At a hearing about the President’s budget proposal in May that called for a balanced budget within 10 years, a Democratic congresswoman scolded White House Budget Director Mick Mulvaney saying she had “never seen such a cruel and morally bankrupt budget.”
To which Mr. Mulvaney replied, “What about the standard of living for my grandchildren who aren’t here yet who will end up inheriting $30 trillion in debt, $50 trillion in debt, $100 trillion in debt?…Who’s going to pay the bill Congressman?…Us? Or somebody else?…right now my unborn grandchildren are paying for it, and I think that is morally bankrupt.”
Given the trajectory of the recently released House and Senate budget proposals, it might be time for Mulvaney to turn that lecture towards his own party.
Last week, Senate Republicans unveiled their budget proposal which in theory requires them to reveal what priorities they will have for the upcoming decade. But realistically, the only items they plan to pursue are those that are included in reconciliation instructions, which will allow them to pass a bill without a single vote from Democrats. The rest is all empty rhetoric. So what path does the newly released budget proposal set through its reconciliation instructions? $1.5 trillion in tax cuts (with a T), paired with $1 billion in spending cuts (with a B). Using the Mulvaney standard set in May, the Senate’s plans are morally bankrupt.
The House’s reconciliation instructions are better, calling for deficit neutral tax reform and $200 billion in mandatory spending cuts. But even $200 billion is a drop in the bucket compared to the $10.9 trillion that is projected to be added to the debt over the next decade. One-fiftieth of the way there.
How do these lackluster proposals impact younger Americans?
When the federal government spends more than it takes in, also known as a deficit, it borrows from creditors, which include private citizens and foreign governments, among others. When the government runs a deficit, it finances its spending rather than borrowing through increased tax revenues or reduced spending. The interest payments on this publicly held debt contributes directly to our deficit, and increases the national debt.
To translate, if you had an income of $50,000 but spent $60,000 this year (c’mon Millennials, put down that avocado toast), putting that $10,000 on your credit card, that’s basically what happens with the federal government. But it’s not the debt itself that puts most people in bankruptcy, it’s the interest on the $10,000 that hurts the most!
Well in 2017, the U.S. will spend over $250 billion, or 7 percent, of the federal budget servicing interest on the debt. This will only get worse. Save for entitlement and benefit programs, the Congressional Budget Office (CBO) projects that interest on our national debt will be the largest budget item in 2027, costing $800 billion!
To make that clear, money spent servicing the interest on our debt does not go to domestic assistance, defense, student aid, or any government program that happens to be your favorite. Tack on an extra 10 years of compounding interest, when Millennials will be at their peak earning years, and you can clearly see our disastrous financial path Director Mulvaney is trying to articulate.
Rather than tacking on an additional $1.5 trillion in deficits to our already out-of-control fiscal problems, Congress should be reducing deficits by that amount, at a minimum. While entitlement reform is crucial, they could start by eliminating a number of government programs and reducing spending on many more programs. While we are likely to see members from both parties call these cuts draconian, many of these programs are either duplicated by another program or agency, or are inefficient and lack results.
In fact, over the years, the federal government has accumulated 56 federal programs to teach financial literacy at 20 different agencies, 209 STEM education programs administered by at least 13 different agencies, and 18 domestic food assistance programs administered by three different agencies. Many of these programs should have been eliminated long ago, but special interest politics usually gets in the way.
Millennials are supposed to be the most efficient generation to date, so you tell me, is it so far-fetched to think that some of these programs are in fact duplicated or inefficient? While neither of the budget proposals tackle our biggest financial problem, entitlements, the House budget at least acknowledges that the national debt and reducing deficit financing are important. However, Republicans will be tempted to take the easy road and settle upon the Senate idea to debt-finance their tax reform agenda without any offsets on the spending side.
Washington is committing generational theft every year these problems go unaddressed. Lawmakers on both sides of the aisle continue to borrow from our generation and future generations in order advance their political agendas. If we don’t start making the tough choices now, future Americans will be left with no options, no economic opportunity, and a lot of disgust with the selfish generation of lawmakers that came before them.