Memo to Millennials: Be Fiscal Conservatives
Millennials, more than any other demographic group, should be twenty-first century fiscal conservatives. Twenty-first century fiscal conservatism should best be understood as encapsulating two broad principles, namely: sound management of the nation’s finances and skepticism of excessive government intervention in the private economy.
Politicians’ failure to govern according to these principles will leave millennials overtaxed and underemployed, narrowing their opportunities for decades. They could become the equivalent of Japan’s Lost Generation, which came of age during that country’s lost decade when economic growth was anemic, and whose members were subsequently passed over in the labor market.
Debt Matters. While politicians of both parties have failed the millennial generation, it was during the George W. Bush administration when the country saw its budget surplus turn into a deficit. The Republican Congress went on a spending spree. The Obama administration and its Democratic allies, however, have done no better.
Indiana Governor Mitch Daniels, who gave the Republican response to President Obama’s State of the Union address, has rightly called the federal government’s current and future debt a second Red Menace. The national debt is not sustainable. It also puts a considerable burden on younger Americans, particularly those who are underemployed and saddled with both college and credit card debt. After all, it will be the millennial generation, rather than the retiring baby boomers, that will be paying off the national debt through higher income taxes, at the same time that they will be paying off non-dischargeable student loans. There is something deeply unfair about Washington borrowing money from China to pay for government programs, while many of America’s brightest college graduates are underemployed and some are, for financial reasons, forced to live at home.
Populists can score easy victories by railing against the rich for supposedly not paying their fair share. The real question, however, is whether the current tax code promotes intergenerational fairness. Because in many ways it does not, millennials should be at the forefront of arguing for a more equitable tax code that neither privileges debt over savings, nor confers benefits to homeowners that are not available to renters.
Be Skeptical. Millennials should be skeptical of those politicians who promise new government programs designed primarily to win their political allegiance. Likewise, they should weigh the future costs of large-scale government programs, be they in health care, infrastructure projects, or transportation. Those politicians who vote for projects today to appease various constituencies are not going to be the ones paying for them when the debt comes due in the future.
Twenty-first century conservatives should also reject the close ties between Washington and Wall Street, wherein large financial institutions are bailed out when they fail. This is not capitalism, so much as quasi-corporatism. Millennials should likewise be wary of government subsidies to various industries, however good the cause might seem. Green energy is a case in point.
Millennial voters should elect politicians who will promise less in government services, but will be good stewards of the nation’s finances. Millennials themselves should be twentieth-century fiscal conservatives concerned with debt reduction and a balanced budget. They should demand that Washington stop borrowing money from their futures.
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