While expressing skepticism that other countries will cut their gross debt to GDP ratios over the next five years, versus simply forecasting such a result, the Cato writeup characterizes “current US policy action (deliberately expanding borrowing via the tax and omnibus spending bills) and inaction (on entitlement spending)” during an economic upturn as “unprecedented.”
Perhaps, but we disagree with the further statement that the US is “explicitly planning” for larger budget deficits and higher debt-to-GDP levels over the next half decade. The president’s budget proposal for FY 2019 provides the following projection of deficits as a % of GDP: 2019 (4.7%), 2020 (4.5%) . . . 2023 (3.0%) . . . 2028 (1.4%). BP-19 and related documents. 2/12/18 (download PDF).
Granted, BP-19 hasn’t been approved by Congress, but neither has any other budget proposal. The basis for the IMF data is presumably a baseline projection, which reflects inaction versus an affirmative decision to run larger budget deficits.
II. Blame game – It’s human nature. When bad news surfaces, a discussion of “who is responsible for this” and “who is the victim” is almost sure to follow.
Thus, liberals attribute the uptick in deficits to recently enacted tax cuts – never mind that the increased spending levels that have been approved will have considerably greater impact. Budget blame where it belongs, J.T. Young, Washington Times, 4/19/18.
If there is blame for Republicans, who have full control of government, it is on spending, not their recent tax cuts. Though in fairness to them, it is hard to see how they could have lowered spending with their slim congressional majorities and a military underfunded under President Obama. But it is not hard to imagine the howls of today’s liberal tax cut critics if spending reduction would have occurred — especially from the entitlement reform so desperately needed.
And moderate Republicans would probably join in the chorus, witness the reaction after the Republican Study Committee unveiled an alternative budget blueprint to end deficits in eight years. As we understand it, there isn’t even likely to be a House vote on the RSC effort. GOP plan to cut spending by $12 trillion opposed by GOP, americanactionnews.com, 4/27/18.
“(T)here are growing doubts on Capitol Hill about whether the GOP will adopt any budget resolution this year — something that Republicans repeatedly criticized Democrats for in the past,” The Hill reports.
Generational equity provides another variation on the “who is responsible” theme. It’s commonly supposed that (a) the Baby Boomers have been the big winners from the entitlement programs that have been established and are looking increasingly unaffordable, while (b) younger Americans will take the biggest hit when the fiscal meltdown occurs and forces a radical cut in Social Security, etc. benefits. Millennials face a harsh reality, Christopher Talgo, heartland.org, 3/8/18.
Unlike previous groups in American history, far too many Baby Boomers have reveled in self-indulgence. This short-term and egocentric philosophy has culminated in an unprecedented financial crisis, forcing subsequent generations to pay for Baby Boomers’ folly. If the current situation doesn’t change soon, rigid adherence to liberal ideology, unadulterated selfishness (through government spending programs), and a lack of responsibility will be the legacy left by Baby Boomers.
Although the Millennials have not weighed in on the fiscal problem thus far, they are said to be the largest single voting bloc in the US and will surely exert their influence at some point. The influence of even younger Americans should not be discounted either.
Is smaller, more focused, less costly government in this country’s future? We’d like to think so, but there’s plenty of evidence to the contrary.
III. Mindset – Polling results indicate that younger Americans (a) lean Democratic vs. Republican (but would prefer a new party of their own choosing); (b) favor policies generally supported by liberals such as gun controls & fighting climate change; (c) have an open mind about socialism and other alternative political/economic systems; (d) tend to be less religious than their parents and are skeptical about social institutions.
•Two-thirds of youth [18-29] fearful about America’s future, prefer Democratic control of Congress, Harvard youth poll finds, harvard.edu, Fall 2017 poll, 12/5/17.
“American political institutions are at a tipping point,” said John Della Volpe, Polling Director at Harvard Kennedy School’s Institute of Politics. “Millennials are now the largest generation in the electorate. This poll and the Virginia election show that they are becoming more motivated -- and I believe the fear that exists today about our future will soon be turned into the fuel that will reform our government. The only question is whether this comes from inside or outside the traditional party structure.”
•Poll: Millennials want third political party, Rebecca Savransky, thehill.com, 11/29/17.
An NBC News/GenForward poll finds 71 percent of millennials think there should be a third major party because neither the Republican nor Democratic parties represent the American people well. Just 26 percent of millennials said they think the major parties now do an adequate job of representing the American people.
• Harvard IOP youth poll finds stricter gun laws, ban on assault weapons favored by two-thirds of likely midterm voters under age 30, harvard.edu, Spring 2018 poll (download PDF), 4/18/18.
