If college students are asked about debt, most will think of their own impending payments of student loans. The average amount of student debt nationwide has skyrocketed over the past 20 years and now exceeds $26,000 per undergraduate student. Student debt is an increasing threat to the financial security of an entire generation and clearly must be addressed in the coming years. However, debt on a different scale has been growing in Washington, D.C. for years. Recent changes to the federal government’s revenues are projected to worsen the problem, and the urge for action on the national debt is more pressing than ever before. Rising national debt has serious implications for the next generation of workers, especially college students.
On Friday, Dec. 22, 2017, Congress passed its first piece of tax reform legislation in more than 30 years. The sweeping bill cut taxes across the board in the hopes of spurring economic growth and creating jobs. A few weeks later, the federal government shut down after Congress failed to reach a deal to raise the debt ceiling and fund the government. The Congressional Budget Office (CBO) estimates that the tax reform will push the federal deficit to almost one trillion dollars and increase the national debt by 1.5 trillion dollars over the next decade to more than 20 trillion dollars. In 2016, the U.S. gross domestic product (GDP) was 18.57 trillion dollars. By 2050, the GDP is forecasted to be approximately 37 trillion dollars. At the current rate, the national debt will increase by more than half of the U.S. GDP by 2047. Service on that debt, the monthly or yearly interest payments the federal government makes to creditors, will become the third largest government “program” behind social security and Medicare. Interest in the national debt will crowd out other productive investments, such as education, research and development, and infrastructure spending. Social programs that many Americans rely on, especially social security, are not sustainable at current levels of debt and spending. To remedy the problems left to us by the previous generation, millennials must become aware of how the national debt has grown and its future projections, debt’s effect on the economy, and proposals to address it.
Current college students are particularly affected by the national debt due to the burdens of an already high average student debt. Service on student loans lowers rates of saving and homeownership among young people, limiting both investment and retirement savings. Millennials are shaping up to be an educated but poor generation, saddled with the obligations of previous generations. This trend will only increase as student debt rises and wages continue to stagnate, yielding a reduction of the average assets of young people. Without social security and other social programs, millennials and future generations may face challenges such as buying homes, building assets, starting a family, and retiring. The current trend of increasing debt is clearly unsustainable for the next generation and it is imperative for the future of our nation to minimize this burden.
Understanding both the causes of and the proposed solutions to the national debt is a matter of balancing federal revenues and costs. To balance the annual deficit, the federal government must raise taxes or decrease spending. The challenges lie in deciding which programs’ funding to cut, which taxes to raise, what the timeframe for a balanced budget should be, and how to sell higher taxes or less generous government programs to the American public. Balancing social programs, economic growth, and a balanced budget is a politically untenable challenge in the current polarized climate.
While Democrats and Republicans often do not align in their views on policy issues, both sides acknowledge that the growing national debt is a problem that must be addressed. Policy experts from across the ideological spectrum have provided potential remedies that can be difficult to reconcile across party lines and loyalties.
It is clear that current trends are unsustainable and the next generation of workers are uniquely unprepared to shoulder the excesses and mistakes of the current and past generations. Both sides of the ideological spectrum have presented plans for balancing the Federal budget and tackling the debt. However, without Congressional action, even the most sensible plans cannot produce concrete change in the national debt. Millennials must ensure that the current and future members of Congress are cognizant of the importance of curtailing the growth of the national debt.
As part of the most educated, informed, and politically active generations to exist, students at the Claremont Colleges are in a unique position to advocate for action that can prevent the grim predictions of the CBO. As a network of schools with the capacity to produce political and social leaders, the Claremont Consortium must keep the national debt in mind, even as we are entering the workforce and dealing with the consequences of the decisions of previous generations. Raising awareness of the national debt is the first step towards a more sustainable future: a future where debt is not a looming concern and the productivity created by the millennial generation can be used to achieve better standards of living for everyone.