in order to put the number into perspective. A trillion seconds is 186,276 years. The sun is, like, uh, a trillion degrees. We have, like, uh, $56 trillion dollars in debt. Oh, wait, that’s true. A trillion is 10¹²—a lot. There are nearly six trillion miles in a light-year, and there are nearly five trillion dollars of national debt. My generation ultimately is, whether we like it or not, the holder of that debt.

In 2008, I was fortunate to be a panelist at the Youth Entitlement Summit, where panelists heard testimony from a diverse set of high profile experts on budget, entitlement (health care and social security), and tax policies. All pretty esoteric stuff that actually affects every person in the most real ways. Former U.S. Comptroller General David Walker, former Director of the Congressional Budget Office Alice Rivlin, and others impressed on us and the public via C-Span the weight of what is commonly known as the entitlement crisis, but it should really be known as a generational crisis.

Reporting on the mess in which we find ourselves, Dallas Federal Reserve President David Fisher says that in order for us to achieve fiscal solvency we would have to cut all discretionary spending (think: education, security, infrastructure, etc.) by 97 percent permanently. Or to look at it another way, every high school student will have to see a tax increase every year of their life.

Obviously the issue is more than “fiscal insolvency,” something you find on a balance sheet; the issue is directly tied to prosperity and quality of life. On this course health care becomes more expensive and poor quality for all. Most people would lose needed government service. The tax burden on the next generation would make the Soviet Union blush. Government is granted an excuse to expand ever further. As President-elect Obama calls for a transformative infrastructure and stimulus plan—the boldness of which I applaud—this generational crisis will be waiting for him and us on the other end, while we pay the bills. Neither a conservative nor or a liberal will find the consequences of inaction attractive, acceptable, or even tolerable. The pain to the next generation will be unlike any generational transfer ever seen.

Although the problem has yet to reach the precipice, the accelerator is on autopilot and now with heavy foot—hundreds of billions in bailouts, recession, wars, compounding interest on debt, and the list goes on. The future looks bleak. To fight back, we must bluntly assess and inform others of our current predicament and then make difficult decisions.

There are a lot of options on the table offered by both sides of the aisle that address spending, revenue, and delivery of service: value added taxes, reduction of corporate tax rates, increase in social security tax rates, raising the retirement age, national insurance exchanges and markets, means testing, reforming the tax code entirely, cutting or expanding benefits, automatic savings programs, addressing treatments for chronic illnesses, entitlement budgeting, greater use of technology, and more. But there is a lack of political courage.

Unfortunately too many politicians fail to make it a priority, and those who say they do often only offer vague solutions to avoid offending their constituents or “special interests.” The reality is that the next generation should be the special interest of any real political leader. All leaders—young and old, political and otherwise—must challenge everyone to think more deeply and debate more thoroughly these issues. We should not whine and propagate generational warfare; rather, we should enter the marketplace of ideas and help move us to actual solutions.

If we do not confront and overcome this challenge, we will be trapped, fallen behind and unable to invest in what launches us forward into the 21^st century—education, energy, infrastructure, competitiveness, etc.

The next time you meet a politician or anyone who takes a deep, remote, or no political interest, engage and/or inform them about this crisis. Ask them if they care about the future, and then ask them to show you their plan. Be a part of the dialogue. The squeaky wheel gets the grease. If we fail, our generation, your future will fall into trillions of pieces.