"For several years, the opinions of young Democrats, Republicans and Independents have been steadily shifting toward greater support for gun control measures. We now find a strong majority of 18-to-29-year-olds -- and two-thirds of likely voters -- supporting stricter gun laws and a ban on assault weapons," said IOP Polling Director John Della Volpe. "The difference today is that the Parkland students have created an environment where the lack of progress on reducing gun violence is now symbolic of all the ills plaguing Washington, D.C.
•Poll: Millennials would rather live in socialist or communist nation than under capitalism, Bradford Richardson, Washington Times, 11/9/17.
The majority of millennials would prefer to live in a socialist [44%], communist [7%] or fascist [7%] nation rather than a capitalistic one [42%], according to a new poll. *** Fifty-nine percent of all respondents chose capitalism as their preferred arrangement, compared to 34 percent who said socialism, 4 percent fascism and 3 percent communism.
•Millennials open to socialism are not living in the real world, Jerrod Laber, Washington Examiner, 12/11/17.
. . . millennials aren’t committed and principled socialists, so much as they have unrealistic views on what governments should do and are actually capable of doing. *** [A] Reason-Rupe poll from 2015 found that younger people have a more positive opinion of socialism (58 percent) [than their elders] *** [however,] only 48 percent of millennials prefer a “government-managed economy."
•Why don’t millennials like capitalism? Frank Dowd, thestate.com, 7/17/17.
Too many of today’s parents do everything for their children and shield them from learning life’s hard lessons *** a higher educational system that produces an oversupply of the white-collar soft-science and humanities majors, many of whom have no marketable skills *** being highly educated and yet working at Starbucks, waiting tables or living in your mom’s basement can indeed make you cynical about the benefits of hard work and free enterprise.
•Millennials who say governments should do more to solve problems don’t necessarily appreciate the pitfalls involved. Socialism, capitalism seen in new light by younger voters, Eli Stokols, Wall Street Journal, 12/6/17.
IV. Pragmatic considerations – Some observers attribute disillusionment with capitalism to the Great Recession and slow recovery therefrom, but we don’t believe that’s an adequate explanation. The country has bounced back from other financial crises without lasting damage. Also, this saga demonstrated government failures (much was promised, far less was delivered) as well as failures of the private sector.
The US educational system (public schools and most universities) has probably had a far more profound effect in molding young minds than the Great Recession. This type of socialism Millennials won’t like, garydemar.com, 11/26/17.
One of the main reasons they believe socialism is right is that they are being educated in a socialistic environment. *** And what are a majority of government schools teaching? There is no God. The government supplies all their needs and wants. A person’s sex is chosen. The free market should not be free.
To the extent that the foregoing is true, it’s unrealistic to assume that ideas taught in the schools can be readily changed by offering conservative arguments to counter them. Younger Americans will make up their own minds about policy issues, thank you very much.
Still, younger Americans may eventually get things right. Left leaning they may be, but they are also practical thinkers and innovators who are trying to make their way in the world. If smaller, more focused, less costly government can help to achieve a better life – as we happen to believe – this realization will conceivably catch on in time. Millennials face a harsh reality, Christopher Talgo, heartland.org, 3/8/18.
Coming of age in the digital revolution has made Millennials creative and adaptable. At this early point, innovation seems to be the Millennial ethos. Social media, ridesharing, and Airbnb—all of which depend on free-market values—have been pioneered by Millennials. If necessity is the mother of invention, as the most innovative and creative generation in American history, Millennials will likely find a solution to our current financial crisis.
Let’s hope so - and stand ready to provide sound advice and encouragement. Just don't expect us to dance gangman style!
#All the Trump and Republican self-congratulation during the last year about tax cuts has played itself out because the really tough issue has come front and center, only to be miserably and disgracefully flunked.
First, spending MUST be decided by the House Ways and Means Committee. It is only after a certain spending balance for the budget has been agreed to that the tax program can be responsibly constructed. The spending total must be agreed to first. It must be no greater than last year's tax total.
That way budget balance is almost certain. Ask Bill Clinton. He was the smartest President we have had since Calvin Coolidge. His Administration had budget surpluses for four years.
Trump has proven to be a Blustering Fool. Securities markets are set to nosedive. They do not like either tariffs or saber-rattling. At the moment they are not certain as to how bad Trump's policies will be. But just a few more months of the same, and we will be right back where we were with his two predecessors. It’s a disheartening prospect.
SAFE member in Georgia (speaking as an economist)