Our generation’s challenge
Conor Durkin | Sunday, October 6, 2013
It’s not hyperbole to say that our current government might be more dysfunctional than any we have ever had. The events of the past week serve as a perfect indication of this. Their inability to broker a budget deal has resulted in a government shutdown marked by politicians playing the blame game and staging political theatrics like forbidding World War II veterans from visiting national monuments. All in all, it’s safe to say our government probably isn’t working as intended at the moment.
Moreover, this sort of dysfunction is happening at the worst possible time for members of our generation. Today’s students are well aware of the economic challenges we are facing. Student loan debt is higher than ever, driven by college tuitions that have continued to balloon even as prices in the general economy have virtually stagnated. At the same time, employment prospects for graduates are still at some of their worst levels in decades, with young adult unemployment rates in the double digits. Yet perhaps the most concerning figure for members of our generation is the size of our fiscal gap: $200 trillion dollars. That’s the size of future debts our generation will have to pay, and if our government doesn’t work soon to resolve the threat it poses, future generations will have a truly devastating public policy problem on their hands.
It’s important to understand what this number means. When we talk about the current national debt, what we’re referring to is the total amount of money that the U.S. government has borrowed thus far – its existing bills. What it doesn’t include, however, is what we’re projected to borrow in the future. That’s where the fiscal gap comes in, by projecting the government’s future revenues and expenditures to pinpoint the present value of our future debts. As of today, that number is right around $200 trillion dollars, a frighteningly large figure driven largely by future increases in spending on programs like Social Security and Medicare.
To be frank, if our leaders keep kicking the can down the road and refusing to cooperate and address this debt problem, our generation is screwed. As spending on entitlement programs increases, spending on other important areas – like infrastructure, education, the environment, job creation or scientific research – will get crowded out. Instead of investing in the future of future generations, we’ll instead be subsidizing past generations. By 2031, every penny of federal revenues will be just enough to cover mandatory spending (consisting primarily of entitlements, as well as interest payments on existing debts), meaning that all other spending will have to be financed with borrowing. By 2033, the Social Security trust fund will run totally dry and the program will only be able to pay a fraction of its benefits. In summation, if we don’t address this problem soon, we’ll be left with more debt, higher taxes, fewer benefits and a lower standard of living.
We may not all agree on what the proper solution is, but any solution has to begin with a real discussion about what the problem is. Fortunately, this week we have an opportunity to do just that. At 7:00 pm in Washington Hall this Wednesday, you have the opportunity to hear from Stanley Druckenmiller and Jimmy Dunne in a presentation entitled “Mortgaging the Future: Millennials’ Declining Share of the Economic Pie.” Mr. Druckenmiller is a world-renowned hedge fund manager and philanthropist who founded and ran Duquesne Capital for many years and is famed for both breaking the Bank of England and predicting the 2008 financial crisis. Mr. Dunne is a member of the University Board of Trustees and is co-founder and senior managing partner of Sandler O’Neill and Partners. Those who have taken Introduction to Business Ethics will be familiar with Mr. Dunne’s remarkable management of Sandler O’Neil after the tragedy of Sept. 11, 2001.
The event is sure to provide valuable insight into the economic challenges our generation is facing with respect to our government’s fiscal policy, and I strongly encourage anyone who cares about our economic future to attend. Brought to you by the Notre Dame College Republicans, Notre Dame College Democrats, Notre Dame Student Government, the Notre Dame Investment Office and the College of Arts and Letters, this event truly represents a cohesive university-wide effort to engage in one of the most substantive public policy challenges of our age, and is well worth your attention.
Our generation stands at a crossroads. Our economic future is uncertain. We must work to ensure that the challenge of the fiscal gap is dealt with so as to ensure continued prosperity for future generations, and that must begin by understanding what the problem entails. I hope you’ll take the opportunity this Wednesday to do just that.
Conor Durkin is a senior studying economics and political science. He can be contacted at [email protected]
The views expressed in this column are those of the author and not necessarily those of The Observer.