INFORM Act is One Reform to the Budget Process Every Millennial Should Support
Politicians in Washington like to talk about their children and grandchildren, but they apparently are not used to listening to them. As a fellow millennial, I suspect what they would hear is a plea to start worrying more about the next generation and less about their next election. Because when young people look at issues like our warming planet, growing income inequality, and increasing national debt, we wonder why politics seems to be more about point scoring than problem solving.
As politics has become more polarized and paralyzed, many young people have rationally chosen to focus their efforts outside of the system. But this will only exacerbate the problem. Fortunately, some young people have decided to double down on their political involvement and begin demanding real solutions. Can it work? It just did. With Wednesday's introduction of the INFORM Act in the Senate, a small but growing and committed group of young people proved what is possible when we join together and fight for our future.
In February, The Can Kicks Back — a non-partisan, millennial-driven campaign to defeat the national debt — brought a policy proposal to Capitol Hill that recommended bringing greater transparency to the budgeting process by reporting the full size of our fiscal imbalance and intergenerational consequences of our fiscal policy. Now, Senator John Thune (R-S.D.) and Senator Tim Kaine (D-Va.) have joined together to make this idea a reality. Already other senators including Rob Portman (R-Ohio), a former director of the Office of Management and Budget, and Senator Chris Coons (D-Del.) have signed on board. Moreover, ten Nobel Laureate economists have endorsed the bill.
Why is this legislation important? You’ve heard it before: What gets measured gets done. When it comes to our nation’s growing debt, we do not have the right measures to make good decisions, and that may be why not much is getting done.
The various deficit reduction agreements in the recent past, from the sequester’s spending cuts to the fiscal cliff’s tax hikes, brought interest payments on the debt down to $1.8 trillion from $1.9 trillion in 20 years. Hardly progress. What’s worse, the deficit reduction that has been enacted to date has largely been at the expense of crucial investments in our future, such as Head Start, and not through sensible reforms of our tax code or unsustainable entitlement programs, such as Medicare. That’s simply a prescription for slower economic growth and higher national debt in the decades to come.
One reason policymakers have taken this hare-brained approach to deficit reduction is because we do not have the full picture of the problem. On one hand, we do not do a good job of looking out into the future. Lawmakers often rely on a standard 10-year projection, but this is insufficient because policies that have a similar impact on the deficit over the next10 years may differ sharply in their impact on the deficit over subsequent decades. On the other hand, we do not bother to consider the implications of policy decisions on from a generational perspective. Not only are we handing a massive tab to the young and unborn, but more government resources are being transferred to the elderly as fewer resources are being invested in the future.
The Intergenerational Financial Obligations Reform (INFORM) Act seeks to help fix this problem by providing more information about the federal budget and proposed policy changes, specifically through incorporating fiscal gap and generational accounting analysis in the budgeting process.
The fiscal gap calculates the present value difference between total future projected government spending and revenue, plus our current debt. In 2012, our country’s fiscal gap was $222 trillion, 13 times larger than the official debt reported by the government. Generational accounting calculates the net taxes of each living generation and future generations. A 2011 generational accounting completed by the International Monetary Fund found that current adults will receive more back from the government over the course of their lifetimes than they paid in taxes, meaning this gap is being closed by a transfer of wealth from young to old.
These analyses, while imperfect in predicting the future, are nonetheless useful in demonstrating important trends that should guide the budget debate in Washington moving forward. They can help us determine whether proposed policy changes improve or worsen our long-term financial situation, and whether they increase or decrease the burden on the young. In sum, the INFORM Act can be a critical component to developing policy that is both fiscally sustainable and generationally equitable.
It’s time for our leaders to face the facts, not kick the can. My generation’s future — and our American Dream — hangs in the balance. While significant work remains before the INFORM Act becomes law, its bipartisan introduction demonstrates the power of millennials and their ideas. Imagine what can be done if millions of more millennials rallied to the cause. Learn more and contact your representative at www.TheCanKicksBack.org/informact.